Congresswoman Waters Reintroduces Landmark Legislation to Prevent Foreclosures, Hold Servicers Accountable
Congresswoman Maxine Waters (D-Calif.) yesterday reintroduced H.R. 1567, the Foreclosure Prevention and Sound Mortgage Servicing Act of 2011. Congresswoman Waters has introduced similar legislation since the 110th Congress, and has long maintained that the servicing industry is broken. By reintroducing and updating the bill, Congresswoman Waters continues to demonstrate her commitment to ending the foreclosure crisis and holding servicers accountable.
"In light of the slap of the wrist our regulators are preparing to give 14 servicers who admitted to breaking the law, legislation to require loss mitigation prior to foreclosure is needed now more than ever before. It's the only way to protect homeowners and to prevent foreclosures."
Congresswoman Waters' bill would require servicers to provide loss mitigation, including loan modifications, prior to foreclosure. Notably, the bill places one entity in charge of modifying primary and secondary liens and requires principal reduction for underwater mortgages. It would also address problems in the mortgage servicing industry by prohibiting dual track, requiring a single point of contact; requiring referrals to housing counseling agencies; regulating fees; and implementing other reforms to an industry in need of structural changes. The bill also reforms short sales, prohibiting on demand payments and providing greater protections for homeowners.
In introducing the bill, Congresswoman Waters acknowledged that the bill will be one of several that she introduces to tackle problems in the servicing industry. "This bill is the first in a series of legislative proposals that I plan to introduce to further regulate the servicing industry and to protect homeowners."