May 02, 2007

Dodd Unifies Industry Members, Consumer Representatives to Help Preserve American Dream of Home Ownership

Leading stakeholders in subprime market agree to Dodd principles

UPDATE: DODD COMMENDS BEAR STEARNS’ AGREEMENT TO PRINCIPLES Chairman Dodd announced that Bear Stearns will join the organizations and companies mentioned below in agreeing to the Homeownership Preservation Summit Statement of Principles he released earlier today (attached). Chairman Dodd commends Bear Stearns for its leadership on this issue.
As part of his efforts to preserve homeownership for millions of American families and to strengthen local communities and our nation’s economy, Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, today announced that leading stakeholders in the subprime mortgage market have agreed to a comprehensive set of principles when working with families facing foreclosure on their homes. The principles are based on the premise that everyone – investors, servicers, lenders, homeowners, and neighborhoods – benefits when families’ homes are protected from foreclosure to the extent possible. The announcement came two weeks after Chairman Dodd convened the Homeownership Preservation Summit, a meeting with the leaders of some of the largest subprime mortgage lenders, securitizers, and servicers, as well as consumer and civil rights groups, to discuss ideas and develop solutions to the subprime mortgage market crisis which is currently threatening millions of Americans with foreclosure on their homes. A longtime advocate for homeownership, Chairman Dodd has focused on predatory lending and the subprime market turmoil for several months, having convened two hearings since becoming Chairman in January. “These principles represent a critical step in preserving homeownership and economic opportunity. I applaud the tremendous leadership demonstrated by the Mortgage Bankers Association, Citigroup, JPMorgan Chase, Litton Loan Servicing, HSBC, Freddie Mac, Fannie Mae, the Self-Help Credit Union, the Leadership Conference on Civil Rights, AARP, and ACORN to take active and effective measures to preserve homeownership for families at risk of losing their homes,” said Dodd. “The crisis affecting the subprime market is a comprehensive one, and involves many parties. It cannot be solved overnight, and cannot be solved by one party acting alone. Each party needs to do its part in helping to address this problem. The companies and organizations that endorse these principles demonstrate their commitment to being part of finding solutions to foreclosures. “I commend the organizations and companies that have joined me in formulating and agreeing to these principles, and I urge others to participate, or face explaining to their customers and the public their refusal to adhere to common-sense guidelines that will help preserve homeownership and strengthen our communities and our nation’s economy.” Since assuming the Chairmanship of the Banking Committee, Dodd has made ending subprime lending abuses a high priority. He has chaired two oversight hearings, and successfully called on federal financial regulators to adopt new rules on subprime loans. In addition, Freddie Mac decided to stop buying certain abusive subprime products, and commit $20 billion to refinancing subprime loans. Last week, Dodd led an effort endorsed by nine other Committee Democrats to call on the Federal Reserve Board to apply the subprime lending guidance to non-bank lenders. The following organizations and companies commented on the Summit and the principles that grew from it: “The Mortgage Bankers Association endorses the homeownership preservation principles developed under Chairman Dodd's leadership. We appreciate the Chairman's efforts in bringing together important elements of the mortgage finance industry to ensure that all that can be done on behalf of borrowers facing foreclosure is being done,” said John M. Robbins, CMB, Chairman of the Mortgage Bankers Association. Carl Levinson, President and Chief Executive Officer of Citi's Consumer Lending Group, said: “Citi applauds Chairman Dodd's leadership in addressing the needs of families who are at risk of losing their homes to foreclosure. These are difficult times for low- and moderate-income homeowners and the industry must work together with advocacy groups and elected officials to provide needed relief now and long term solutions going forward. Recognizing this, Citi supports the Statement of Principles developed by Chairman Dodd and his Homeownership Preservation Summit and calls on other lenders to join Citi in advocating the adoption of these principles by the industry and helping homeowners remain homeowners.” “We support Sen. Dodd's efforts to help families who are struggling with their mortgage payments,” said David Lowman, CEO of Chase Home Lending, the mortgage unit of JPMorgan Chase. “We believe we can develop the best solutions by working with the Senate committee, our regulators, borrowers, investors and community representatives.” “The principles that Senator Christopher Dodd and the Senate Banking Committee have developed are aligned with the homeownership preservation and loan modification practices Litton has been employing for years to help those borrowers stay in their homes,” said Larry B. Litton, Jr. President and CEO of Litton Loan Servicing. “We have been actively working with the federal and local governments, community organizations, customers, investors, and regulators on this issue and we believe this is a great tool the industry can use to help reduce the number of foreclosures facing the subprime industry, while continuing to meet our obligations to our investors.” Brendan McDonagh, CEO of HSBC Finance Corporation, said: “As part of its ongoing commitment to sustaining homeownership through responsible lending and servicing, HSBC supports the guidance provided by the U.S. Senate Banking Committee’s Statement of Principles announced today by Senator Dodd. HSBC has been pleased to work with Senator Dodd, the Committee and industry colleagues in discussing the important issues facing homeowners today. HSBC has been servicing customers for more than 125 years, through many credit cycles and a wide range of economic circumstances. We take the current mortgage environment seriously and we are taking strong and proactive steps to minimize the impact on our customers. We have a number of policies and programs in place to assist our customers. For example, HSBC has had a proactive outreach program in place since October 2006 offering rate and payment relief to at risk ARM customers. As well, HSBC’s Foreclosure Avoidance Program (FAP) was developed in 2003 and to date has delivered $100 million in financial relief.” “We applaud Senator Dodd's leadership and support his principles to preserve homeownership,” said Richard F. Syron, chairman and CEO of Freddie Mac. “These principles complement Freddie Mac's longstanding commitment to putting people into homes that they can afford and keep.” “We're pleased to sign on to the statement of principles and we appreciate Senator Dodd's leadership in convening the Homeownership Preservation Summit,” said Daniel H. Mudd, President and CEO of Fannie Mae. “Fannie Mae is committed to being part of a solution that keeps people in homes, minimizes market disruption and improves practices and products for consumers.” “I commend Senator Dodd and all the industry participants in developing improved practices,” said Martin Eakes, Chief Executive Officer of the Self-Help Credit Union. “Without intervention by every segment of the mortgage industry along these lines, hundreds of thousands of American families who have been placed in subprime mortgage loans whose interest rates are set to explode in the near future will lose their homes to foreclosure. To avoid this fate, which serves neither borrowers nor investors, servicers should take advantage of their ability to extend the initial rate for the life of the loan and make any other adjustments so that families can stay in their homes and investors can continue to get paid.” “We support Sen. Dodd’s proposal to help thousands of Americans keep their homes,” said Wade Henderson, Executive Director of the Leadership Conference on Civil Rights. “Too many have lost their homes already. The foreclosure crisis has especially devastated thousands of minorities and low-income Americans who saw their American dream – to own their own home – turn into a nightmare.” “AARP strongly supports the principles, which will help millions of families who are at risk of losing their homes because of unconscionable practices on the part of predatory lenders,” said David P. Sloane, Senior Managing Director, Government Relations and Advocacy at AARP. “We are hopeful that Congress will act to pass strong, consumer-oriented predatory mortgage lending legislation to prevent these practices from continuing in the future.” ACORN President Maude Hurd said: “The members of ACORN, the country’s largest grassroots community organization of low and moderate income families, applaud Senator Christopher Dodd, Chairman of the Senate Banking, Housing, and Urban Affairs Committee for his leadership in convening last month’s Housing Preservation Summit, and for the agreement that has come out of that summit. We are proud to be a part of the efforts by Senator Dodd and the Committee to stop the massive foreclosure crisis that is ravaging our neighborhoods. The present foreclosure crisis stems directly from widespread predatory lending practices that have tricked and lured too many families into loans they could never realistically repay. There are too many companies whose servicing practices have made these homeowners feel as if the lender was only interested in stealing their home. We also applaud those mortgage companies who have agreed to the principles for homeownership preservation and thus are taking the necessary steps to help families who are facing foreclosure. For the last two years we have been advocating that when lenders modify a loan, they should make sure that it gives the homeowner long term affordability. This is a major principle, and we are glad to see that some of the largest mortgage companies have agreed to this. We call on all mortgage companies to adopt these same principles.” Senator Dodd has invited other organizations interested in agreeing to the principles to contact Banking Committee staff.
Click here for the full Statement of Principles.