Industry NewsMortgage

Lenders promise streamlined workouts

HOPE NOW coalition services most mortgages

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More than two dozen loan servicers that collect payments on most U.S. mortgages have agreed to adopt guidelines that are intended to expedite the process of working with troubled borrowers to prevent foreclosures. The new HOPE NOW guidelines state that loan servicers should inform homeowners within 45 days whether their application for a workout -- such as a repayment plan, loan modification or short sale -- has been accepted or denied. Servicers also agreed to re-subordinate second-lien loans if their position will not be worsened by a refinance or workout -- potentially removing a major obstacle to preventing foreclosures in cases where borrowers have "piggyback" second loans. HOPE NOW servicers will also attempt to contact homeowners with subprime adjustable-rate mortgages (ARM) and other homeowners with ARMs that have a probable risk of default 120 days in advance of reset. The Bush administration helped organize the HOPE NOW coalition of loan servicers, an...