Senate Examined Bank Owned Foreclosures Prevention Programs

by on Foreclosure Crisis

The Senate Banking Committee recently held the hearing, titled “Preserving homeownership: Progress needed to prevent foreclosures.” One of the highlights of the hearing was Chairman Chris Dodd of the Senate Banking Committee’s venting of his frustration over what to him is a lack of progress on bank owned foreclosures prevention efforts.

Dodd said that despite efforts and assurances, little was made to accomplish the goal of abating the flood of foreclosed homes in the country. He pointed out the need to reduce the loan principal amount in order to prevent the spread of bank owned foreclosures and stabilize the housing market, which he thinks is a key towards a full economic recovery.

Recent data showed that the number of homeowners on the brink of losing their properties to foreclosure jumped by 9 percent in the second quarter with foreclosure filings reaching a total of 1,905,723. The figures were 15 percent higher from the first six months the previous years.

Dodd recalled holding a hearing on the same issue in February 2007 and said that the recent hearing is disgraceful.

According to data released by the Center for Responsible Lending (CRL), about 9.12 percent of mortgage loans or one in every 10, were delayed at the end of the first three months of this year. Senator Jack Reed has urged the Obama Administration to help troubled homeowners by requiring lenders and banks to be accountable for distressed borrowers’ requests for help.

Last June, Reed sent letters to Secretary Shaun Donovan and Secretary Tim Geithner to urge them to create and implement a strategy that will require banks and lenders to respond to problems of homeowners immediately to help them protect their properties from bank owned foreclosures.

A member of the banking committee, Reed said that the limited actions taken under the Bush Administration failed to prevent the foreclosure crisis. He pointed out that under the Obama Administration, Making Home Affordable and Hope for Homeowners programs were launched and improved.

However, he noted that a great number of distressed homeowners are having difficulty accessing the programs and getting the much needed help that they need.

At the hearing, Reed discussed his plan to introduce a bank owned foreclosures law that would give loan assistant payments to distressed homeowners. He added that his bill also aims to create a national database for effective foreclosure monitoring.