Washington, DC, October 23, 2007 – The Mortgage Bankers Association (MBA) and the Ohio Mortgage Bankers Association (OMBA) today sent a letter to the Ohio Department of Commerce commenting on the recently-proposed Compact to Help Ohioans Preserve Homeownership. In the letter, MBA and OMBA recommended a number of already existing programs that the State of Ohio ought to encourage mortgage servicers to take part in or adopt, rather than the state creating an entirely new program.
“Although the Compact is well-intentioned and MBA agrees that servicers should assist distressed borrowers whenever possible, we have serious concerns with the Compact and believe that certain portions of the document could actually hinder all parties from achieving the critical goal of homeownership preservation,“ MBA Senior Vice President of Government Affairs and Public Policy Kurt Pfotenhauer and OMBA President C. William Cosgrove, CMB wrote in the letter. “In lieu of the Compact, we strongly urge the State of Ohio to encourage lenders and servicers who have not already done so to commit to the HOPE NOW Alliance and Senate Banking Committee Chairman Dodd’s principles.”
On October 9, 2007, the US Department of the Treasury and the US Department of Housing and Urban Development unveiled the HOPE NOW Alliance, a nationwide effort between counselors, mortgage market participants, and mortgage servicers to coordinate and standardize borrower contact and loss mitigation efforts. In addition to a direct mail effort targeted at borrowers who may be in distress, the alliance will also ensure that consumer hotlines are staffed, create improved technology, and coordinate with housing counselors in efforts to preserve homeownership.
In May, following his Homeownership Preservation Summit, Senate Banking Committee Chairman Chris Dodd (D-CT) released his “Dodd Principles”. The Principles include the following seven points: 1) Early Contact and Evaluation, 2) Modifications to Create Long-term Affordability, 3) Dedicated Teams or Resources, 4) Low-Cost Refinancing, 5) Credit Availability, 6) Maximize Success, Minimize Damage, and 7) Accountability. Many of the nation’s largest servicers participated in the summit, endorsed the Principles and are actively working to integrate them into their operations.
The letter also pointed to the recent California and Massachusetts programs as an alternative if Ohio officials saw the need to take their own independent state action.
In California, Governor Schwarzenegger has outlined a program focused on encouraging lenders and servicers with loans in the state to provide appropriate workout and loan modification arrangements with troubled borrowers, in accordance with the Dodd principles.
On April 30, 2007, Massachusetts Governor Deval Patrick directed the Commissioner of the Division of Banks to seek voluntary delays from mortgage lenders, on a case-by-case basis, for any Massachusetts homeowner who has filed a complaint with the Division of Banks as part of their consumer assistance outreach efforts. Governor Patrick instructed the Division of Banks to review complaints and refer homeowners to reputable homeownership counseling firms, and called on lenders to utilize this voluntary forbearance period to work in good faith with homeowners who are struggling to make their mortgage payments.
“On October 15, at MBA’s Annual Convention, the Massachusetts Commissioner of the Division of Banks stated that the program has assisted more than 1100 troubled borrowers,” the letter reads. “We support the Massachusetts program and would suggest that the State of Ohio consider a similar approach.”
A copy of the letter, including its comments on specific portions of the Ohio Compact are attached, or can be found on www.mortgagebankers.org.
The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 500,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 3,000 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: www.mortgagebankers.org.