Acorn Calls for More Loan Modifications

The activist group ACORN got a bad rap during the recent presidential campaign when John McCain accused them of using paid solicitors to sign up bogus voters. Barack Obama had to distance himself from the group, which has been a big advocate for low income homeowners.

ACORN has come out slugging against Hope Now, an alliance between banks, mortgage servicers and other consumer groups.


“HOPE NOW’s own numbers show that far less than a third of their nearly 3 million foreclosures prevented in 2008 actually involved modifications to the underlying mortgage, rather than weak repayment plans that do nothing to address the structural unaffordability of so many loans. The HOPE NOW estimate of 950,000 mortgage modifications in 2008 is a pathetic failure when stacked up next to the 2 million Americans who lost their homes. We don’t know how many of these modifications actually resulted in reduced monthly payments that are affordable to homeowners, the driving reason behind high re-default rates. Instead of more excuses, we need solutions that will stop all these unnecessary foreclosures and fix our economy where it is hurting most.”

The group also notes that Credit Suisse recently released revised projections that foresee 8 million foreclosures in the next four years, up from a prediction of 6.5 million in April. “The industry’s current bad practices are essentially responsible for doubling the foreclosure crisis and preventing the broad economic recovery we need. The mortgage industry doesn’t need any more PR, it needs systemic change.”

ACORN is calling on mortgage servicers to enact a 90-day moratorium on foreclosures, taking that time to implement the FDIC’s modification protocols that were successful at avoiding unnecessary foreclosures and re-defaults at Indymac. This change alone would stem the glut of Real Estate Owned properties that are dragging down housing prices and would help jumpstart the economic recovery. The federal government must use every stick and carrot at its disposal to help Americans save their homes, including enacting the Bair proposal to use TARP funds to facilitate 2.2 million mortgage modifications, lifting the ban on judicial modifications, and demanding that banks receiving TARP funds start modifying loans per the FDIC protocols.”

Before it's here, it's on the Bloomberg Terminal.