Foreclosure Help Failing, Group Says

New York Newsday (09/30/08); Yan, Ellen
A new report from the State Foreclosure Prevention Working Group shows that the number of delinquent homeowners on track for assistance declined during the first five months of the year, and 20 percent of those who were able to renegotiate their mortgage terms have fallen behind on their payments once again. Based on data from 13 of the country's 20 biggest servicers of subprime mortgages, the study further concludes that loan servicers have not developed long-term, sustainable tactics to avoid foreclosures. The report states: "Servicers appear to have reached the 'low hanging fruit' of subprime loans facing interest rate resets, while not developing effective approaches to address the bulk of subprime loans which are in default before interest rate resets. The mortgage industry's failure to develop systematic approaches to prevent foreclosures has only spurred declines in property values and further increased expected losses on mortgage loan portfolios." Researchers noted that eight out of 10 delinquent homeowners were not being helped as of May, compared to seven out of 10 in January.