(NNPA)—Persistent allegations that major lenders failed to properly review foreclosure filings prior to finalization have now led to swift developments at both the state and federal levels. These actions could very well be a signal that decision-makers and influential leaders realize the patience and the pocketbooks of America’s people have worn thin.
The nation’s state attorney generals formed a mortgage foreclosure working group Oct. 13, and now a week later, two key federal regulators, the Federal Deposit Insurance Corp. and the Federal Reserve System, have jointly announced a symposium on mortgages and the future of housing finance. Open to the public, the free event took place at the Seidman Center in Arlington, Va., Oct. 25 and 26 and will require advance registration.
In an agency news release, FDIC Chairman Sheila Bair spoke to why the session is so critical. “It is very clear that as a country we need to aggressively examine the incentives of our system of mortgage finance to ensure that the problems that contributed to the financial crisis are addressed. It will be difficult to restore stability and normalcy to the housing finance system—and thus the broader economy—without reform.”
For one of the participants, however, the session is also about America’s families and the anguish suffered through the foreclosure tsunami.
“While the devastation of this foreclosure crisis is naturally spurring conversation on the future of housing finance, we must recognize that homeownership is still a key strategy for helping families build wealth and stability,” notes the Center for Responsible Lending’s Martin Eakes.
“This forum provides good opportunity to distinguish between the failed practices that helped cause this foreclosure crisis and the sound practices that have helped families obtain and benefit from homeownership.”
According to FDIC’s most recent data, as of June 2010, an estimated 11 million homeowners or nearly one in four of those with mortgages, were underwater, owing more than their homes are worth. Moreover, although several financial tools such as refinance modifications, short sales cash-for-keys negotiations, and deeds-in-lieu are intended to provide options for troubled homeowners, the number of challenged homeowners far exceeds the capacity of lenders and their representatives to reach agreements for swift decisions that both borrowers and lenders can accept.
On Oct. 13 Bair spoke candidly to the impractical disconnect between lenders and challenged homeowners before the Urban Land Institute in Washington.
“Not only are these borrowers generally unable to take advantage of today’s record low mortgage rates to refinance, but they become more likely to walk away from their mortgages. We also need to move away from incentives that encourage the lax underwriting that we saw prior to the crisis,” said Bair before posing a rhetorical question to the audience. “Sometimes I wonder: Have lenders really learned their lessons?”
This symposium will gather advice and reflections from the American Enterprise Institute, the Federal Reserve, multiple federal regulators, and a number of esteemed academicians.
To accommodate interest beyond the venue’s seating capacity, a webcast will also be available. For more information on how to view the proceedings online, go to: www.fdic.gov.
As these leaders share data and insights, the state attorneys general will continue contacting a comprehensive list of individual mortgage servicers with four specific objectives guiding those inquiries:
•Reviewing past and present practices by mortgage services;
•Evaluating potential remedies for past practices and to deter future improper practices;
•Establishing a mechanism for more effective independent monitoring of future mortgage foreclosure practices; and
•Putting a stop to improper mortgage foreclosure practices.
According to Tom Miller, Iowa attorney general and leader of the 50-state bipartisan working group, “Since this issue affects peoples’ homes and has clear economic implications, this probe and its outcome need to be fair both to homeowners and also to lenders.”
Miller will work closely with an executive committee comprised of attorneys general offices in Arizona, California, Colorado, Connecticut, Florida, Illinois, Iowa, New York, North Carolina, Ohio, Texas and Washington; and state banking regulators from Maryland, New York and Pennsylvania.
“What’s important here,” added Miller. “Is that this is a cooperative and coordinated effort by states to address a serious problem.”
(Visit Charlene Crowell at Charlene.email@example.com.)