Teaneck - Standing with a local homeowner facing unemployment and mortgage concerns, U.S. Senator Robert Menendez (D-NJ) today announced dual actions meant to address the foreclosure crisis. Menendez hailed a new allocation of $188 million for New Jersey from the federal government's "Hardest Hit Fund," meant to assist families with unemployed workers who are also on the verge of foreclosure. This federal investment is part of $300 million total that will come to New Jersey from the program.
In addition, as Chairman of the Senate Banking Subcommittee on Housing, Transportation and Community Development, Menendez today demanded answers from banks and mortgage service companies about the growing flawed "rubber-stamp" foreclosure scandal. Major banks have halted foreclosures in 23 states, including New Jersey, upon revelations that at least tens of thousands of foreclosures per month were authorized in large batches without proper due diligence.
On the Hardest Hit funding, Menendez said: "This mortgage safety net will be available to those who need it the most in these tough times: laid off workers on the brink of losing their homes. They are confronted by a job lost through no fault of their own and a home on the verge of being taken away -- that's just about the hardest one-two punch a tough economy like this can throw at a family. We're delivering this assistance to soften that blow, so that families can stay standing as their breadwinners look for new jobs, and so that our economy can fully recover without more setbacks."
On the flawed foreclosure letters, Menendez said: "To learn that some financial institutions have treated foreclosures as a rubber-stamp process is deeply troubling. After all that has transpired in our economy, Wall Street should act responsibly toward and cooperatively with Main Street families. This rushed and bureaucratic approach to actions as significant as foreclosures would suggest otherwise. I want to know how deep this problem goes and what safeguards are now in place to prevent unjustified rubber-stamp foreclosures from happening in the future."
The Hardest Hit investment will help fund the NJ Home Keeper program, to be administered by the New Jersey Housing and Mortgage Finance Agency in the coming months. That program will provide interest free loans to unemployed and underemployed homeowners for up to two years and $48,000. They are deferred generally until the homeowner is in good enough employment standing to repay the loans.
On the rubber-stamp foreclosure issue, Menendez wrote to JP Morgan Chase, Bank of America and Ally Financial, all of which have announced foreclosure freezes, asking for details on what those banks are doing to determine which foreclosures were flawed and how they are rectifying those situations. In addition, Menendez also wrote to 117 mortgage servicing companies, asking whether they have reviewed their foreclosure process, whether measures have been taken to address flaws and if statistics about potentially flawed foreclosures have been compiled. In addition, Menendez and Senator Al Franken (D-MN) requested that the Government Accountability Office investigate whether shortcomings in federal regulators' oversight had any role in allowing flawed foreclosure processes to occur.
PDFs of letters:
JP Morgan Chase: http://menendez.senate.gov/imo/media/doc/20101005ltr_JPMorgan.pdf
Bank of America: http://menendez.senate.gov/imo/media/doc/20101005ltr_BoA.pdf
Ally Financial: http://menendez.senate.gov/imo/media/doc/20101005ltr_Ally.pdf
Mortgage Servicers (identical letter sent to 117 companies): http://menendez.senate.gov/imo/media/doc/20101005ltr_MortgageServicers.pdf
GAO: http://menendez.senate.gov/imo/media/doc/20101005ltr_GAOMortgages.pdf
Text of letters:
LETTER TO MORTGAGE SERVICE COMPANIES (IDENTICAL LETTER SENT TO 117 COMPANIES):
October 4, 2010
[Name of Mortgage Servicer]
Dear [CEO]:
I write to you today regarding several recent news reports detailing flawed foreclosure proceedings and lax servicer oversight.
As you are well aware, Ally Financial, J.P. Morgan Chase and Bank of America have halted their foreclosure proceedings after flawed paperwork and careless oversight procedures were discovered. While Ally Financial has declined to comment on the number of homeowners that may be affected, J.P. Morgan Chase's decision will affect 56,000 borrowers in 23 states, after it was revealed that approximately 18,000 foreclosures per month had been approved by the company without the necessary due diligence. Bank of America will also halt foreclosures in the same 23 states.
It is simply inexcusable that proper oversight proceedings were not in place, especially when dealing with matters as monumental as the seizure of a family's home. At least one credit rating agency, Fitch, states that it believes this problem is widespread among banks and servicers, which raises the question of whether other banks should impose a moratorium until this lack of oversight is corrected.
