A nationwide community group has found that tens of thousands of homeowners who were displaced by Hurricane Katrina are not being offered the mortgage relief that has been highly publicized in recent weeks. As if the devastation from the storm was not enough, these same homeowners could face foreclosure by the end of the year.
ACORN found that the subprime mortgage industry is offering suspended mortgage payments, late fee waivers, and suspension of credit bureau reporting for the month of September only, while the prime mortgage industry is offering these same relief measures, along with a moratorium on foreclosures, for 3 months, and in some cases for up to 12 months. Additionally, most prime mortgage servicers are automatically granting relief to those homeowners living in the FEMA designated disaster areas; but much of the subprime industry is only offering relief to those displaced homeowners who call and request it.
“The communities that suffered the most from Katrina and the ineffective government response are now receiving inferior and disparate treatment from our nation’s financial system,” said ACORN President Maude Hurd. “Equal treatment and a chance to get back on their feet is not too much to ask for the homeowners in our communities. Those that have more expensive loans to start with should certainly get the same consideration as other borrowers.”
ACORN found that this was particularly true with displaced homeowners with loans from Wells Fargo Mortgage, the company’s prime mortgage channel. Wells Fargo Mortgage customers are being provided an automatic 90 day deferment. Displaced homeowners with loans from Wells Fargo Financial, the company’s subprime mortgage unit, are only being offered relief on a case by case basis, and only if they contact the company.
