If you’re a homeowner struggling to make ends meet and pay your mortgage on time, yesterday was a good day in Congress. According to Reuters, the House Financial Services Committee held hearings and had the heads of eight of the country’s largest lenders in front of them.
The Congressmen/women pressed the lenders hard to commit to suspend foreclosure actions until the Treasury Secretary’s Financial Stability Plan is finalized. The new plan was introduced yesterday, but many of the details are still being worked out. It includes at least $50 million in funding to prevent avoidable foreclosures by reducing monthly payments for homeowners…presumably through loan modifications and principle write downs.
Since it’s going to take a few weeks to hammer out all the details and implementation guidance, Rep. David Scott (D-GA) asked the lenders if they would commit to halting foreclosure actions until the plan is finalized.
Bank of America’s Kenneth Lewis agreed, saying “If we could put a timeframe on it and not just leave it open-ended, say it is 2 or 3 weeks, we could do that.” To which Rep. Scott responded, “3 weeks…that’s good news.”
Citigroup’s Vikram Pandit said they would “commit to making sure people stay in their houses as part of the moratorium.” He qualified that by saying his commitment was only for owner-occupied homes.
As a follow up to this meeting, the Office of Thrift Supervision (OTS), which regulates federal savings holding companies and thrifts (like banks and mortgage lenders), called on OTS-regulated institutions to suspend foreclosures on owner-occupied homes until the plan is finalized as well according to Default Servicing News.
After this statement, ING Direct annouced it has placed a foreclosure moratorium on owner-occupied homes through the end of March.
In response to these actions, Rep. Barney Frank (D – Mass), Chairman of the House Financial Services Committee said he expects over 95% of US lenders will stop foreclosures until the Treasury plan is finalized. Rep. Frank has also introduced legislation to protect lenders from lawsuits that stem from modifying mortgages held by investors. According to many lending experts and bank leaders, this is one of the biggest stumbling blocks to meaningful mass modifications by lenders.
In a final bit of news yesterday, according to the same Default Servicing News article, Treasury Secretary Geithner and HUD Secretary Donovan met with “more than two dozen officials from large banks, nonprofit organizations, and industry groups to discuss foreclosure prevention.” The outcome was encouraging for homeowners as all parties agreed (at least in principle) “that we can no longer rely on a voluntary system within the financial services industry to lead the foreclosure prevention effort.”
So What’s It Mean To You?
- Call your lender to see if they’re participating in the moratorium.
- If they don’t know what you’re talking about, call their legal department or their media relations department.
- If they say they’re not participating, e-mail and fax a letter to your Congressman/woman as well as Rep. Frank. If you don’t know how to contact your representative, start here: https://writerep.house.gov/writerep/welcome.shtml
- Keep your eyes out for the new Financial Stability Plan. It’s all over the news and we’ll stay on top of the portions affecting you as a homeowner in or nearing foreclosure.
Things should move pretty quickly, but if your foreclosure sale is in the next 3 – 6 weeks, you may be able to get it postponed temporarily. No one really knows what’s going to be in the Financial Stability Plan yet, but with $50 million to throw at the problem, there’s reason to be hopeful. As we all know, though, the devil is in the details!
Best Wishes…
Tags: bank of america, citigroup, government regulation, ING
February 13th, 2009 at 11:51 am
This foreclosure suspension is good news for homeowners. We all need to reach out to them since I see people in despair, losing hope that anything else could be done to save their homes. Please keep your postings informing the public. Thank you