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March 15, 2006
Kind-Hearted Mortgage Bankers? Looks That Way
Right about now you'd be expecting a tidal wave of foreclosures in New Orleans, but it hasn't happened. The simple reason is that mortgage bankers are giving people a break, recognizing that an act of God, so to speak, is responsible for their lateness on payments.
The Mortgage Bankers Association announced on Mar. 14 that almost 76,000 homeowners in Louisiana and Mississippi were seriously delinquent on their mortgages as of the end of December.
Nonetheless, because of lenders' "forebearance programs," the number of foreclosure proceedings started during the period fell to only 0.16% of all mortgages in Louisiana and 0.26% of those in Mississippi. Those numbers are below a year earlier and below the national average of 0.42%.
It's easy to knock bankers, but in this case, let's give credit to the credit-givers where credit is due.
By the way, the Mortgage Bankers Association also praises those borrowers who have kept current despite being unable to occupy their homes.
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The real reason has nothing with them being nice, kind, or recognizing an act of god.
It has everything to do with the fact that they would suffer huge losses if they attempted foreclosure on that many homes. The sheer volume of homes would flood local market inventories and homes would likely need to be liquidated for pennies on the dollar.
They are chosing forebearance because it protects their own bottom line, not the borrowers.
Posted by: grim at March 15, 2006 12:36 PM