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Passing the buck

Congressional hearings resume today on the alleged mishandling of thousands of foreclosure documents. Although employees for several of these servicers have admitted to signing thousands of foreclosure documents illegally, industry leaders still claim they’re handling paperwork correctly. In the prepared statement of her testimony, Bank of America’s top mortgage official Barbara Desoer claims “Thus far we have confirmed the basis for our foreclosure decisions has been accurate.”

Desoer also charts a puzzling change of course, claiming the blame for the landslide of denied mortgage modifications falls on investors. Although industry leaders have long pointed the finger at homeowners they say aren’t qualified or don’t provide proper paperwork, Desoer now says investors are the reason BofA stalls or flat-out refuses the majority of mortgage modifications.

Investors were quick to fire back, with the Association of Mortgage Investors releasing a statement contradicting Desoer’s claims. “Regrettably, these programs have often proven unsuccessful due to the servicers…who continue to inhibit sustainable modifications. Mortgage investors have no control over the modification process, and therefore share many of the frustrations that homeowners and state attorneys general are experiencing when dealing with mortgage servicers.”

A recent Pro Publica analysis supports the stance of investors, showing that nearly all contracts between investors and servicers lacked any of the modification prohibitions Desoer refers to.

The Congressional hearings include testimony from several banking officials, as well as Tom Miller, Iowa Attorney General and head of the 50-state investigation into mortgage servicers.

Since the Congressional session will only last a few more weeks, any action will likely be postponed until the new Congress convenes in January. Regardless of the shifting party makeup of the chambers, new polling by Lake Research shows the issue is not a partisan one. In fact, 75% of those polled – regardless of party affiliation - are in favor of requiring banks to work with homeowners, and 72% believe legislators have not done enough to hold mortgage lenders and banks accountable for the foreclosure crisis.

While the call for accountability in the mortgage servicing industry is growing louder at the federal level, it’s been heard here in Oregon for quite some time. Economic Fairness Oregon will be working with state legislators this session to push servicers to work with the thousands of Oregonians struggling to keep their homes. Learn more about the proposal here.