Mortgage lenders Fannie Mae and Freddie Mac passed the buck of responsibility during congressional hearing on the foreclosure crisis. If you listened to Fannie Mae and Freddie Mac you would believe that it is the mortgage servicers who are solely responsible for the high number of foreclosures still griping the nation.
"I want to underscore that Fannie Mae does not service loans. We rely on the loan servicing divisions of major banks and other financial institutions as the primary front-line operators and points of contact with the borrowers," said Terence Edwards, executive vice president for credit portfolio management at Fannie Mae. "We pay servicers significant fees during the life of a loan to work with borrowers. Servicers are required under our servicing contracts to help borrowers in trouble, not just collect payments."
Hopefully Fannie Mae does not expect us to believe that they are not responsible for the high number of foreclosures because they don't service the loans. It is a fact that mortgage lenders and servicers are equally responsible for the foreclosure crisis. It was the lack of oversight on the part of mortgage lenders that landed many ill-prepared Americans into toxic adjustable rate mortgages and other "creative" mortgages which made them more vulnerable to foreclosure. And it is the continued refusal of mortgage servicers to honestly try to help troubled homeowners avoid foreclosure. One of the most ill-conceived policies of moving forward with foreclosure while a debtor attempts to modify their mortgage is further proof that the mortgage industry is not giving a real effort in trying to stop foreclosures .
But one good thing that has come out of the congressional hearings on this foreclosure crisis is that some major banks have decided to do away with pursuing foreclosure while a debtor is trying to modify their mortgage. Let's see how quickly they implement that change.