|“The lack of restraint amongst our mortgage services has created a moral hazard juggernaut that at best prolongs and deepens the entire foreclosure crisis and at worst threatens our global economic security”
Dave Lowman Lies
No sooner did a spokesperson for the banks, Dave Lowman, CEO of JP Morgan Chase, say that his company was doing everything possible to help homeowners, around a dozen people seated in the hearing stood up and interrupted him. Unfurling a banner reading “Dave Lowman Lies,” one man shouted that Lowman had committed perjury and that the committee needed to listen to the homeowners present instead of the bank executives before being removed by security.
Still, other testimonies were surprisingly candid, saying that servicers treated their clients with “contempt,” and had acted lawlessly and illegally. Diane Thompson of the National Consumer Law Center referred to HAMP only as a “failure” and cited cases where lenders told borrowers to default and then denied them a loan modification anyway, among other examples.
The congressmen overseeing the hearing grilled the CEOs of MERS (“MERS is part of the problem,” Senator Richard Shelby R-GA), the President of Bank of America Home Loans (“You built in very serious long term resistance to dealing with customers”, Senator Robert Bennett, R-UT), and others for close to three hours.
Time for Solutions
In the meantime, the state attorneys general investigation has met with the major lenders several times, with discussions so far seeking to end the possibility of foreclosure for homeowners undergoing a loan modification. The Washington Post also said that there have been talks about creating a “fund to compensate borrowers who can prove they lost their home in an improper foreclosure.”
In Florida, attorneys and activists have long been decrying the lack of transparency in the “Rocket Docket.” Responding to a complaint filed by the ACLU, recently Chief Supreme Justice Charles Canady ordered the foreclosure hearings remain open to the public, after numerous instances of people being barred from these hearings were reported, particularly in South Florida.
During her congressional testimony, Ms. Thompson riddled off a long list of necessary changes, perhaps most importantly: “Funding for mediation and representation of low income homeowners is desperately needed and principal reduction must be mandated. ”
The Center for American Progress also issued a press release this week, urging the Middle Class Task Force run by Vice President Biden to look at the success so far in foreclosure mediation. Operational mediation programs “…see settlements in well over half of their mediations, with a majority of homeowners keeping their homes.” They also asked for borrowers to be automatically sent into mediation when defaulting as many homeowners unknowingly waive their right to mediation or do not have mediation in their area.
If foreclosure is imminent, the recently created Florida mandatory mediation program may be the best option. Click here to find out more about mediation!