WASHINGTON — U.S. Senators Jeff Merkley (D-OR), Olympia Snowe (R-ME), Jack Reed (D-RI) and Sheldon Whitehouse (D-RI) offered the Regulation of Mortgage Servicing Act of 2011 as an amendment to the Public Works and Economic Development Reauthorization Bill. The mortgage servicing bill would help homeowners stay in their homes by ending some of the well-documented abuses by mortgage servicers leading to foreclosures, and would produce a positive ripple effect through the economy by reducing the overall number of foreclosures.
The bill would require banks and other mortgage servicers to create a single point of contact for borrowers, end the dual track process of foreclosing homes while homeowners are negotiating a modification, and provide an independent, third-party review before sending a family to foreclosure.
“Two and a half years after the federal government took extraordinary actions to save the big banks from the fire they set in the housing markets, millions of families are still seeing their home values go up in smoke,” said Senator Merkley. “This economic development bill is designed to help get people back to work, but we won’t get the economy moving again until we deal with the foreclosure crisis. Since foreclosures bring down the prices of surrounding homes, everyone loses when a family is not given a fair chance to refinance. This mortgage servicing amendment will help to keep families in their homes, producing a win-win benefit for families and local economies.”
“Rampant and enduring home foreclosures hurt families, neighborhoods, communities and the health of the economy overall,” said Senator Snowe. “I am pleased to offer this vital legislation as an amendment to the Economic Development Act in the hopes of staving off unnecessary foreclosures caused by confusing communications with loan servicers and misfiled or flawed paperwork.”
“The foreclosure processing system is broken and hindering our economic recovery. Establishing a clear set of rules and procedures will prevent more faulty foreclosures and protect troubled borrowers who have often been misled into expecting loan modifications that never materialized. Nationwide, we have seen a spike in foreclosure-related complaints, and this amendment sets clear guidelines that will level the playing field for everyone,” said Senator Reed.
“All too often, Rhode Islanders who are eligible for loan modifications are pushed into foreclosure due to administrative incompetence on the part of the mortgage servicers. I have heard from countless constituents who get bounced from department to department and person to person, wasting hours on the phone and always having to start over – like some nightmare ‘Groundhog Day.’ By requiring servicers to provide homeowners with a single point of contact and to exhaust options before resorting to foreclosure, we will help protect our families, neighborhoods, and property values,” said Senator Whitehouse.
Recent reports show that the housing crisis is worsening again, with the S&P/Case-Shiller index of housing prices falling for nine months straight, last week reaching the lowest level since 2002. With many Americans’ most significant investment being their home, the continuing decline in real estate prices is putting a drag on the entire economy. Just over 1 million homes have been foreclosed on in the past year, and housing experts conclude that there are potentially 5 to 8 million more homes heading towards foreclosure.
Co-sponsors of the bill on which the amendment was based include Senators Jack Reed (D-RI), Dick Durbin (D-IL), Daniel Inouye (D-HI), Ron Wyden (D-OR), Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Jeanne Shaheen (D-NH), Richard Blumenthal (D-CT), Mark Begich (D-AK), Carl Levin (D-MI), and Claire McCaskill (D-MO). The legislation is also supported by the following organizations: the Center for Responsible Lending, the National Consumer Law Center, the Consumer Federation of America, the National Community Reinvestment Coalition, and the National Council of La Raza.
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