The unethical and negligent practices of the nation’s mortgage lenders and servicers are widely known. But it has been hard to put an exact number on how many people lost their homes during the worst of the crisis due to understaffing and paperwork errors, until now.
According to a new federal study, which came out last week, was intended to determine why the HAMP program was so ineffectual at helping many people prevent foreclosure.
Under HAMP, major lenders were encouraged to offer mortgage modifications and received federal subsidies for helping troubled homeowners avoid foreclosure. However, earlier this year many of the banks received extensive criticism and lost subsidies because they failed to offer mortgage modifications even to those who were eligible.
The authors of the study found that 800,000 homeowners, who were eligible for loan modifications, were denied, according to ProPublica. And they found the main reason was because lenders failed to have enough employees with proper training to process applications.
The study determined banks that were well-staffed and had trained their employees to deal with loan modifications completed more loan modifications. The researchers concluded that if the poorly performing banks had processed modifications at the same rates as their peers, 800,000 homeowners could have stopped foreclosure.
The report did not identify the banks, but it would be hard to determine which ones are the culprits simply because of their status as major mortgage lenders. It is safe assume that JP Morgan Chase, Wells Fargo, Bank of America and CitiBank are among the lenders that failed to adequately help defaulted homeowners.
Although lenders offer people assistance with their defaulted loans, it is often better for the borrower facing default to hire a foreclosure attorney and negotiate for an alternative solution.
