Alberto Torrico (D)
Pedro Nava (D)
LOS ANGELES (Legal Newsline) -- A state lawmaker and Democratic candidate for California attorney general will hold a legislative hearing Monday to probe how loan modification programs are affecting communities of color.
State Assembly Majority Leader Alberto Torrico, D-Fremont, said he wants to explore ways to help struggling California homebuyers stay in their homes.
"The foreclosure crisis has turned the American Dream into a nightmare for millions of Americans who can no longer pay their mortgages," Torrico said.
He noted that the $75 billion federal Home Affordable Modification Program is "failing," with fewer than 5 percent of mortgage modifications being made permanent.
Federal data indicates that the Los Angeles County and Orange County region of Southern California accounted for nearly 6 percent of all the temporary and permanent loan modifications made under the White House program.
Nationally, Bank of America Corp. led mortgage servicers making 158,562 trial modifications as of this month. JPMorgan Chase & Co., had 143,027 trial modifications, while CitiMortgage Inc., a unit of Citigroup Inc., had 103,478 trial modifications. GMAC Mortgage Inc. had 28,275.
Officials say only a small percentage of trial modifications have been made permanent.
As of Sept. 1, about 1 percent of all trial mortgage adjustments were made permanent after three months, according to the Congressional Oversight Panel, which monitors the U.S. Treasury Department's bailout funds.
Last month, California had the nation's third-highest foreclosure rate, dropping from No. 2, according to a report by Irvine, Calif.-based RealtyTrac.
In all, the company said, 73,995 properties received either a default notice, had a scheduled foreclosure auction or bank repossession.
In the third quarter, the combined percentage of loans in foreclosure or at least one payment past due was 14.4 percent, the highest percentage ever reported by the Mortgage Bankers Association, based in Washington.
"More reforms are clearly needed to bring real hope to the struggling families who are scared to death of losing their homes," said Torrico, who is vying to succeed fellow Democrat Jerry Brown as California's chief legal officer.
"People are desperate and want to have their loans modified so they can keep their homes," Torrico said. "We are going to hear from organizations that work with these people to explore the loan modification process, see which financial institutions are working with families and which ones are not, and how the process is affecting communities of color."
Last month, state Assemblyman Pedro Nava of Santa Barabara, another Democratic candidate for attorney general, held a hearing on how best to stem the tide of home foreclosures.
Nava, chairman of the Assembly Banking and Finance Committee, has introduced legislation that would allow homeowners who have been served a notice of default to enlist the help of a state-appointed monitor to negotiate lenders with the goal of lowering monthly payments.
From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.