CA Survey Criticizes Lenders on Modification Efforts.

SAN FRANCISCO -- A survey by the California Reinvestment Coalition here found that "despite what they publicly state," lenders operating in California are not trying to help borrowers modify their loans and avoid foreclosure.

Instead, most borrowers are pushed to foreclosure or short sales. Up to 57% of the surveyed counselors reported foreclosure and 33% reported short sale "as the most common outcomes for borrowers who cannot afford to pay their mortgages," CRC said, leading to more foreclosures in the state.

"The survey findings are distressing. Until lenders begin to deal honestly with this crisis and act in earnest, thousands upon thousands of Californians will suffer from foreclosure and the forced sale of their homes," said CRC associate director Kevin Stein. "The consequences will be devastating."

The survey analyzed data from 33 of California's 80-plus mortgage counseling agencies certified by the Department of Housing and Urban Development to assist borrowers at risk of foreclosure. It notes that as lenders began foreclosure proceedings on nearly 60,000 Californians in August alone, beyond individual duress, it has caused decreases of property values in related neighborhoods, incurred higher costs and lower tax revenue for local governments, and weakened California's broader economy.

Approximately two million loans are facing rising interest rate resets in the U.S. over the next two years, including 500,000 Californians, who may be at risk of foreclosure, Mr. Stein said. In August, counselors who participated in the survey assisted about ...