The Federal Reserve urged residential mortgage loan servicers earlier today to review their ability to help borrowers at risk of defaulting on their homes and to pursue loss mitigation strategies with an eye towards preserving homeownership. “Appropriate loss mitigation strategies may include, for example, loan modifications, deferral of payments or a reduction of principal,” the agency said in a statement. “In addition, institutions should consider referring appropriate borrowers to qualified homeownership counseling services that may be able to work with all parties to avoid unnecessary foreclosures.” A significant number of homeowners with hybrid adjustable-rate mortgages should see their mortgages reset throughout the rest of this year and during the next year, likely putting those borrowers at risk of defaulting on their loans.
Fed To Servicers: Give Borrowers Helping Hand