Study: loan workouts harder to get in California

Yesterday, Bank of America announced it made 12,700 permanent loan modifications in January, nearly quadruple the figure for the month before. But that bank still has about a million mortgages that are at least 60 days delinquent.

And it turns out that when it comes to loan modifications, borrowers in California may be even worse off than those elsewhere. Kevin Stein of the California Reinvestment Coalition recently released a study of loan modification data for five California cities. Here’s what he found:

KEVIN STEIN: Loan modifications are hard for everyone to get, but they seem like they’re harder for people in California to get. Though we are overrepresented in the foreclosure crisis, we are underrepresented when it comes to foreclosure solutions.

Stein says his organization believes that’s partly because the Obama administration’s Home Affordable Modification Program doesn’t effectively deal with two of California’s biggest problems: high unemployment and borrowers who owe more than their home is worth.

STEIN: So the national solution that’s in place really doesn’t do enough for people in the places that we’re concerned about in California.

Stein sees the lack of loan modifications as part of a larger trend towards what he calls re-redlining. He says in the nineties, big financial institutions targeted communities of color for high-cost predatory loans, which resulted in high concentrations of foreclosures.

STEIN: And these same neighborhoods are now, we believe, having a harder time getting new access to credit that can help maybe start to revitalize neighborhoods. We’re seeing kind of a different aspect of the story, but it’s a continuation of the story of these large financial institutions doing damage to neighborhoods in California and neighborhoods of color in particular.

How has your neighborhood been affected? Or, do you work for a mortgage lender? Do you think banks’ role in the financial crisis has been represented fairly?