Six mortgage loan servicers have joined the Bush administration’s HOPE NOW alliance since the group was formed in October to contact borrowers in danger of defaulting on their loans and help some refinance or modify the terms of their loans to avoid foreclosure.
With the addition of Carrington Mortgage Services, IndyMac Bank, Litton Loan Servicing, Merrill Lynch: Home Loan Services/Wilshire, Morgan Stanley/Saxon, and Ocwen Loan Servicing, HOPE NOW membership now includes more than 20 loan servicers, who collect payments on 90 percent of subprime loans, the group said this week.
In December, Treasury Secretary Henry Paulson announced that HOPE NOW members had agreed on procedures for engaging in loan refinancings and loan modifications that he said could help as many as 1.2 million borrowers with adjustable-rate mortgages (ARMs).
Critics said the number of borrowers helped by the initiative could be much lower — the Center for Responsible Lending estimated that 145,000 families might see relief — and have urged Congress to take other steps to help borrowers, such as allowing bankruptcy judges to rewrite loan terms.
To be eligible for streamlined refinancing or modification such as a five-year interest-rate freeze, borrowers must have taken out an ARM loan on an owner-occupied home between Jan. 1, 2005 and July 31, 2007, with an initial interest-rate reset between Jan. 1, 2008 and July 31, 2010.
Only borrowers with FICO scores less than 660 and facing an increase in monthly payments greater than 10 percent will be eligible for fast-track loan modifications. Borrowers who don’t meet the test may qualify for loan modifications after individual reviews of their current income and debt obligations.
HOPE NOW is comprised of the American Bankers Association; American Financial Services Association; American Securitization Forum; America’s Community Bankers; Assurant Inc.; Bank of America; CCCS Atlanta Inc.; Carrington Mortgage Services; Citigroup Inc.; Consumer Bankers Association; Consumer Mortgage Coalition; Countrywide Financial Corp.; EMC Mortgage Inc.; Fannie Mae; The Financial Services Roundtable; First Horizon National Corp.; First Tennessee Home Loans; Freddie Mac; GMAC ResCap; Homeownership Preservation Foundation; Housing Partnership Network; The Housing Policy Council; HSBC Finance; IndyMac Bank; JPMorgan Chase & Co; Litton Loan Servicing; Merrill Lynch: Home Loan Services/Wilshire; Morgan Stanley/Saxon; Mortgage Bankers Association; National City; NeighborWorks America; Ocwen Loan Servicing; Option One Mortgage Corp.; PMI Mortgage Insurance Co.; Securities Industry and Financial Markets Association; State Farm Insurance Cos.; SunTrust Mortgage Inc.; Washington Mutual Inc.; and Wells Fargo & Co.
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