Ongoing flood of foreclosures seen as threat to recovery
Home-foreclosure filings exceed 6,600 per day, the Center for Responsible Lending reports, and there have been nearly 2 million already this year. More than 6 million families could face foreclosure over the next three years, Michael Barr, the Treasury Department's assistant secretary for financial institutions, said last month. The flood of foreclosures could wash out any economic recovery, Barr warned. CNBC/Reuters (10/8)
Banks, regulators work to prevent wave of option-ARM mortgage defaults: Obama administration officials and bankers are working to stave off an expected wave of defaults on pay-option adjustable-rate mortgages, banking sources said. A large number of these so-called option-ARMs mortgages will reset and call for higher payments soon, but a vast number of borrowers already can't meet their payments. The administration wants lenders to forgive some of the principal on these loans, but banks would like to see another solution. The Wall Street Journal (10/7)
Wachovia computer bug has limited mortgage modifications: A problem with computer software is preventing Wells Fargo unit Wachovia from modifying the majority of its distressed-mortgage holders under the Obama administration's $75 billion foreclosure-prevention plan, according to Michael Heid, co-president of Wells Fargo Home Mortgage. Wachovia has been able to process modifications for only 2% of its mortgage holders during a trial period. Wachovia will begin processing a larger number of loan modifications under the administration's program in the next couple of weeks, Heid said. The Wall Street Journal (10/8)
