Foreclosure Mess Likely to Drag On
The ongoing tangle that has become the foreclosure process in many parts of the country moved in two directions last week, each of which could impact credit unions.
On the one hand, credit union mortgage analysts were encouraged that a nationwide foreclosure moratorium appeared to move off the agenda after the White House made it clear the Obama administration would not support one. Further, Bank of America and other large banks also announced that they had finished their initial review of their foreclosure processes and were ready to start them again.
"Ultimately, this problem will require some type of global solution," she said. "And in developing that solution, I would suggest that all interested parties consider some type of triage on foreclosures, perhaps providing safe-harbor relief if the property is vacant or if the servicer offered a meaningful payment reduction-say a minimum of 25%-and the borrower could still not perform on the loan."
On the same day, Federal Reserve Chairman Ben Bernanke told the meeting that the Federal Reserve was coordinating a broad effort by federal regulators to look into the issue.
"When I was actively working the mortgage industry, I used to wonder sometimes about the deeds and how they are recorded all across the country and that whole system," she said, explaining that this system does not easily meld with a secondary mortgage market that needs to be as fluid as this one has become. "I agree it needs to be reformed. but I am at a loss about who will do it or where the money will come from to pay for it."
One more serious problems that Pratt and other analysts saw rising out of the procedural mix up are the numbers of so called "put backs."