Legislation Will Create Accountability for Banks who Race to Foreclose Without First Attempting to Work With Troubled Homeowners
Washington, DC – October 21, 2010 – (RealEstateRama) — Congressman Dennis Kucinich (D-OH) today announced that he is preparing legislation to force lenders to halt foreclosures of owner-occupied residential homes until lenders have certified that they have complied with their contractual obligations to try to reduce eligible borrowers’ monthly payments, using one of several government-sponsored foreclosure prevention programs.
“This Administration has bent over backwards to create every possible incentive for banks to work with troubled borrowers and keep them from losing their homes to foreclosure,” Kucinich said. “But banks have not kept their end of the bargain. For millions of troubled homeowners, lenders are ignoring their obligation to work with those borrowers and are pushing ahead with improper and in some cases, illegal foreclosures.”
“It’s about time we let homeowners fight back against the banks that try to foreclose on them without doing their due diligence. We need to put the onus on the banks to explain why they haven’t worked with these borrowers before they can foreclose on the borrower,” added Kucinich.
The legislation will give owner-occupant residential homeowners the legal right to defend against a foreclosure if the bank pursuing the foreclosure action did not make a good faith effort to work with the borrower to lower their monthly payments and prevent the loss of the home. Kucinich’s staff has spoken with housing and consumer experts who have said that such legislation that would be helpful. All major U.S. mortgage servicers have signed up for the federal foreclosure prevention program, the Home Affordable Modification Program, known as HAMP.
“For too long foreclosure laws have been written and enforced for the benefit of banks. When Congress returns to session in three weeks, I intend to introduce legislation to protect the American dream. No family should be forced on the street because of faulty paperwork,” said Kucinich.
Today’s announcement comes on the heels of a declaration by Bank of America (BofA), the nation’s largest bank, that BofA will resume foreclosure proceedings in the 23 states that require a judge’s approval. BofA and many of the nation’s largest banks had voluntarily halted their foreclosure proceedings after reports that ‘robo-signers’ had not adequately reviewed required paperwork, and in some cases, did not even verify who actually owned the home.
Kucinich, who has held ten hearings on the foreclosure crisis and its effects on communities since taking the gavel as Chairman of the Domestic Policy Subcommittee in 2007, has pressured the Administration to improve its centerpiece foreclosure prevention program, HAMP. Over the course of several hearings in 2009 and 2010, Kucinich brought Treasury officials in charge of the program to testify about the workings of the program and how it could be improved.
When Congress returns, Kucinich will send letters to the Chairmen of relevant Committees and colleagues seeking support for changing the law in ways to protect people from foreclosure
Nathan White (202)225-5871