Lenders Mostly Resisted Calls From Government Urging Loan Modification To Stop Foreclosures

Lenders have mostly resisted calls from housing advocates, legislators and government legislation urging them to help stem the foreclosure tide by remodifying loans to include lower interest rates and monthly payments. And borrowers have fared no better, with many delinquent homeowners on Long Island unable on their own to break through to communicate with lenders and loan-servicing companies. Some lenders and servicers are so swamped with calls from distressed homeowners that it can take weeks to return calls.

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After she was laid off two years ago, Rosemarie Cino tried talking to her mortgage lender when she fell $8,000 behind on her mortgage despite her jobs walking dogs, cleaning swimming pools and driving for Federal Express.

"They didn't even want to talk to me," said the Islip resident, who has two dogs. "They were like, 'Pay or we're taking your house.' They asked about what I spend on food. When I said I had to buy dog food, they suggested I get rid of my dogs."

A year after the subprime mortgage collapse, millions of homes have fallen into foreclosure as the economy has soured and struggling homeowners buckle under the weight of higher payments on escalating adjustable rates and mortgage balances far in excess of their home's value.

Lenders have mostly resisted calls from housing advocates, legislators and government legislation urging them to help stem the foreclosure tide by remodifying loans to include lower interest rates and monthly payments. And borrowers have fared no better, with many delinquent homeowners on Long Island unable on their own to break through to communicate with lenders and loan-servicing companies. Some lenders and servicers are so swamped with calls from distressed homeowners that it can take weeks to return calls.

Notable deaths Inching closer to foreclosure, desperate homeowners are seeking out nonprofits and a growing number of for-hire negotiators. Housing advocates and loan modification or loss mitigation firms advise clients on required paperwork and steps that show how they can get back on the payment track -- all before negotiating with the lenders or servicers.

But after the explosion in the number of mortgages for people who didn't qualify, nonprofits and other industry veterans call for caution over this latest wave of sales pitches to needy homeowners, which also includes those who are behind on payments but don't have subprime loans.

The job of the loan modifier and housing advocate is to persuade the lender or servicer to rework terms into payments that the homeowners can afford. They try to lower rates, reduce monthly payments by extending the mortgage term, get cuts in the principal owed, switch adjustable rates to fixed, and make other changes.

Some firms and advocates succeed by emphasizing hardships, such as layoffs or accidents that led to hospitalization. Some pore over clients' mortgage papers for law violations as bargaining chips. Those who once worked in the mortgage world say they use their connections to lenders.

"There really wasn't a need for this until about a year ago, if that, because you could get a mortgage in a heartbeat," said Michael Attina, a former mortgage bank manager who founded Manhattan Mitigation in April and last month opened a South Huntington office. "That's what we're cleaning up right now."

Lately, with Wall Street giants dying and asking for a government rescue, the increasingly unstable economy has led to more lenders and servicers being amenable to loan "workouts," some nonprofits and loan modification companies said.

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