Lenders act to limit US foreclosures

Major lenders embark on a rescue mission to halt the wave of foreclosures sweeping the nation and delaying a housing market recovery.

from the April 26, 2007 edition

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Rita Askew, safe at home

Rita Askew of Evanston, Ill., is one borrower who remains in her red-brick townhouse thanks to help from her lender and community groups.

Her husband, the family breadwinner, had to leave his school-maintenance job for several months last year because of an accident. "I probably would have been selling my house," Mrs. Askew says, if the National Training and Information Center (NTIC) hadn't stepped up for her.

NTIC helped win a loan-modification accord that cut the monthly payment from $1,668 to $1,117. The interest rate dropped from 10.6 percent to 6.0 percent.

Several major lenders, including Ocwen Financial Corp., CitiFinancial, and Select Portfolio Servicing Inc., have agreed to partner with NTIC to negotiate "workout" deals when possible for troubled loans.

But for people who face difficulty paying their mortgages, the choices can narrow quickly if the loans go unpaid for a month or more.

Borrowers can seek a traditional refinance deal with any lender. They can seek temporary forbearance or a loan modification deal. Some can successfully sue the lender, showing that the original loan process violated state or federal laws. Or they can try to sell the home, perhaps talking the lender into accepting proceeds that fall short of the loan balance due.

Housing advocates say to beware of "rescue" scams, outfits that charge big fees and then fail to help people stay in their homes.

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