A group of Attorneys General and state banking regulators led by Iowa Attorney General Tom Miller set up to review and find solutions to the mortgage crisis issued its first report today. Mark Pearce, North Carolina’s Deputy Commissioner of Banks, says they examined the 13 major residential mortgage servicers in the month of October.
Pearce says they found 7 out of 10 troubled homeowners fell through the cracks in the mortgage servicing system, "This is a silent majority of homeowners that were not in contact at all with their mortgage servicer." Pearce says the homeowners hadn’t talked with the servicers even though most had loans that were 60 days overdue.
Attorney General Miller says the State Foreclosure Prevention Working Group sat down with the mortgage companies and talked about working to have homeowners move toward a payment plan instead of settling for foreclosure. Miller says they had very productive meetings as the servicers indicated that they agreed that modifications and other mitigation efforts to keep people in their homes made a lot of sense.
Miller says getting and keeping the lines of communication open was a key problem. Miller says they heard that half of the people who were foreclosed on had not contact with the servicer. Miller says they can’t do any sort of mitigation without contact between the two sides, "so that’s a huge challenge." Miller says they’ve been able to get the loan servicers to go from a collection mode to a mitigation mode.
Miller says they also told the servicers the old line from President Ronald Reagan, "Trust but Verify," as he says they want to work with them, but want numbers to see how the mitigation efforts are going. Miller says the mitigation efforts were based in part on what was learned in Iowa during the farm crisis in the 1980’s. The group plans to issue monthly reports on the situation.