(charlotteobserver) If you're facing foreclosure, don't count on your lender to bail you out. That's the emphasis of a study released Thursday by a pro-consumer task force formed last summer to brainstorm how to combat the country's rising tide of foreclosures. The group includes representatives of 11 state attorneys general and two state banking departments, including the N.C. attorney general and the N.C. banking commissioner. The study lays the foreclosure blame on mortgage lenders, not the borrowers. Lenders have said they are working with troubled homeowners; the report found that servicers had modified more than 150,000 delinquent loans, about 19 percent of delinquencies. Among its findings, which are based on data from 13 of the country's top 20 subprime-mortgage servicers: • About 70 percent of people in danger of foreclosure aren't doing anything about it. • Among those who are, about three-quarters are simply pinching their pennies and catching up on their payments. Before the country's housing market took a serious tumble around early 2006, many people could avoid foreclosure by refinancing their homes or selling them. Now, in a housing downturn, that's not a viable option: Only 4 percent of the people who are trying to avoid foreclosure were able to refinance or sell their homes, the report states. • Adjustable-rate mortgages aren't the only problem: Many people are defaulting on their mortgages even before they reset to higher rates. Thirty-three percent of the delinquent subprime loans studied have not reset yet, the state's group found. And only 3 percent of the delinquent loans entered delinquency within three months of a reset. This year, about 700,000 mortgages will reset to higher interest rates for the first time, and more will reset for the first time in 2009. Foreclosures have risen steeply over the past year. Earlier this decade, many mortgage lenders loosened their underwriting standards and handed out loans to people with shaky credit. Those borrowers were more likely to default on their loans, but the lenders could make more money off them by charging higher interest rates.

Join BBN for free to post a comment. If you already have an account, please login here to post a comment. You will be returned to this page after logging in.