Lying brokers and more subprime nightmares

Many homeowners who were subject to predatory lending practices - including brokers who misrepresented payments - are trying to rework their loans. Few are having any luck. The problem is that servicers don't have the power to renegotiate a loan. Because they don't actually own the loan and therefore they can't make changes to the payment plan. Most mortgages aren't owned by a single bank. Instead, they are packaged and sold to investors on the secondary market, which means that loan servicers are actually beholden to investors, not borrowers. And it's much harder for troubled borrowers to get a deal that permanently lowers their mortgage payments. The Hope Now Alliance of mortgage lenders and servicers, including Citigroup, Bank of America and JP Morgan Chase, says it has kept over one million borrowers out of foreclosure since July. But only about one quarter of them - 278,000 - have actually had the terms of their mortgages modified. With an apparent stalemate between lenders and borrowers, will people be forced to go into foreclosure or even to just walk away!

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