Sen. Brown To Mega-Banks: Work With Borrowers

Posted by Orb Staff on July 29, 2010 No Comments
Categories : Mortgage Servicing

Senate Banking Committee member Sen. Sherrod Brown, D-Ohio, is calling on the nation's four largest banks to work with responsible homeowners to avoid foreclosure.

In a letter written this week to the heads of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, Brown said his office has received a ‘disproportionate number of complaints’ from homeowners about the ‘ability and willingness’ of the banks and their third-party servicers to navigate borrowers through the federal government's modification and short sale programs.

He also cited foreclosure statistics for Ohio, one of the nation's worst-hit states. Nearly one in six borrowers in Ohio are at least 30 days past due or in foreclosure, and nearly one in three home sales is a ‘troubled property,’ according to Brown.

In his letter, Brown outlined several common borrower complaints, such as being asked to repeatedly complete and resend information for Home Affordable Modification Program (HAMP) applications, being placed into trial HAMP mods while simultaneously continuing the foreclosure process, and having their mortgages put in arrears while they are enrolled in trial modifications. Borrowers say they are also subjected to a drawn-out Home Affordable Foreclosure Alternative short sale process and that their requests for information concerning the status of HAMP applications and HAFA requests are ignored.

‘It is in the best interest of your banks to work with responsible borrowers to help them stay in their homes or find other alternatives to foreclosure,’ Brown said in the letters. He encouraged the banks to take a ‘hard look’ at their ability to communicate among their various operations and affiliates, as well as to examine the degree to which ‘any shortcomings in these areas are hindering’ loss mitigation efforts.

‘For example, consider the effects that fee arrangements and other economic incentives have on the mortgage modification process as your third-party mortgage servicing contracts come up for renegotiation to ensure that these agreements are promoting, and not hindering, modifications,’ Brown wrote.

Ohio continues to rank 48th among the 50 states and the District of Columbia in the number of homeowners who have been able to modify their mortgages through HAMP. About 15% of seriously delinquent loans in Ohio have been modified through HAMP, and about 8% of trial modifications have been converted into permanent modifications.

SOURCE: Office of Sen. Sherrod Brown

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