Consensus at the National Housing Forum yesterday leaned toward the idea that loan modifications
Cue Robert L. Johnson, the founder of Black Entertainment Television and chairman of RLJ Companies. Mr. Johnson, who often combines business ventures with community outreach programs designed to help minorities, has come up with a new way of looking at the problems borrowers have securing good loan mods.
"Over the last several months, my team has been meeting with and briefing key agency leaders about a proposed solution to the problem of the foreclosures on American homeowners," he said. "We are proposing a minority-owned banking enterprise partnership to provide loan servicer advance financing through our bank Homeowners First Bank with lending requirements specifically designed to foster foreclosure prevention."
His proposal to help stop foreclosures targets what he considers to be a neglected slice of the housing crisis: loan servicers.
Never mind that the four largest mortgage servicers in the country are attached to banks that have received government funds under the Treasury Department´s Capital Purchase Program; Mr. Johnson wants the government to give servicers $1 billion, through Homeowners First Bank, to give them more resources to reach out to delinquent borrowers and more time to work on loan modification plans for them.
With that cushion of extra money, Mr. Johnson reasoned, servicers would be under less pressure from the owners of the loans they serviced to foreclose immediately. They could even make a payment or two to the loan owners to give borrowers extra time to get organized if needed. Mr. Johnson estimated that the plan could facilitate up to 882,000 more loan modifications.
His idea didn´t get support at the forum. It wasn´t mentioned again after Mr. Johnson proposed it mid-morning. Later speakers and panels lamented the constraints of contract law and the continuing lack of transparency in the secondary mortgage market that made modifying loans even harder.
