Brown at Banking Committee Hearing: Use Federal Resources to Keep Families in Their Homes , Not to Shield Illegal Activity

Brown to Introduce Legislation to Help Ohioans Avoid Foreclosure through Affordable Mortgage Modifications

WASHINGTON, D.C. – March 15, 2011 – (RealEstateRama) — U.S. Sen. Sherrod Brown (D-OH) attended a hearing of the U.S. Senate Committee on Banking, Housing, and Urban Affairs today entitled ‘The Administration’s Report to Congress:  Reforming America’s Housing Finance Market.’ The hearing examined the progress the Obama Administration has made in reforming the mortgage During the hearing, Sen. Brown announced that he would file legislation to help Ohio homeowners avoid foreclosure through both affordable mortgage modifications.

“Ohio families have lost jobs because of Washington policies – including job-destroying trade agreements, a financial crisis brought on by financial deregulation, and a shift from an industrial- to a service-based economy,” Brown said. “Because Washington helped create this crisis, we have a responsibility to help fix it. That’s why I will introduce legislation to fix a servicing model that has caused foreclosure fraud and homeowner abuse in Ohio and across the nation. And I will continue working to ensure that we are using our resources wisely.”

The witnesses at today’s hearing were: Timothy Geithner, Secretary, United States Department of the Treasury and Shaun Donovan, Secretary, United States Department of Housing and Urban Development.

Brown renewed his call for increased access to counseling and legal services. Last year, Brown wrote to U.S. Treasury Secretary Timothy Geithner to suggest improvements to the HAMP program so that more Ohio families avoid foreclosure. The HAMP program was designed to encourage banks to modify mortgages to prevent foreclosures. Ohio continues to rank forty-eighth among the fifty states and the District of Columbia in the number of homeowners who have been able to modify their mortgages for lower payments through Home Affordable Modification Program (HAMP). Only 14.8 percent of seriously delinquent loans have been modified through HAMP in Ohio, and only 8 percent of trial modifications have been converted into permanent modifications. Brown also urged more federal funding for foreclosure prevention counseling programs.

Brown is a leading proponent of providing assistance to communities affected by the housing crisis and population loss. Following pressure from U.S. Sen. Sherrod Brown (D-OH), the Federal Reserve Board announced in February that it would maintain critical protections for homeowners outlined in the Truth in Lending Act (TILA). In January, Brown and five of his Senate Banking Committee colleagues urged the Federal Reserve to reconsider proposed rules that would eliminate the ability of homeowners to stop foreclosures and rescind predatory home loans.

In August 2010, Brown secured more than $300 million in funding for foreclosure-prevention assistance from the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (“Hardest Hit Fund”) and the U.S. Department of Housing and Urban Development’s Emergency Homeowners Loan Program.

In July 2010, he sent a letter to the executives of the nation’s four largest banks calling on them to work with responsible homeowners to avoid foreclosure. Brown fought for the creation of the Neighborhood Stabilization Program (NSP) in the Housing and Economic Recovery Act of 2008 and the continuation of the program in the American Recovery and Reinvestment Act (ARRA) of 2009. In Sep. 2008, Brown announced that Ohio communities would receive more than $258 million in NSP funds authorized by the housing bill. In Sep. 2009, Brown wrote to Secretary Donovan in support of Ohio applicants to the second wave of funding through the NSP program.

A copy of Brown’s remarks, as prepared for delivery, follows:

Like my colleagues, I am eager to talk about how we can stabilize housing finance and bring private capital back into the marketplace.

However, we have to walk before we can run.

As long as we continue to have more than one million foreclosures a year, the foreclosure crisis must be our priority.

And Secretary Donovan, I want to thank you for acknowledging this problem in your testimony.

As the nonprofit policy organization, Policy Matters Ohio noted in a recent report, 2010 was the first time in 15 years that Ohio did not have an increase in foreclosure filings.

But had several of the largest servicers not temporarily suspended their new foreclosure filings, the number of foreclosure filings would likely have continued to increase.

And more than 500,000 Ohioans – more than 1 in 4 homeowners – are still “under water,” owing more on their mortgage than their house is worth.

I disagree with my colleagues who blame this crisis on fair lending laws and irresponsible homeowners alone.

Unlike some other states with similar foreclosure crises, the causes of Ohio’s problems are not limited to subprime loans and real estate speculation.

Ohio families have lost jobs because of Washington policies – including job-destroying trade agreements, a financial crisis brought on by financial deregulation, and a shift from an industrial- to a service-based economy.

Because Washington helped create this crisis, we have a responsibility to help fix it.

That’s why I will introduce legislation – incorporating some ideas from Senator Reed and others – to fix a servicing model that has caused foreclosure fraud and homeowner abuse in Ohio and across the nation.

And I will continue working to ensure that we are using our resources wisely.

That means funding foreclosure counseling and legal services – these are commonsense and high reward investments that will help our economic recovery.

It means continuing the work that I have done with some of my colleagues on this committee – including Senator Menendez – to provide constructive suggestions to improve the administration’s HAMP program.

And it means ensuring that Fannie and Freddie are helping, not hurting, the taxpayers to whom they owe their continued existence.

They must start by helping families trapped under the weight of their mortgages by reducing their principal.

That’s good for homeowners and it’s ultimately good for taxpayers.

It’s no secret that I’ve had disagreements with Ohio’s attorney general Mike DeWine in the past.

But he’s doing the right thing by continuing the lawsuit that his predecessor, Rich Cordray, brought against Fannie Mae on behalf of Ohio’s public pension system.

And U.S. taxpayers should not be paying $160 million worth of legal bills for top executives at Fannie and Freddie who took millions of dollars from teachers, nurses, firefighters, and police officers.

That is outrageous.

At a time when we’re counting every penny that we spend, federal resources should be used to help families stay in their homes, not protect past illegal conduct.

Whether we like it or not, the foreclosure crisis affects all of us – homeowners, families, neighbors, and state and local governments.

The entire system is broken and it’s our responsibility to fix it.

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