Last month I wrote a piece on ShametheBanks and in HuffPost about an amendment sponsored by Sens. Al Franken (D-Minn.), Olympia J. Snowe (R-Maine), and Patty Murray (D-Wash.) The amendment to the Financial Reform Bill would create an Office of Homeowner Advocate to assist homeowners who have been denied a loan modification through HAMP. This office would provide a much needed outlet for homeowner's who have been denied HAMP modifications, for whatever reason.
The piece generated a number of calls to legislators and was picked up by other notable bloggers and homeowner advocates like Givemebackmycredit.com, MFI-Miami, and 4closurefraud.com.
The hope, in May, was that the amendment would at least make it into the Manager's Amendment and would be part of the final bill. As it happened, there was no Manager's Amendment, but that didn't stop Franken and his allies on both sides of the aisle from making sure it wasn't overlooked. It passed Tuesday evening by a surprising and satisfying vote of 63-33.
True to form, Franken, not being content to give up after he didn't get the amendment into the financial reform bill pushed for it in the Tax Extender Bill (a bill separate from the amendment's original target that deals with unemployment insurance and other safety net legislation. It was passed by the House in March and is currently being debated in the Senate. A very impressive effort that shows Franken's commitment to homeowners and to foreclosure prevention.
"This victory means help for the many [homeowners] who are in danger of losing their homes through no fault of their own," Franken said. "These families are doing their best in a tough economy that they didn't create. And they need to know there's someone who has their back when they're trying to navigate the already stressful system of avoiding foreclosure."
"As Mainers and Americans know too well, these turbulent economic times, in which we have witnessed record high unemployment rates, have been confounded by the housing market crisis and certain mortgage servicers who are, frankly, taking advantage of our nation's families," said Sen. Olympia Snowe, once again showing her loyalties to the American people. A departure from her own party who prefers to believe that, "families that have chosen to stop paying their mortgage and instead use the extra money they are saving each month to buy season tickets to Disneyland...take a Carnival cruise to Mexico...and go out to dinner more often," according to a GOP memo sent out last week.
"By creating an Office of the Homeowner Advocate, these Americans will receive the vital assistance they require when they are faced with the daunting foreclosure system," Snowe continued.
It's well known that the servicers and banks have not been forthcoming in their reasons for denying loan modifications and in some cases have given outlandish reasons to home owners like, "early payments". That wasn't a typo. GMAC denied an Indiana couple a permanent modification because they made their trial payments early.
Anyone having tried to get a loan modified knows it can be a painful and frustrating process. After months of lost paperwork and jumping through hoops at the whim of the servicer, homeowners are left precariously paying trial payments that could go on for several months - well beyond the requisite three months. Once the trial payments are over (and of course collected) a staggering amount of them are denied permanent status with no reason offered by the servicer who still collects the servicing fees from investors, racks up fees and fines on the homeowner's account, and in some cases collects taxpayer subsidies for their "efforts." In many cases the homeowner is slapped with a lump sum of the accumulated difference in the adjusted payments, now making a tough situation even more daunting.
The proposed office would provide a much needed and long awaited means for homeowners to appeal the denial and would provide oversight to a program that up until now has allowed servicers and banks to continue gaming a system they helped destroy and fleece already struggling homeowners.
A former servicer employee and HuffPost reader, Richard Lindow commented on Crucial Help for Homeowners Could Never See the Light of Day about the proposed amendment last month, referring to the provision and defending the servicers:
"The persons speaking with the customers, unfortunately, do not appear to know why a particular action was taken, and, I assume, from articles such as yours and complaints I have received, that lenders do not do a very good job of explaining it either.
If this amendment will help to provide clarity and information to borrowers who really have no idea why they were denied a modification, then please sign me up as a proponent.
If, however, it is merely, another avenue for people to vent who were legitimately denied (e.g., because his pay stubs showed he worked in NY and the property was in FL, and his employer confirmed in writing that he has worked for that company in NY full-time for the last 10 years), then perhaps we should perhaps assess whether this fiasco is worth any more time or money."
I have to say, I agree. If homeowners are in fact to blame for the shoddy results of the HAMP program and the banks and servicers are really working in the best interest of the borrower, but the borrower isn't co-operating, then what better vehicle to prove that? Banks and servicers have been claiming for almost over a year now that denials are a result of uncooperative homeowners. The banks and servicers should be pleased to finally have a government office dedicated to exposing the real reason for 230,000 HAMP applications being denied in April alone. This should finally shed some light on where the blame should be cast and help everyone sleep better at night. After all, there is close to $4 billion in monthly charges, taxpayer subsidies, fees, and fines at stake.
Update: The Senate didn't pass the Extender Bill. This doesn't necessarily mean the amendment won't come back up. In fact with the vote of 63-33 it got, there's a very good chance it'll be back.
As for the vote on Friday:
"Tonight, every single Republican voted to deny states critical aid that would keep firefighters, police offices and teachers employed," said Jim Manley, spokesman for Senate Majority Leader Harry Reid (D-Nev.). "And tonight, every single Republican voted to tell the one in ten Americans who have lost their jobs that they are on their own."
