Washington, D.C. – Oregon’s Senator Jeff Merkley, a member of the Senate Banking Committee, issued the following statement Tuesday after the committee’s hearing on the major problems in the national mortgage servicing industry:
“As we strive to create jobs and place American families on sound financial footing, we have to address the problem that plunged the nation into recession in the first place. The housing crisis remains a massive anchor holding back economic growth and hampering financial security for American families.
“Today’s hearing exposed a glaring problem in the mortgage modification process: mortgage servicers are negotiating loan modifications with a homeowner while they simultaneously conduct foreclosure proceedings with the same family. Under this dual-track system, a responsible family can work with their lender to apply for a mortgage modification, submit all of the required paperwork, make trial payments on time, and all the while continue to receive foreclosure notices from the same lender.
“This dual-track model is extremely confusing for homeowners and can cause serious instability and strain within a family. I recently heard from Rebekah and Lawrence Allen of Redmond, Oregon about their attempt to receive a mortgage modification from the Bank of America. The Allens signed a loan modification and were approved for a trial loan modification in 2009. They began making their new payments, but continued to receive foreclosure notices. Confused, they called the bank and were told everything was fine, so they should continue making their payments. They continued to make their loan payments for a year. Then, when the Allens went out of town for a few days, a foreclosure notice was posted on their door. Before long, a representative from the mortgage company came to their home and questioned whether they occupied the property. Despite their attempts to do the right thing, the Allens were subject to enormous levels of stress and embarrassment. It’s wrong that the Allens and millions of families like them been sentenced to suffer through bureaucratic nightmare in an effort to keep their home.
“The Obama Administration has developed the Home Affordable Modification Program to stem the tide of foreclosures, but the program, better known as HAMP, has made too little progress. Even with the HAMP program in place, it has been extremely difficult for homeowners to get permanent mortgage modifications approved by their loan servicers. In its first year and a half, the HAMP program created 466,000 permanent loan modifications. The problem is that we have now seen over 300,000 foreclosure filings each month for 20 consecutive months.
“Swift action is required to stop the trend from continuing and prevent further damage to the economy. To keep families in their homes, we must address this unproductive dual-track modification system, cut down the piles of paperwork that families are forced to sift through, and make mortgage modifications faster and more effective.
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