Attorney General wants banks to detail plans to stem foreclosures

SACRAMENTO
October 29, 2009 12:21pm

Concerned about a "new wave" of foreclosures, California Attorney General Edmund Brown Jr. on Thursday called on ten major banks and loan servicers to detail their plans to assist homeowners facing dramatic monthly payment increases on “pay option adjustable rate mortgages.”

"Homeowners with pay option ARMs are sitting on ticking time bombs that the lending industry has the power to defuse," says Mr. Brown. "Unless these banks and loan servicers act quickly, hundreds of thousands of mortgages will reset across the state, creating a new wave of foreclosures." 


While the economy is beginning to improve, homeowners desperate to save their homes have seen little relief, Mr. Brown says.

In the third quarter of 2009, California accounted for more than 25 percent of the nation's foreclosure activity, with 250,000 homes receiving foreclosure filings statewide. Four of the nation’s highest foreclosure rates were in the Central Valley – Merced, Bakersfield, Modesto and Stockton – according to RealtyTrac Inc., an Irvine-based mortgage information company.

California homeowners hold almost 60 percent of the nation's exotic pay option ARMs originated between 2004 and 2008. Approximately one million of these mortgages will reset nationwide in the next four years, resulting in higher payments and a dramatic increase in foreclosures, Mr. Brown says.

The attorney general’s request was made in a letter sent to: Bank of America Home Loans & Insurance; Wells Fargo & Company; JP Morgan Chase & Co.; Litton Loan Servicing; ResCap LLC; Ocwen Financial Corporation; OneWest Bank; American Home Mortgage Servicing; Saxon Mortgage Services, Inc.; and Select Portfolio Servicing.

The banks and loan servicers are asked to respond by Nov. 23.

Comments on this story

Joe Finance 10/31/09 10:09 PM
THe AG He has fired all of the loan modification help for these homeowners. Now, he explains that the real problem is the banks are not helping people... Nice, the AG would have them get help from lawerys or may be brokers... No it against the law, unless they will work for free... Non-profits in the valley are the weekest link, they have no proof they helped. Infact, the data shows more help is needed, all types of help have limited impact. The average is 12% help from banks. At least the home less will have the legal fees to pay rent... Instead of fighting to save there home... How much did the banks agree to donate for his run for governer, he got rid of the loan modification companies. The banks can now fight homeowners with their legal teams and the homeowners have no one... In the Valley that mean, middle to lower income social economicaly challenged population, not the type that win taking on a major Banks... Why not just have them mail their keys to the AG so he can give them to the banks himself... AG can not be that dumb... He noticed that the baby was crying so he threw the baby out with the bath water... Or he just sold out the consumer... Take away there representation so they would not complain... How many complaints about loan modification DRE 1300... Not close to the 250,000 that lost there home instead of modification... I wonder who will help the 12 to 16 million forecasted to lose there homes accourding to the congressional subcomittee... California sell outs to banks.... Score: Homeowners 0 Banks 1.8 trillion dollars.