Texas Attorney General urges three Texas mortgage companies to lay off foreclosures

by PegNews wire

Countrywide and Dallas-based EMC were two of the companies directly addressed.

AUSTIN — Texas Attorney General Greg Abbott today proposed a series of foreclosure prevention measures to three of the largest mortgage lending and loan servicing companies. At a meeting convened by the Attorney General, the industry leaders were asked to implement several important measures that are designed to prevent Texans from losing their homes to foreclosure.

By the end of next year, approximately $600 billion worth of subprime adjustable-rate mortgages are expected to reset into higher monthly payments for homeowners across the country. During today’s meeting, Attorney General Abbott urged Countrywide Mortgage, Houston-based Litton Loan Servicing and Dallas-based EMC Mortgage to implement several measures designed to preserve homeownership in Texas, improve consumer communication, and resolve complaints.

“Mortgage lenders, loan servicers, and public officials must work cooperatively on behalf of Texas homeowners who are affected by the looming housing crisis,” said Attorney General Abbott. “Because of the housing industry’s tremendous economic impact, resolving this issue is important to the Texas economy’s continued growth and expansion. We believe that the proposals laid out in today’s meeting offer real solutions that will help keep Texans in their homes.”

Attorney General Abbott outlined five measures that lenders and loan servicers should implement to restore borrowers’ financial stability and reduce foreclosures in Texas:

• Provide long-term solutions for borrowers with adjustable-rate mortgage loans (ARMs). Mortgage companies should consider easing homeowners’ mortgage-related burdens by converting adjustable-rate loans into fixed-rate products. Many ARM loans have already adjusted and pushed countless consumers into the foreclosure process. Because of high foreclosure costs, this proposal benefits lenders, loan servicers and homeowners.

• Mitigate first, collect second. Under the protocols currently used by most lenders, homeowners who have difficulty making payments receive expedited referral to the collection process, which is often antagonistic and intimidating. Attorney General Abbott encouraged companies to engage homeowners before sending a case to collections by reviewing each case in a non-confrontational setting and exploring solutions. By doing so, the servicers increase the chances of debtors repaying their obligations.

• Create an in-house resolution committee to address consumer complaints. Attorney General Abbott urged today’s participants to dedicate in-house staff to immediately address consumer complaints received by the Texas Office of the Attorney General (OAG) and report promptly to the OAG on the status of those complaints.

• Improve communication with consumers. While many companies have adjusted their protocols and are engaging consumers who face imminent foreclosure, Attorney General Abbott recommended that companies improve their communication efforts. The attorney general also encouraged the companies to contact consumers well before ARMs reset to higher interest rates so that fixed-rate options can be explored.

• Waive applicable penalties and fees. Attorney General Abbott urged lenders and loan servicers to waive penalties and late fees associated with loans at risk of foreclosure while the companies work with troubled consumers to preserve their loans.

Attorney General Abbott also requested that today’s participants follow up with the OAG within 30 days on their implementation of these five measures. Specifically, he wants to know the percentage of ARMs that were converted to fixed-rate loans and the number of service fees that were waived.

Consumers who believe they have been targeted by a mortgage-related scam should contact the Office of the Attorney General at (800) 252-8011.

Source: Office of the Attorney General of Texas

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