Chairman Of Senate Housing Subcommittee Urges Mortgage Companies To Pick Up Pace Of Loan Modifications

Chairman Of Senate Housing Subcommittee Urges Mortgage Companies To Pick Up Pace Of Loan Modifications

With Banking Committee set to conduct loan modification hearing Thursday, Menendez letter follows up Geithner-Donovan letter

Washington - In a letter to the CEOs of 20 major mortgage companies, the Chairman of the Senate Banking Subcommittee on Housing, Transportation and Community Development today raised concerns about the rate of participation in and cooperation with the program meant to help struggling homeowners modify the terms of their mortgages. The letter by U.S. Senator Robert Menendez (D-NJ) follows up on a July 9 letter by Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan to the same CEOs, raising similar concerns. Menendez urged the mortgage companies to review and revise their loan modification efforts to help achieve the goals of the program.

"Our nation's housing crisis is the root of the global economic crisis that we are faced with. Preventing foreclosures helps keep families in their homes, helps the surrounding communities maintain property values and helps lift the economy, which are results that I believe we can all support," wrote Menendez. "I fully expect you to review your company's policies and procedures regarding loan modifications to find a balanced approach that not only ensures the financial viability of your company, but also achieves the goal of the program, which is to reduce consumers' foreclosures on their mortgages. I look forward to hearing the steps your company is taking to achieve more loan modifications."

Menendez will help to chair a Senate Banking Committee hearing on Thursday entitled "Preserving Homeownership: Progress Needed to Prevent Foreclosures," at which representatives of the U.S. Department of Treasury, the U.S. Department of Housing and Urban Development and representatives from mortgage lenders and consumer groups will testify.

The letter was sent to: James Dimon of JPMorgan Chase; Alvaro G. de Molina of GMAC Financial Services; Kenneth D. Lewis of Bank of America Corporation; Vikram Pandit of Citigroup Inc.; Ellen Alemany of Citizens Financial Group; Bruce Rose of Carrington Mortgage Services; Tom Wind of Aurora Loan Services LLC; Derrick D. Cephas of Amalgamated Bank; David Ertel of Bayview Loan Servicing, LLC; Darren Williams of Wescom Central Credit Union; John G. Stumpf of Wells Fargo Bank, NA; Robert Shafir of Credit Suisse Americas; Rolando Rodriguez of RG Mortgage Corportation; John J. Mack of Morgan Stanley; Dennis Stowe of Residential Credit Solutions; William C. Erbey of Ocwen Financial Corporation, Inc.; Anthony Barone of Nationstar Mortgage LLC; Keith A. Anderson of Green Tree Financial Corporation; Karen L. McCormick of First Federal Savings and Loan; and Donald H. Layton of E*TRADE Financial Corporation.

PDF of letter to mortgage companies (this is one example out of 20 identical letters that were sent): http://menendez.senate.gov/pdf/07142009LetterJDimonJPMorganChase.pdf

Text of letter:
July 14, 2009

[CEO Address]
Dear [CEO name],

I write in my capacity as Chairman of the Senate Banking Subcommittee on Housing, Transportation, and Community Development to urge you to expand loan modifications under the Home Affordable Modification Program (HAMP) and to work cooperatively with the Administration's efforts to reduce foreclosures.

As you might know, the Senate Committee on Banking, Housing, and Urban Affairs will examine these and other loan modification issues at a hearing next Thursday, July 16th entitled "Preserving Homeownership: Progress Needed to Prevent Foreclosures." In preparing for that hearing, I have become even more concerned about the progress that lenders, loan servicers, and the federal government are making toward modifying loans to help the national foreclosure crisis.

Our nation's housing crisis is the root of the global economic crisis that we are faced with. Preventing foreclosures helps keep families in their homes, helps the surrounding communities maintain property values and helps lift the economy, which are results that I believe we can all support. However, the Office of the Comptroller of the Currency and Office of Thrift Supervision estimate that servicers implemented about 185,000 new loan modifications in the first quarter of 2009, which is dwarfed by the estimated 2.4 million foreclosures in 2009 according to the Center for Responsible Lending. It is also not clear how effective these modifications are in preventing foreclosures. I understand that Treasury Secretary Timothy F. Geithner and Department of Housing and Urban Development Secretary Shaun Donovan also sent you a letter to that effect on July 9th. It has been widely reported that lenders and servicers have generally been overwhelmed by requests for loan modifications and have not always succeeded in implementing good systems to deal with those requests with well-trained loan professionals who can provide accurate information for borrowers. Another problem I hear repeatedly is that the loan modifications being offered are sometimes not generous enough to meet the needs of families, many of whom have experienced recent unemployment.

In light of these and other problems, I fully expect you to review your company's policies and procedures regarding loan modifications to find a balanced approach that not only ensures the financial viability of your company, but also achieves the goal of the program, which is to reduce consumers' foreclosures on their mortgages. I look forward to hearing the steps your company is taking to achieve more loan modifications.


Sincerely,

ROBERT MENENDEZ
United States Senator

# # #