As Chairman of the Senate Subcommittee on Housing, Transportation, and Community Development, I have several inquiries regarding your company's foreclosure processes:
• Have you reviewed your own foreclosure processes in light of these revelations? If so, please detail this review.
• What steps have you taken to ensure that your own foreclosure processes will not experience the same problems exhibited by Ally Financial, J.P. Morgan Chase and Bank of America? Have you devoted sufficient resources toward this goal given the scope of the problem? Please provide specifics.
• If you have discovered problems with your foreclosure proceedings, what steps have you taken to make whole homeowners who have been adversely affected?
• Please provide statistics detailing your own foreclosure proceedings, including the number of foreclosures that have been investigated, the number that have shown mistakes, and what kind of mistakes those were.
Unfortunately, I continue to hear numerous experiences of New Jerseyans expressing their frustration with the mishandling of bank foreclosure proceedings, and this recent disclosure will bring even more public outrage. I strongly believe that a full accounting and public transparency concerning this revelation is in the best interest of all parties.
Thank you for your attention to this matter. I look forward to your response.
Sincerely,
ROBERT MENENDEZ
United States Senator
LETTER TO JP MORGAN CHASE:
October 4, 2010
Mr. Jamie Dimon
Chief Executive Officer
J.P. Morgan Chase
270 Park Ave.
New York, NY 10017-2070
Dear Mr. Dimon:
I write to you today regarding J.P. Morgan Chase's foreclosure procedures. I have read with great interest and concern the troubling recent press reports detailing the flawed handling of homeowner paperwork and lax oversight, which may have broad ramifications for thousands of Americans who unfortunately have lost their home already or currently find themselves in foreclosure proceedings.
As you are well aware, a company executive testified in a sworn deposition that she and her team had approved approximately 18,000 foreclosures per month without completing proper due diligence to ensure these proceedings were justified. While I applaud your decision to halt foreclosure proceedings in light of these findings, and while your company is certainly not solely to blame for the country's foreclosure problems, it is inexcusable that proper oversight procedures were not in place, especially when dealing with matters as monumental as the seizure of a family's home. According to published reports, your decision to halt foreclosure proceedings will affect 56,000 borrowers in 23 states, including my state of New Jersey. Obviously, this will cause greater uncertainty in a market that is showing signs of a rebound, but still struggling to find its footing.
J.P. Morgan Chase officials have said that while the firm "does not expect to find any factual problems" or cases of "customers [being] harmed," it will "take appropriate action" if problems or customer harm is indeed uncovered. Given the scope of the admissions, however, it seems extraordinarily difficult to believe that no customers have been foreclosed on who should not have been.
As Chairman of the Senate Subcommittee on Housing, Transportation, and Community Development, I ask that you fully document, both to me and to the general public, your efforts to re-evaluate all homes that have already been foreclosed, and make whole those homeowners whose houses have been unjustly foreclosed. Quite simply, the owners of these homes deserve no less.
Unfortunately, I continue to hear numerous experiences of New Jerseyans expressing their frustration with the mishandling of bank foreclosure proceedings, and this recent disclosure will bring even more public outrage. I strongly believe that a full accounting and public transparency concerning this revelation is in the best interest of all parties.
Thank you for your attention to this matter. I look forward to your response.
Sincerely,
ROBERT MENENDEZ
LETTER TO BANK OF AMERICA:
October 4, 2010
Kenneth Lewis
Chief Executive Office
Bank of America
100 North Tyron Street
Charlotte, NC 28202
Dear Mr. Lewis:
I write to you today regarding Bank of America's foreclosure procedures. I have read with great interest and concern the troubling recent press reports detailing the flawed handling of homeowner paperwork and lax oversight, which may have broad ramifications for thousands of Americans who unfortunately have lost their home already or currently find themselves in foreclosure proceedings.
As you are well aware, a company executive testified in a sworn deposition that she had approved approximately 8,000 foreclosures per month without completing proper due diligence to ensure these proceedings were justified. While I applaud your decision to halt foreclosure proceedings in light of these findings, and while your company is certainly not solely to blame for the country's foreclosure problems, it is inexcusable that proper oversight procedures were not in place, especially when dealing with matters as monumental as the seizure of a family's home. According to published reports, your decision to halt foreclosure proceedings will affect borrowers in 23 states, including my state of New Jersey. Obviously, this will cause greater uncertainty in a market that is showing signs of a rebound, but still struggling to find its footing.
The employee in question pointedly was quoted under oath as saying, "I typically don't read [foreclosure documents] because of the volume we sign." This revelation is simply indefensible.