By the end of this week, 903,000 people who have been unemployed for longer than six months will have missed benefits checks they would otherwise have received had Congress managed to reauthorize the stimulus bill provisions that expired on June 1. By the end of next week, that number will climb to 1.2 million....
"Tonight, every Republican voted to protect wealthy bankers, hedge fund and Wall Street CEOs from paying their fair share of taxes," said Manley. "Tonight, every single Republican voted to allow big businesses to continue to outsource American jobs, and get a tax break for doing it."
Republicans pushed earlier Thursday for an alternate bill that would have extended unemployment benefits but dropped the Medicaid assistance, which Sen. John Thune (R-S.D.) termed a "$24 billion state bailout." The Republican alternative would have reduced the deficit by, among other things, slashing spending at federal agencies. This bill failed by a vote of 41 to 57.
"Poll after poll demonstrates that the voting public wants Congress to protect and support the unemployed and it is time for them to stop playing dangerous games with people's lives," said Judy Conti of the National Employment Law Project, which recently commissioned a poll that showed 74 percent of registered voters think it's more important to preserve jobless aid programs than to reduce the deficit. "The Senate should not recess until HR 4312 is passed, and the House should treat it with the same urgency. The nearly million workers who have lost their benefits while these politicians have used them to score cheap poiints in an election year deserve much better than this."
Here's the rest of that story: http://www.huffingtonpost.com/2010/06/17/senate-jobs-bill-fails-again_n_616732.html?ir=Business
Here's the Press Release from Franken's office:
Franken, Snowe, Murray Homeowner Advocate Amendment Passes The Senate
Bipartisan Amendment To Safety Net Legislation Would Assist More Than 20,000 Minnesotans In Danger Of Losing Their Homes
WASHINGTON, D.C. [06/16/10] – The Senate passed an amendment offered by U.S. Sens. Al Franken (D-Minn.), Olympia J. Snowe (R-Maine), and Patty Murray (D-Wash.) to the safety net legislation now being considered on the Senate floor. The proposal will create an Office of the Homeowner Advocate, funded from existing sources, whose focus would be on assisting homeowners who believe their mortgage servicer is breaking the rules. Currently, these families have nowhere to turn when wrongly denied from the assistance program, or encounter difficulties in navigating the already stressful system of avoiding foreclosure.
The Franken amendment passed with broad bipartisan support, 63 to 33.
“This victory means help for the many Minnesotans who are in danger of losing their homes through no fault of their own,” said Sen. Franken. “These families are doing their best in a tough economy that they didn’t create. And they need to know there’s someone who has their back when they’re trying to navigate the already stressful system of avoiding foreclosure.”
“I could not be more pleased that the Office of Homeowner Advocate Amendment passed the Senate, and by a bipartisan vote. As Mainers and Americans know too well, these turbulent economic times, in which we have witnessed record high unemployment rates, have been confounded by the housing market crisis and certain mortgage servicers who are, frankly, taking advantage of our nation’s families,” said Sen. Snowe. “By creating an Office of the Homeowner Advocate, these Americans will receive the vital assistance they require when they are faced with the daunting foreclosure system.”
“Washington state families who have been hit hard by lost jobs and plummeting housing prices are fighting to stay in their homes,” said Senator Murray. “We need to make sure that the programs we put in place to help these families are actually working and that the big banks are being forced to play by the rules. Giving families a strong voice in this process is critical to preventing future foreclosures and speeding our economic recovery.”
The Office of the Homeowner Advocate is modeled after the successful Office of the Taxpayer Advocate at the Internal Revenue Service. It aims to help resolve problems with the Home Affordable Modification Program (HAMP), a program developed by the U.S. Treasury Department to help homeowners struggling to keep their homes. It would be funded from money that is available for the costs of administering the HAMP program, but is not otherwise committed.
18,800 Minnesotans currently participate in the HAMP program and stand to benefit immediately from the Franken amendment. More could participate in HAMP if the proposal goes through, as the Office of the Homeowner Advocate would be tasked with correcting the mistakes currently denying them eligibility. As the foreclosure crisis goes on, many more people are expected to join the HAMP program, which was originally expected to help three to four million homeowners nationwide.
The Office of the Homeowner Advocate would have three primary functions: To assist homeowners, housing counselors, and housing lawyers in resolving problems with the HAMP program; to identify areas where homeowners are having problems in dealing with the HAMP program; and to identify possible administrative and legislative changes to HAMP.
The Office of the Homeowner Advocate would:
- Have an independent director, appointed by the Secretary of Treasury in consultation with the Secretary of Housing and Urban Development. This director would have a background as an advocate for homeowners and have experience dealing with mortgage servicers. The director cannot have worked for a servicer or for the Treasury Department within the past four years.
- Make the Director available to testify in front of the Senate Banking Committee and House Committee on Financial Services at least four times a year, or at any time at the request of the Chairs of either committee, and issue a formal report to Congress once a year.
- Have staff designated by the Director to have the authority, on a case-by-case basis, to implement servicer remedies, subject to the approval of the Assistant Secretary for Financial Stability. This will help to ensure that the staff of the Office of the Homeowner Advocate actually have the ability to make servicers follow the rules.
This story can also be seen at HuffPost: http://www.huffingtonpost.com/richard-zombeck/finally-some-hope-of-hamp_b_615284.html
