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DODD ASKS ADMINISTRATION TO LOOK OUT FOR HOMEOWNERS

Alleged Abuses May Be Hurting Efforts to Keep Families Keep Their Homes

July 24, 2009

WASHINGTON – Senate Banking Committee Chairman Chris Dodd (D-CT) asked the Administration to look into accusations that companies are setting up roadblocks to efforts to modify mortgages and keep people in their homes. 
 
Last week, Dodd chaired a hearing on what more needs to be done to prevent foreclosures.  One witness alleged companies charged with modifying mortgages were providing customers with false information. 
 
Yesterday, Chairman Dodd sent Treasury Secretary Geithner and Housing and Urban Development Secretary Donovan a letter asking them to look into those allegations.  
 
Diane Thompson of the National Consumer Law Center testified that several mortgage servicers participating in the Home Affordable Modification Program, a key component of efforts to prevent foreclosures, are violating program guidelines by:
·         demanding payments from homeowners before reviewing their cases,
·         denying help to homeowners not already in default, and
·         initiating foreclosure proceedings before the reviews of their cases are complete.   
 
Dodd’s letter is below and attached.
 
July 23, 2009
 
The Honorable Timothy F. Geithner              
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
 
The Honorable Shaun Donovan
Department of Housing and Urban Development
451 7th Street, SW
Washington, D.C. 20410
 
Dear Secretary Geithner and Secretary Donovan:
 
On July 16, 2009 the Senate Banking, Housing and Urban Affairs Committee held a hearing titled “Preserving Homeownership: Progress Needed to Prevent Foreclosures.”  One of the witnesses on this panel, Diane Thompson of the National Consumer Law Center, raised a number of very serious concerns about the conduct of servicers participating in the Home Affordable Modification Program (HAMP).  I have enclosed her testimony with appendices which details the problems to which she testified.  I am writing to bring these concerns to your attention and to ask you to look into these claims.
 
Specifically, Ms. Thompson reports that several participating servicers are in violation of HAMP guidelines by:
 
·    Demanding upfront payments in advance of review or trial modification;
 
·    Requiring homeowners to waive all claims and defenses in order to apply for a review;
 
·    Denying loan modification reviews to homeowners who are not yet in default; and
 
·    Initiating foreclosures and selling homes while HAMP reviews are still pending.
 
It is my understanding that HAMP prohibits each of these activities. 
 
I would greatly appreciate it if you could look into the concerns Ms. Thompson has expressed.  If true and widespread, abuses of this kind threaten to undermine the effectiveness of the HAMP program and deny the relief on which so many Americans are depending for their financial stability. 
 
These problems also underscore the importance of ensuring transparency in both the program guidelines and their implementation.  The federal government is funding a significant number of foreclosure prevention counselors.  If the rules and procedures governing the program are made public, these counselors and other interested parties can help ensure that Treasury guidelines are followed and mistakes prevented or expeditiously corrected.  Transparency can help ensure accurate and timely results, and I urge you to require openness in the operation of this important program.
 
I thank you in advance for your time and efforts in responding to this inquiry.
 
                                                                        Sincerely,
 
 
 
                                                                        Christopher Dodd
                                                                        Chairman
Senate Banking, Housing and Urban Affairs Committee
 
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