Federal regulators have given the nation's 16 leading mortgage lenders another month to work out how they are going to tackle the widely publicized problems they are facing with loan modification and foreclosure procedures.
Mortgage lenders and servicers were initially given a 45-day deadline by federal regulators to come up with their plans - a deadline which would have finished next Monday. However, the lenders now have another month to work out what they will do, regulators say.
The regulators have already asked lenders and servicers to reimburse those borrowers who have had their homes wrongly foreclosed, they say. Originally, the banks were given 45 days to work with auditors and find out how many of their foreclosed borrowers could have kept their homes had they been given access to workout plans.
Federal regulators have asked servicers to submit workable plans to show how they will improve foreclosure practices and minimize similar problems in the future.
Under the deal, mortgage servicers have also agreed to take steps to make the loan modification process easier for delinquent borrowers by providing them with a single point of contact to discuss their case. Additionally, mortgage servicers have been banned from carrying out loan modification negotiations while working on foreclosing properties at the same time.
Federal officials say that the deadline extension will also give them more time to try and work out a broad settlement with all mortgage lenders and servicers over accusations of widespread foreclosure practice abuses. It's thought that the ongoing talks may lead to a settlement which includes a $20 billion fine and a requirement for lenders and servicers to revamp standards and cut some borrowers loan balances.
Amongst the banks involved are the Bank of America, Wells Fargo, Ally Financial, JP Morgan Chase, HSBC and others.