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Paul Kiesel
Paul Kiesel
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The Helpless Subprime Borrower

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70 percent of seriously delinquent subprime mortgage borrowers are still not getting the help they need to stay in their homes. Mortgage rescue programs like Hope Now are not able to keep pace with the growing number of delinquent loans, signaling that more needs to be done to help mitigate the amount of foreclosures that are taking place and that will continue to increase in the coming months.


The big statistic that has come out over the last week is that nearly a quarter of all subprime loans are in delinquency. About 300,000 subprime borrowers are now in some stage of foreclosure, and this trend is up almost 10 percent since last October.


Mortgage servicers can barely deal with the sheer number of delinquent loans and the fact that about two-thirds of all mortgage modification efforts are not completed by the following month; showing that the servicers are unable to rectify this problem on their own. More needs to be done: slow down the foreclosure process in order to give servicers more time to find solutions for each borrower, and per borrowers who might have been slighted and misinformed when signing unclear and/or fraudulent TILA forms, the government or the courts should interject itself and prevent foreclosures from happening to borrowers who have been victimized by all of the lenders who originated the hundreds of thousands of loans that break the Truth in Lending Act.


CNNMoney had this to say in regards to the subprime mortgage crisis and its gloomy outlook:


“The performance of subprime loans has continued to deteriorate, with many of the loans completed in 2006 and 2007 already in default. For example, 28.5% of subprime ARMs that won’s reset until Spring, 2009 are already delinquent. About 21% of these same loans were delinquent in October. The report concluded that ‘very weak underwriting and mortgage origination fraud, and not simply payment resets,’ are what’s driving subprime loan defaults.”


Fortunately, Bank of America took the appropriate steps today in tentatively changing their strategy and mortgage product menu, as soon as the acquisition of Countrywide is completed.