Calif. AG Presses Servicers For Loan Mod Details

California Attorney General Edmund G. Brown Jr. has called on 10 mortgage servicers to detail their loss mitigation plans relating to upcoming option adjustable-rate mortgage (ARM) resets.

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

California homeowners hold almost 60% of the nation's option-ARMs originated between 2004 and 2008. Approximately 1 million of these mortgages will reset nationwide in the next four years.

In letters to Bank of America, Wells Fargo, J.P.Morgan Chase, Litton Loan Servicing, ResCap LLC, Ocwen Financial Corp., OneWest Bank, American Home Mortgage Servicing, Saxon Mortgage Services Inc. and Select Portfolio Servicing, Brown asks the servicers for data on the option-ARMs they service.

Specifically, Brown wants to know how many option-ARM loans secured by real property located in California each shop is servicing; the number of option-ARM loans that have negatively amortized and the average dollar amount of that negative amortization; an explanation of "all efforts�taken to handle customer service concerns of borrowers with option-ARM loans"; an explanation of loan modification plans developed for option-ARM loans; and the extent to which each shop's approach to modifying option-ARM loans has changed since the beginning of the foreclosure crisis.

Brown requested that the servicers respond by Nov. 23.

SOURCE: Office of California Attorney General Edmund G. Brown Jr.


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