As Chairman of the Senate Subcommittee on Housing, Transportation, and Community Development, I ask that you fully document, both to me and to the general public, your efforts to re-evaluate all homes that have already been foreclosed, and make whole those homeowners whose houses have been unjustly foreclosed. Quite simply, the owners of these homes deserve no less.
Unfortunately, I continue to hear numerous experiences of New Jerseyans expressing their frustration with the mishandling of bank foreclosure proceedings, and this recent disclosure will bring even more public outrage. I strongly believe that a full accounting and public transparency concerning this revelation is in the best interest of all parties.
Thank you for your attention to this matter. I look forward to your response.
Sincerely,
ROBERT MENENDEZ
LETTER TO ALLY FINANCIAL:
October 4, 2010
Michael A. Carpenter
Chief Executive Officer
Ally Financial
200 Renaissance Drive
Detroit, MI 48201
Dear Mr. Carpenter:
I write to you today regarding Ally Financial's foreclosure procedures. I have read with great interest and concern the troubling recent press reports detailing the flawed handling of homeowner paperwork and lax oversight, which may have broad ramifications for thousands of Americans who unfortunately have lost their home already or currently find themselves in foreclosure proceedings.
As you are well aware, a foreclosure specialist at your own company testified in a sworn deposition that he signed off on hundreds of foreclosures per day without completing proper due diligence to ensure these proceedings were justified. While I applaud your decision to halt foreclosure proceedings in light of these findings, and while your company is certainly not solely to blame for the country's foreclosure problems, it is inexcusable that proper oversight procedures were not in place, especially when dealing with matters as monumental as the seizure of a family's home. According to published reports, your decision to halt foreclosure proceedings will affect 56,000 borrowers in 23 states, including my state of New Jersey. Obviously, this will cause greater uncertainty in a market that is showing signs of a rebound, but still struggling to find its footing.
As Chairman of the Senate Subcommittee on Housing, Transportation, and Community Development, I ask that you fully document, both to me and to the general public, your efforts to re-evaluate all homes that have already been foreclosed, and make whole those homeowners whose houses have been unjustly foreclosed. Quite simply, the owners of these homes deserve no less.
Unfortunately, I continue to hear numerous experiences of New Jerseyans expressing their frustration with the mishandling of bank foreclosure proceedings, and this recent disclosure will bring even more public outrage. I strongly believe that a full accounting and public transparency concerning this revelation is in the best interest of all parties.
Thank you for your attention to this matter. I look forward to your response.
Sincerely,
ROBERT MENENDEZ
LETTER TO GAO:
October 5, 2010
The Honorable Gene L. Dodaro
Acting Comptroller General
U.S. Government Accountability Office
441 G Street NW
Washington, D.C. 20548
Dear Mr. Dodaro,
We are writing to request that the GAO conduct an investigation into the reports of misconduct by Ally Financial (formerly GMAC Mortgage), JPMorgan Chase, Bank of America and all other mortgage servicing companies and affiliated banks. We are concerned that shortcomings in policies and procedures at these companies may have resulted in routine filing of false affidavits in foreclosure proceedings. Such actions may have resulted in numerous illegal foreclosures nationwide. As you know, our country is in the midst of a historic foreclosure crisis and the impact of foreclosures on American families is devastating. In light of this crisis, the alleged misconduct by these banks is all the more troubling.
Specifically, we request that the GAO investigate the role of all government entities, including federal regulators, involved in overseeing mortgage servicing companies and affiliated banks, identify any regulatory problems that may have permitted this misconduct to occur without detection until now, and give recommendations on whether the agencies should be given additional authority to remedy these problems. In addition to the broader industry's foreclosure problems, we are especially interested in the actions of GMAC, specifically because of the equity stake taxpayers currently own in the company.
Also, as federal agencies pursue their own inquiries into this matter, we ask that the GAO carefully monitor their efforts and report on any potential gaps in the regulators' current and future investigations of this problem. It is imperative that these investigations are comprehensive. All Americans who have been adversely affected by this wrongdoing should receive proper compensation and restitution.
If you have any questions regarding this request, please don't hesitate to contact Lauren Gilchrist on Senator Franken's staff at (202) 224-5641 or Michael Passante on Senator Menendez' staff at (202) 224-3551. Thank you in advance for your prompt response.
Sincerely,
Al Franken Robert Menendez
United States Senator United States Senator
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