Turns out that, according to the WaPo, the reason lenders have been so slow to react to the flood of foreclosures has been that they're "swamped", there are so many of them.
Seven out of 10 troubled mortgage borrowers remain without a plan to work out their loans despite increased industry efforts to help them, according to a new report from a coalition of state attorneys general and banking regulators.
The group collected data from 13 of the largest subprime lenders from October through January and found that the lenders are overwhelmed by their workloads and unable to keep pace with the number of borrowers who are falling behind on payments.
"There still seems to be a disconnect between homeowners and their mortgage servicers," said Mark E. Pearce, North Carolina's deputy commissioner of banks. The report is the most recent effort to assess how well lenders are responding to foreclosure problems as they face increased pressure from policymakers and consumer advocates to provide swifter and more meaningful help. It also represents the only public attempt by a non-industry source to collect such loan data across states.
(emphasis added)
Yeah, well.... It's hard to feel sorry for them and almost as hard to accept that this is all such a big surprise to them given how hard and for how many years they worked to set up the conditions that would allow their massive rip-off. I suspect that what surprised them isn't really the huge numbers of people they swindled so much as the fact they didn't manage to lay off their bet on someone else and are in the position of having to actually deal with something they had intended to bail out on months ago.
The problem as it stands now with many of them is no longer, it seems, one of a lack of strategies so much as simply surviving the sheer numbers of homeowners they hoodwinked.
Instead of rescheduling missed payments, more lenders reduced the overall burden by modifying loan terms. They lowered interest rates or extended the term of the loan to cut payments. Less often, they forgave part of the principal.
But the lenders are failing to make headway because they can't keep up with the number of delinquent loans. About 50,000 more loans were modified in January than in October, Pearce said. But 90,000 additional loans became delinquent during that time.
The coalition, which represents 11 attorneys general, two state banking departments and the Conference of State Bank Supervisors, said the lending industry will not make a dent in the foreclosure crisis if it continues to address the problems on a case-by-case basis.
Instead, it needs to change the system so that borrowers with similar problems are automatically handled the same way, the coalition said.
But...but...that's what the merchant banks have been fighting so desperately to keep the Congress from doing - changing the system the investor class still thinks will make them rich if they can just hang on long enough. The immediate nature of the crisis, however, seems to have left them no choice but to take it on. Nevertheless, they continue to resist systemic changes that might actually impact the crisis in favor of a long drawn-out process of individual negotiations that might save them a few bucks in the short run but cost the country its economy in the long term.
I know bankers are conservative and all but there's a time for everyone to change. Even them.
I think they're just very reluctant to give up the supposed cash cow they fought for so many years to acquire. What they need to do is face the fact that that cow is so sick they'll spend a lot more doctoring it than if they just replaced it with a healthier if less prolific milker.
But have you ever tried to talk sense to Mr Greed? Doesn't work.
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