Letter to The Honorable Timothy Geithner, Department of The Treasury

Letter

Congresswoman Dina Titus of Nevada's Third District sent a letter to Treasury Secretary Timothy Geithner today on the need to improve the Home Affordable Modification Program by holding mortgage servicers accountable for failing to follow the program's requirements. Titus has been sending monthly letters to the administration on the foreclosure crisis in Southern Nevada.

Below is the text of the letter.

May 12, 2010

The Honorable Timothy Geithner
Department of The Treasury
1500 Pennsylvania Ave. N.W.
Washington, D.C. 20220

Dear Secretary Geithner,

In a recent report by the Congressional Oversight Panel (COP), entitled "Evaluating Progress of TARP Foreclosure Mitigation Programs," released earlier this month, the Panel offers a number of suggestions to Treasury for improving foreclosure prevention efforts. As you know, the COP was created in 2008 as part of the passage of the Troubled Asset Relief Program and is charged with "reviewing the current state of financial markets and the regulatory system."

While I encourage you to consider all of these recommendations, I write today to ask that you give special consideration to one proposal in particular that I believe will greatly increase accountability and responsiveness from mortgage servicers participating in the Home Affordable Modification Program (HAMP).

The COP report suggests that Treasury "prohibit HAMP-participating servicers from proceeding with a foreclosure unless a valid denial or cancellation reason is reported, and impose meaningful monetary sanctions for failure to properly report denial and cancellation reasons." I agree that this reform is sorely needed.

My office was one of the first offices to work directly with homeowners and servicers to help families stay in their homes. One of the most common complaints I receive from my constituents is that they are denied a modification without a documented reason. According to the COP, "for 71% of denials no valid reason was provided." I am seriously concerned about the lack of transparency surrounding the denial process. Servicers and mortgage holders are given too much power with a total lack of oversight. It is imperative that more is done to ensure lenders are strictly following the program guidelines and requirements. For those who do not, it is important that your department impose immediate and meaningful sanctions. While I understand that you have already instituted "claw backs" on incentives for servicers who violate the program guidelines, repeat offenders must face more serious punishments.

It is also important that you establish performance benchmarks for individual servicers and sanctions for those who fail to meet benchmarks. Despite the enormous length of time servicers have had for implementation, it is unfathomable that so many servicers still have dismal performance records. I am concerned that the attitude of many servicers is to hope that homeowners will stop trying to fight foreclosure and that Treasury will abandon its efforts to help homeowners.

It is my belief that servicers have had more than sufficient amount of time to implement the "Making Home Affordable Program." If you do not believe that servicers are able or willing to fully engage in these efforts after more than a year, it may be time to consider alternatives to help families stay in their homes.

Sincerely,

Dina Titus
Member of Congress

C.C. Elizabeth Warren, Chairwoman - Congressional Oversight Panel

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