Editorial: Ignorance Is Not Bliss.(Editorial)

Servicers are facing a vortex of woes these days. Poorly underwritten loans are heading toward default, public sympathy is on the side of borrowers, and too few of them know what servicers can do to help them avoid foreclosure. Most defaulted borrowers go to foreclosure without ever responding to their servicers outreach efforts. Yet they still blame the lender for their problems. Adding to the misery: plaintiff's attorneys and consumer advocates are zeroing in on lenders, both with litigation and legislative proposals that could prove burdensome to the industry. Most recently, several large servicers have been targeted by cities that claim their lending practices have driven up foreclosures in urban areas, creating a "public nuisance."

Over and over, we hear that fewer than half of borrowers who go to foreclosure ever respond to their lender's efforts to reach them. This is a problem the industry is addressing on multiple fronts, as servicers come under increasing pressure to proactively pursue workout strategies that are designed to keep borrowers in their homes. All too often, when you tune into ...