There is a detailed 27 page proposal ("code of conduct") by states attorney generals and some federal agencies to settle apparent bad practices by mortgage servicers. The specifics include specific loan modification time lines; the freeze foreclosure action once a loan modification application is received; limits on bank fees charged to delinquent borrowers; and improved tracking to get away from using the MERS (Mortgage Electronic Registration System) that causes problems of identity of who owns the loan.
Another effort by the Obama Administration is to hold large banks responsible to "write-down" up to $20 Billion (of the $744 Billion more than their homes are worth) of mortgage loan balances as a penalty for sloppy mortgage practices. There is a belief that a large single settlement may avoid several smaller suits from several federal agencies would tie up the banks in courts for years.
Note of interest: Loans that went through foreclosure in January 2011 were delinquent for an average of 507 days.
Source: WSJ, 3/5-6/2011, B1 and 2-25-2011
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