A November 2010 survey by the National Association of Consumer Advocates (NACA) and the National Consumer Law Center (NCLC) demonstrates that mortgage servicers often initiate foreclosure proceedings improperly, either while a homeowner is awaiting a loan modification or due to improper fees or payment processing.
It is an honor to appear today before this Committee. Thank you for the opportunity to share some thoughts on our national foreclosure crisis. My name is Christopher Peterson and I am the Associate Dean for Academic Affairs and a Professor of Law at the University of Utah where I teach contract and commercial law classes.
It is the typical and ongoing story of lost documents, inconsistent statements, a servicer's unkept agreements, homeowner run-arounds and endless insecurity and anxiety caused for a homeowner who at all times was fully eligible for a HAMP modification.
National Consumer Law Center, the Center for Responsible Lending, and the National Association of Consumer Advocates welcome the opportunity to comment on the Board of Governors’ interim rule that implements certain provisions of the Mortgage Disclosure and Improvement Act of 2008 (MDIA). Specifically, these comments address the Interim Reg. Z § 226.18(s) related to the interest rate and payment summaries.
This letter is from individual attorneys who regularly represent low or moderate income homeowners in defense of foreclosures, as well as national, state and local advocacy organizations, some of whom are a part of the Americans for Financial Reform coalition, others who are legal aid or community housing programs. We write this letter to make the unprecedented request that you withdraw the proposed Truth in Lending (“TILA”) mortgage regulations in FRB Docket No. R- 1390.1 In the face of an unparalleled foreclosure crisis, now is the time to reinforce the fundamental importance of TILA rescission. Instead, the Board’s proposal would eviscerate the single most effective tool that homeowners have to stop foreclosures and avoid predatory loans: the extended right of rescission.
What robo-signing reveals is the contempt that servicers have long exhibited for rules, whether the rules of court procedure flouted in the robo-signing scandal or the contract rules breached in the common misapplication of payments or the rules for HAMP modifications, honored more often in the breach than in reality. Servicers do not believe that the rules that apply to everyone else apply to them. This lawless attitude, supported by financial incentives and too-often tolerated by regulators, is the root cause of the robo-signing scandal, the failure of HAMP, and the wrongful foreclosure of countless American families.
The undersigned organizations urge you to ensure that any resolution results in real protections for homeowners seeking to avoid losing their homes to foreclosure.
We are pleased with the overall proposal, and appreciate the attention given to comments we submitted earlier in 2010 on the Advance Notice of Proposed Rulemaking. The importance of the Enterprises’ role in meeting consumers’ need for affordable and sustainable mortgage credit is greater today than in recent years. The mortgage crisis has highlighted the dangers of unregulated capital market participation in the mortgage system, and the risks to which consumers can be exposed when unsustainable mortgage products are allowed to proliferate.