In a state where 265,000, or 13 percent, of all mortgages were delinquent or already in the process of a foreclosure, New York announced that it began pressing bigger banks to make more effort in averting foreclosures, according to The New York Times. John C. Liu, New York City's comptroller believed that "the federal programs in place just aren't having a desired effect," and the amount of people losing homes "continues to be a drag on [the] regional economy."

Mr. Liu and six large unions plans to send a letter to Citigroup, JPMorgan Chase, Bank of America, and Wells Fargo among other banks that criticizes them for not responding efficiently underwater and delinquent mortgages with "unanswered phone calls, delays in the modification process and multiple requests for homeowners to resend paperwork already submitted."

Bank of America spokesman Richard Simon, however, believes that his bank has effectively taken action, saying that "Bank of America is committed to helping our customers remain in their homes, as demonstrated by 650,000 modifications we have completed since January 2008, including about 160,000 so far this year."

Bank of America also takes part in Obama's Home Affordable Mortgage Plan, or HAMP, a program that began in March 2009 and aims to lessen the amount of foreclosures, according to Mortgage11.com. This $75 billion modification program allows qualified borrowers to reduce monthly payments, net interest rates, loan balances, waive negatively accrued interest, and receive monthly bonus of $1000 as an incentive for borrowers to keep their newly modified loans, according to Mortgage11.com. Qualifications for this plan include that the loan be less than $729,750, the loan should be taken before January 1, 2009, and he or she "should live in his home as his primary residence."

Although HAMP's website says it "is on track to help 3 to 4 million homeowners by 2012," Liu has reason to believe that this federal program might not being "having a desired effect." According to Associated Press, HAMP has lost more than a third of its 1.24 million borrowers since late June. With a total of 436,000 borrowers who have dropped out since the program began, this exceeds the number of borrowers who successfully have their loan payments reduced through the program, a total of 340,000. AP also reported that, although officials believe that those who dropped out of the program receive help in alternative ways, "analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery."

In hopes to better the situation, Liu and the presidents of the six unions expect the banks to respond to the letter by September 1 and might move pension funds and bank deposits to different institutions depending on the responses they receive.

*Any information on all blog entries should not be construed as legal advice. If you have any legal issues, please consult an attorney.