Congresswoman Joins her California Democratic Congressional Colleagues in Calling for Bank Investigations into Widespread Mishandling of Delinquent Mortgages
Washington, DC – October 6, 2010 – (RealEstateRama) — Today, Congresswoman Lucille Roybal-Allard joined 30 other Members of the California Democratic Congressional Delegation in sending a letter to Attorney General Holder, Federal Reserve Chair Bernanke, and Comptroller of the Currency Dugan requesting investigations into systemic wrongdoing by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures.
“My constituents are among thousands of families throughout California who have sought help from their state and federal representatives after experiencing disappointing, frustrating and wrongful setbacks in dealing with their financial institutions when trying to avoid foreclosure and stay in their homes,” Congresswoman Lucille Roybal-Allard said. “I join my colleagues in demanding that these complaints be fully investigated for any violations of the law. Congress and the Obama Administration passed incentives to help financial institutions work with homeowners to avoid foreclosure and we want to know that families are able to take advantage of these incentives whenever possible.”
Delegation members have received thousands of complaints from their constituents, which appear to outline a clear pattern of misconduct on the part of lenders and servicers. Recent press accounts have also reinforced the view that these institutions are routinely failing to respond in a timely manner, misplacing requested documents, and misleading both borrowers and the government about loan modifications, forbearances, and other housing related applications.
The full text of the letter appears below:
October 5, 2010
Eric Holder, Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW, Room 1145
Washington, DC 20530
Ben S. Bernanke, Chairman
Board of Governors of the Federal Reserve System
Twentieth Street and Constitution Avenue, NW
Washington, DC 20551
John C. Dugan, Comptroller
Office of the Comptroller of the Currency
U.S. Department of the Treasury
250 E Street, SW, Room 9048
Washington, DC 20219
Dear Attorney General Holder, Chairman Bernanke and Comptroller Dugan,
As members of the California Democratic Congressional Delegation, we urge you and your respective agencies to investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures.
Over the last few years, thousands of our constituents have reported that many financial institutions, despite good faith efforts on the part of most homeowners to work out reasonable loan modifications or simply seek forbearance of foreclosure, routinely fail to respond in a timely manner, misplace requested documents, and send mixed signals about the requirements that need to be met to avoid foreclosures. We are particularly perplexed by this apparent pattern in light of the many incentives Congress and the Obama Administration have offered to servicers and lenders to avoid foreclosures where financially viable, including subsidies and loan guarantees from taxpayers. Avoidable foreclosures end up being unnecessarily costly for homeowners, lenders and servicers, and our housing market, whose health is essential to our economic recovery.
The apparent pattern reported by our constituents leads us to conclude that their problems are not just personal anecdotes anymore. Recent reports that Ally Financial (formerly GMAC), JP Morgan, and Bank of America may have approved thousands of unwarranted foreclosures only amplify our concerns that systemic problems exist in the ways many financial institutions have dealt with homeowners who are seeking to avoid foreclosures.
We are now in the third year of the worst housing crisis we have seen in decades. Far too many families in California, and across the country, continue to lose their homes. While Congress and the Obama Administration have taken steps to help mitigate the housing problem, this devastation has persisted and, in fact, worsened as the country’s unemployment rate increased. We have heard numerous stories of financial institutions being uncooperative at best or misleading and acting in bad faith at worst. These heartbreaking stories are commonplace, persisting across the state and across lenders and servicers. As you can see from the attached document, which highlights examples of casework throughout California, it appears that banks have repeatedly misled and obstructed homeowners from receiving the help Congress and the Administration have sought to provide.
The excuses we have heard from financial institutions are simply not credible three years into this crisis. People in our districts are hurting. We have tried to help them in the face of the many challenges they have faced in their dealings with financial institutions. It is time that banks are held accountable for their practices that have left too many homeowners without real help.
Sincerely,
CA U.S. Reps. Lofgren, Pelosi, Baca, Becerra, Berman, Capps, Chu, Costa, Eshoo, Farr, Filner, Garamendi, Harman, Honda, Lee, , Matsui, McNerney, Miller, Napolitano, , Richardson, Roybal-Allard, Linda Sánchez, Loretta Sanchez, Schiff, Speier, Stark, Waters, Watson, Waxman, Woolsey and Thompson.
