The Banking, Housing and Urban Affairs Committee of the United States Senate recently held a hearing on Housing Finance Reform to discuss potential national mortgage servicing standards. As the debt ceiling debate raged on in Washington, experts in the banking and loan modification sectors stressed the need for national standards that the Federal Housing Administration is looking to implement by September 1st. The standards would look to simply and clarify all aspects of the mortgage process, from making regular payments to modifying a home loan.
Members of the committee, along with the expert witnesses brought in to give testimony on the subject, highlighted the length of time that the housing market has taken to recover. In 2007 the mortgage crisis was viewed as a short-term problem arising from subprime mortgages. Over four years later, the mortgage industry is still suffering, with dwindling home sales and a striking number of homeowners who cannot afford their mortgages.
The committee acknowledged that under- and unemployment is a serious issue that contributes to borrowers having problems with their mortgages, but they believe there is much more to the equation. Faith Schwartz, Executive Director of the HOPE Now Alliance, emphasized that customers also need confidence in the mortgage payment or foreclosure prevention process. They especially need to know their options when they're applying for a loan modification.
She outlined three key changes that would come with national mortgage servicing standards: a single point person with whom to discuss the loan modification, shorter wait times and clearer explanation of the dual process of continuing with the foreclosure process at the same time as processing the loan modification. She added that consistency, accuracy of information, empathy towards the homeowner and access to information are the key servicing points that need to be implemented.
Jack Hopkins, President and CEO of CorTrust Community Bank with locations in
South Dakota and Minnesota, spoke on behalf of the Independent Community Bankers of America. He urged Congress to not allow these FHA standards to include community banks because they would essentially put independent banks out of business. He argued that this would further consolidate the mortgage lending industry because smaller banks do not have the resources to follow all suggested standards and would fail as a consequence, leaving a lack of options in the lending market that is ultimately bad for the very consumers the committee looks to protect.
Schwartz encouraged the committee to look at mortgage servicing standards already in the works, such as proposals by Attorneys General offices, measures in last year's Dodd-Frank bill, the FHA compensation model and Making Home Affordable forbearance plans which all have efforts on the table, instead of attempting to create a new one. She also emphasized the need to acknowledge the successes that have already occurred, such as the 4.6 million permanent loan modifications that the Making Home Affordable program has completed to date.
If these changes are implemented in September as planned or at a later date, the process of obtaining a loan modification could be much easier for homeowners struggling with mortgage payments. Wait times, contact points on the lending side and explaining the dual track process foreclosure and applying for a loan modification are areas that many hope would be improved if these standards were instituted. It is important now more than ever to have an experienced real estate attorney to guide you through this process and ensure that your loan modification is properly serviced. Contact us today to schedule a free initial consultation so we can ensure you the best possible loan modification experience and a fresh financial start.
