Congresswoman Waters Calls for Suspension of Foreclosures, Further Investigation of Mortgage Servicers
Concerned about reports of misconduct at some of the nation's largest mortgage servicing companies, Congresswoman Maxine Waters (D-CA) called for a moratorium on foreclosures while the appropriate federal regulators investigate fully the illegal and improper actions by mortgage servicers.
Recently Ally Financial's GMAC mortgage unit and JP Morgan Chase's mortgage unit both revealed that employees had signed and filed thousands of affidavits in order to foreclose on properties without giving them appropriate review. Bank of America has also suspended thousands of foreclosure proceedings amid questions about its activities.
"It appears that some major mortgage servicers processed tens of thousands of documents a month to rush to foreclose on properties, and it is likely that many families wrongly lost their homes as a result," said Congresswoman Waters. "This should not happen, and we must not tolerate such actions."
Congresswoman Waters wrote letters to Treasury Secretary Timothy Geithner, Federal Housing Finance Agency Acting Director Edward DeMarco and Federal Housing Administration Commissioner David Stevens asking each of them to ensure that their agencies fully use their authority to investigate the mortgage servicing companies, enforce regulations and take steps to monitor compliance.
In addition, Congresswoman Waters wrote letters to the CEOs of major financial institutions including Citigroup, HSBC, PNC, U.S. Bancorp and Wells Fargo asking their mortgage units to suspend foreclosures until they can thoroughly review their procedures.
The failure of mortgage servicers to follow the rules not only affects the homeowners who have mortgages with those companies but also American taxpayers in general. For example, Congresswoman Waters noted that the government's Home Affordable Modification Program (HAMP), a taxpayer-funded program designed to stop foreclosures, is being undermined in part by servicers moving too quickly to foreclose.
Congresswoman Waters also was among 31 Democratic Representatives from California who sent letters to the Justice Department, the Federal Reserve and the Office of the Comptroller of the Currency urging them to "investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications and foreclosures".
"Democrats in Congress passed legislation to reform Wall Street and protect consumers, and we will hold mortgage servicers and other financial institutions accountable. As the chairwoman of the Housing and Community Opportunity Subcommittee, I will continue to hold hearings and advance legislation that helps homeowners," said Congresswoman Waters.
One such bill that Congresswoman Waters has introduced is the Foreclosure Prevention and Sound Mortgage Servicing Act of 2009 (H.R. 3451), which would prohibit servicers from foreclosing without first offering loan modifications to borrowers.