DODD, DEMOCRATS PRESS TREASURY TO USE ITS LEVERAGE TO HELP STRUGGLING HOMEOWNERS

WASHINGTON, DC – In an effort to help stabilize the housing market and ensure that banks and loan servicers are held accountable to requests for needed assistance, U.S. Senators Chris Dodd (D-CT), Jack Reed (D-RI), and 18 of their Senate colleagues sent a letter to U.S. Treasury Secretary Timothy Geithner urging him to develop and implement a strategy requiring banks and loan servicers participating in the Administration’s foreclosure prevention programs to effectively respond to qualified homeowners seeking assistance.

 

“President Obama and his Administration have taken important steps to help families stay in their homes, but more needs to be done,” said Dodd, the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs.  “Banks and loan servicers who have agreed to participate in the Administration’s foreclosure prevention programs must hold up their end of the bargain and Treasury Secretary Geithner must remain vigilant to ensure that they do so.” 

 

“In order to stabilize the economy we need to stabilize the housing market.  Companies that have agreed to participate in the Administration’s foreclosure prevention programs must be held accountable, especially when they are simultaneously receiving taxpayer dollars,” said Reed, a senior member of the Banking Committee, which oversees federal housing policy.  “Homeowners who are looking to get help before it’s too late should not have to wait two months to receive an answer to their questions.  The Administration must keep pushing to ensure that servicers’ public pronouncements translate into relief for homeowners.” 

 

A recent report from the National Foreclosure Mitigation Counseling Program indicates that homeowners are waiting, on average, 45-60 days for responses to requests for help.  Other homeowners have found servicers reluctant to make meaningful changes to the terms of their mortgages despite advertised participation in the Administration’s foreclosure prevention initiatives.  

 

Senator Dodd recently raised this issue with Treasury’s Assistant Secretary for Financial Stability Herbert M. Allison at his confirmation hearing before the Banking Committee, asking him to provide the Committee and the public with detailed information about how many homeowners are receiving assistance under the foreclosure mitigation plan and the extent to which individual loan servicers are complying with the program.

 

The senators also noted that they are concerned about the large number of option adjustable rate mortgages (ARMS) scheduled to reset in the next four years.  News reports indicate the number of option ARMs in question to be one million. 

 

“Without servicers taking proactive steps to reach these homeowners and careful vigilance on the part of the Department of Treasury and others to ensure that outreach translates into real relief, efforts to stabilize the housing market could be undermined,” the senators wrote.  “In addition to the outreach that servicers may be doing to contact homeowners with option ARMs, what assurances have the Department of Treasury and its agents received that servicers are developing the capacity to respond to the potential onslaught of requests for modifications?”

Text of the letter to Treasury Secretary Geithner follows: