US SENATOR DEMANDS THAT BANKS SPEED UP LOAN MODS

New Jersey Senator Robert Menendez has demanded that mortgage companies "pick up the pace" and provide faster, better service to homeowners struggling under mortgages they can’t afford to pay. In a letter to CEOs of 20 major mortgage companies (nearly all of which have received "bail out" money under the Government's "Troubled Asset Relief ("TARP") Program), Menendez raised concerns about their level of commitment and rate of participation in a Government-sponsored homeowner relief initiative.

Menendez urged the CEOs to review and revise their loan modification efforts to help achieve the goals of the Obama Administration's "Making Home Affordable" ("HAMP") loan modification program.

The Office of the Comptroller of the Currency and Office of Thrift Supervision estimates that loan servicers implemented approximately 185,000 new loan modifications in the first quarter of 2009 - a number that pales in comparison to the 2.4 million foreclosures during the same time period.

Menendez, a member of the Senate banking committee, has been at the forefront of recent public hearings regarding prevention of foreclosures, at which representatives of the U.S. Department of Treasury, the U.S. Department of Housing and Urban Development and representatives from mortgage lenders and consumer groups have testified.

The Senator's letter was sent to: James Dimon of JPMorgan Chase; Alvaro G. de Molina of GMAC Financial Services; Kenneth D. Lewis of Bank of America Corporation; Vikram Pandit of Citigroup Inc.; Ellen Alemany of Citizens Financial Group; Bruce Rose of Carrington Mortgage Services; Tom Wind of Aurora Loan Services LLC; Derrick D. Cephas of Amalgamated Bank; David Ertel of Bayview Loan Servicing, LLC; Darren Williams of Wescom Central Credit Union; John G. Stumpf of Wells Fargo Bank, NA; Robert Shafir of Credit Suisse Americas; Rolando Rodriguez of RG Mortgage Corportation; John J. Mack of Morgan Stanley; Dennis Stowe of Residential Credit Solutions; William C. Erbey of Ocwen Financial Corporation, Inc.; Anthony Barone of Nationstar Mortgage LLC; Keith A. Anderson of Green Tree Financial Corporation; Karen L. McCormick of First Federal Savings and Loan; and Donald H. Layton of E*TRADE Financial Corporation

(EDITOR'S NOTE - Why wasn't a letter sent to IndyMac - now known as "OneWest" - who probably needed it the most? SEE the recent article on this webpage: "NY Judge CANCELS IndyMac loan due to BAD FAITH)

The letter from Senator Menendez read as follows:

Dear [CEO name],

I write in my capacity as Chairman of the Senate Banking Subcommittee on Housing, Transportation, and Community Development to urge you to expand loan modifications under the Home Affordable Modification Program (HAMP) and to work cooperatively with the Administration’s efforts to reduce foreclosures.

As you might know, the Senate Committee on Banking, Housing, and Urban Affairs will examine these and other loan modification issues at a hearing entitled “Preserving Homeownership: Progress Needed to Prevent Foreclosures.” In preparing for that hearing, I have become even more concerned about the progress that lenders, loan servicers, and the federal government are making toward modifying loans to help the national foreclosure crisis.

Our nation’s housing crisis is the root of the global economic crisis that we are faced with. Preventing foreclosures helps keep families in their homes, helps the surrounding communities maintain property values and helps lift the economy, which are results that I believe we can all support. However, the Office of the Comptroller of the Currency and Office of Thrift Supervision estimate that servicers implemented about 185,000 new loan modifications in the first quarter of 2009, which is dwarfed by the estimated 2.4 million foreclosures in 2009 according to the Center for Responsible Lending. It is also not clear how effective these modifications are in preventing foreclosures. I understand that Treasury Secretary Timothy F. Geithner and Department of Housing and Urban Development Secretary Shaun Donovan also sent you a letter to that effect on July 9th.

It has been widely reported that lenders and servicers have generally been overwhelmed by requests for loan modifications and have not always succeeded in implementing good systems to deal with those requests with well-trained loan professionals who can provide accurate information for borrowers. Another problem I hear repeatedly is that the loan modifications being offered are sometimes not generous enough to meet the needs of families, many of whom have experienced recent unemployment.

In light of these and other problems, I fully expect you to review your company’s policies and procedures regarding loan modifications to find a balanced approach that not only ensures the financial viability of your company, but also achieves the goal of the program, which is to reduce consumers’ foreclosures on their mortgages. I look forward to hearing the steps your company is taking to achieve more loan modifications.


Sincerely,

ROBERT MENENDEZ
United States Senator


Hopefully, this aggressive effort from Senator Menendez will achieve much-needed positive results.