On January 7, President-elect Barack Obama declared his intention to address the foreclosure crisis soon after being sworn in. The challenge now for advocates is to ensure that the details of the plan match Obama’s rhetoric and truly assist homeowners and renters.
Strong federal mandates are needed because the foreclosure crisis is expected to worsen. At the end of last year, credit agency TransUnion estimated that 4.7 percent of all mortgages were delinquent by 60 days or more. And they've projected that this figure may surpass 7 percent by the end of 2009.
Meanwhile, the voluntary actions on the part of the lending industry to assist homeowners have so far been largely ineffective. Housing counselors across Illinois recently reported that 75 percent of loan servicers rarely agree to workout plans that allow homeowners to maintain their homes. The worst offenders were: America's Servicing Company (a subsidiary of Wells Fargo), First Franklin Loan Services/Home Loan Services, Bank of America, Saxon Mortgage, American Home Mortgage Servicing, and Aurora Loan Services (a subsidiary of Lehman Brothers).
These survey findings -- reported by Housing Action Illinois in "Who's Serving Whom? Analyzing The Frequency Of Loan Servicer Modifications" (PDF) -- provide evidence to support a federal moratorium on home foreclosures, as well as legislation to systematically and automatically modify loan terms and other measures.
A truly comprehensive plan to address homeowners and renters impacted by the foreclosure crisis should include the following six components:
