Congressional Oversight Panel member blasts Treasury Department on Mortgage Fraud

[Better Believe It]

Damon Silvers Blasts Treasury, Tries to Get Them to Wake Up on Mortgage Fraud
By: David Dayen
October 28, 2010

The Congressional Oversight Panel, which Elizabeth Warren used to run but which will now be chaired by folk-hero Sen. Ted Kaufman, held a hearing on TARP foreclosure mitigation programs, basically HAMP(Home Affordable Modification Program) and its counterparts, yesterday. You can see all the statements from everyone on the panel and the witnesses at the link.

I could write a story about any part of this very interesting hearing, but I want to focus in on Damon Silvers. He’s the director of policy and Special Counsel for the AFL-CIO, and a member of the panel. And his performance yesterday was remarkable. First, the opening statement. I want to excerpt this because nobody in our bloodless government seems to understand it:

"As I have said at every hearing on this subject, foreclosing on a family’s home is not a mere financial transaction. It marks a profound financial loss and often devastating emotional defeat for the homeowner, psychological trauma and social dislocation for the homeowners’ children, falling property values and destabilized communities for the homeowners’ neighbors. Mass foreclosures are a sure sign of a failing economy and a society that has been unable to provide basic economic security to its citizens. Mass foreclosures should no more be encouraged by our government than should contagious diseases or catastrophic floods."
(Public statement, not copyrighted material)

Every time you hear that we have to “get foreclosures moving again,” think of this paragraph.

Silvers turns to HAMP, and says correctly that mortgage servicers “simply did not restructure the loans.” And compounding this is what we have learned about foreclosure fraud. Silvers totally gets it:

And now we have learned that the foreclosure process itself, and our system of property law itself is cracking under the strain of the bubble and the bust. There appears to be strong evidence that servicer banks have improperly executed and filed with the courts a large number of affidavits in the pursuit of foreclosures. Worse yet, since the affidavit revelations, evidence has mounted that there are substantive problems with the liens that support significant numbers of securitized mortgages.
Public statement, not copyrighted material)

Silvers asks why NACA (Neighborhood Assistance Corporation of America), with their budget of less than $20 million, can get 20,000 mortgage modifications done in one week in one city, but the government can’t get more than 20,000 modifications a month made permanent, with a $50 billion dollar budget. Great question. Then he asks if HAMP knowingly gave money to servicers who foreclosed on homes where they did not have a valid lien. Then he drops a stink bomb in the room.

Finally, I would like to know what plans the Treasury Department and the OCC (Office of the Comptroller of the Currency), have for dealing with the possibility that either the major servicer banks will be held liable for their failures to properly service $7 trillion in mortgages, or that the collateral for significant amounts of mortgage loans will turn out to be invalid. These possibilities would appear to present systemic risks of the type that TARP was enacted to address, and in particular, would appear to have grave consequences for the very institutions that TARP initially capitalized, and who were allowed to exit TARP on the theory they were now healthy. (Public statement, not copyrighted material)

Read the full article at:

http://news.firedoglake.com/2010/10/28/damon-silvers-blasts-treasury-tries-to-get-them-to-wake-up-on-mortgage-fraud/


Damon Silvers is a lawyer and an associate general counsel for the AFL-CIO. Silvers led the AFL-CIO legal team that won severance payments for laid off Enron and WorldCom workers.

He is a member of the Public Company Accounting Oversight Board Standing Advisory Group, the Financial Accounting Standards Board User Advisory Council, and the American Academy of Arts and Sciences Corporate Governance Task Force

On November 14, 2008 Mr. Silvers was appointed by Speaker of the House Nancy Pelosi and the majority leader of the Senate Harry Reid (following consultation with the minority leaders of Congress ) to serve on the five-member Congressional Oversight Panel created to oversee the implementation of the Emergency Economic Stabilization Act.



DAMON SILVERS

COP Hearing on TARP Foreclosure Mitigation Programs

On Wednesday, October 27 at 10:00 a.m., the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) held a hearing in room 138 of the Dirksen Senate Office Building. Archived video and transcripts of the testimony is available at the following link:

http://cop.senate.gov/hearings/library/hearing-102710-foreclosure.cfm

Opening Statement of Damon Silvers
Congressional Oversight Panel Hearing on TARP Foreclosure Mitigation Programs
October 27, 2010

Good morning. Today’s hearing is the fourth this Panel has held addressing the foreclosure crisis. Congress explicitly required in the Emergency Economic Stabilization Act of 2008 that the powers it granted the Treasury Department in the Act be used in part to reduce the incidence of foreclosures. In response, the Treasury Department in the spring of 2009 created the HAMP program and since then has created a number of other programs aimed at reducing foreclosures.

As I have said at every hearing on this subject, foreclosing on a family’s home is not a mere financial transaction. It marks a profound financial loss and often devastating emotional defeat for the homeowner, psychological trauma and social dislocation for the homeowners’ children, falling property values and destabilized communities for the homeowners’ neighbors. Mass foreclosures are a sure sign of a failing economy and a society that has been unable to provide basic economic security to its citizens. Mass foreclosures should no more be encouraged by our government than should contagious diseases or catastrophic floods.

These reasons alone would justify aggressive government action to prevent foreclosures in the wake of the housing bubble and the epidemic of exploitative lending practices by our financial institutions. But the social impact of foreclosures is not by any means the full story of the harm done to our country by the foreclosure epidemic. Mass foreclosures drive down real estate prices—shrinking the wealth of American households, weakening consumer confidence and the solvency of our financial system.

It has been clear since the beginning of the financial crisis that borrowers, lenders, and the public at large had a profound interest in restructuring loans to enable homeowners who had the ability to make lower payments to stay in their homes. And yet as the financial crisis escalated, the banks in their role as mortgage servicers simply did not restructure the loans. The Treasury Department created HAMP, offering $50 billion in incentives for the banks to restructure the loans—and a year and a half later, we have only 467,000 permanent modifications, compared to 7 million homeowners in the process of foreclosure. Let me note that I think that helping 467,000 families avoid foreclosure is a good thing. But it does not appear to be good enough.

And now we have learned that the foreclosure process itself, and our system of property law itself is cracking under the strain of the bubble and the bust. There appears to be strong evidence
that servicer banks have improperly executed and filed with the courts a large number of affidavits in the pursuit of foreclosures. Worse yet, since the affidavit revelations, evidence has mounted that there are substantive problems with the liens that support significant numbers of securitized mortgages.

Today I hope we can shed light on whether 467,000 permanent modifications, plus another 20,000 or so permanent modifications a month is the best that we can hope for from HAMP. In particular I would like to understand why NACA, a housing advocate group with a budget of less than $20 million, can process 20,000 people seeking mortgage modifications in one week in one city, and the United States government with a budget of $50 billion can only do 20,000 permanent modifications a month across the whole country.

Second, I would like to know whether HAMP has paid out money to servicers to ensure they did not foreclose on homeowners in situations where the servicer did not actually have a valid lien, or had filed a false affidavit with a court. Further I would like to know what plans the Treasury Department has for finding out whether this has occurred.

Finally, I would like to know what plans the Treasury Department and the OCC have for dealing with the possibility that either the major servicer banks will be held liable for their failures to properly service $7 trillion in mortgages, or that the collateral for significant amounts of mortgage loans will turn out to be invalid. These possibilities would appear to present systemic risks of the type that TARP was enacted to address, and in particular, would appear to have grave consequences for the very institutions that TARP initially capitalized, and who were allowed to exit TARP on the theory they were now healthy.

This hearing involves some of the most important issues facing our country today. I look forward to the witnesses’ testimony.

http://cop.senate.gov/documents/statement-102710-silvers.pdf




NACA’S HOME SAVE PROGRAM - OVERVIEW

The mortgage crisis is the result of unbelievable greed and exploitation by Wall Street and the largest financial institutions. While the major lenders in America and the world try to blame the homeowners, it is clear that they provided mortgages to working people that were structured to fail.

NACA has been in the forefront of fighting these lenders as well as being nationally recognized as the largest and most effective organization in assisting homeowners with an unaffordable mortgage. The primary NACA solution is to restructure the existing mortgage by permanently reducing the interest rate to achieve an affordable mortgage payment. This is the best solution for homeowners with an unaffordable mortgage payment. Thousands of homeowners working with NACA have had there mortgages restructured with interest rates reduced to 4%, 3% and as low as 2% and where necessary the outstanding principal reduced. Homeowners often save over $500 a month and some over $1,000 a month.

As a result of NACA’s aggressive advocacy and state-of-the-art operations, we have legally binding agreements with all the major lenders/servicers and investors (i.e. Fannie Mae and Freddie Mac) covering approximately 90% of homeowners to achieve to a restructure or forbearance and is advocating against others. All of NACA’s services are Free. NACA also provides for free a forensic audit to determine any violations in obtaining your current mortgage.

Mortgage Restructure Solution:
The most viable and appropriate solution for most homeowners to save their home and to achieve true homeownership is to restructure their existing mortgage. This can be accomplished by reducing either or both the interest rate and outstanding mortgage amount to achieve an affordable mortgage payment. The mortgage payment would be based on what you can afford as documented on the Affordability Budget as described below. A Restructure changes the terms of the existing mortgage. It is not a refinance (i.e. new loan) and thus not conditioned on the major limitations for refinances or the paying off of a second mortgage. If the homeowner is unemployed NACA provides a forbearance with a minimum payment until that have steady income to have their mortgage restructured.

NACA does not advocate other solutions often pushed by Lender/Servicers and the government. These options include payment plans that increase the already unaffordable mortgage payment or where the payments go up over time. NACA does not consider selling your home or a deed-in-lieu to be viable solutions. If you are determined to keep your home and are willing to work with you in aggressive advocacy there is a good chance that you will not lose it. Servicers and investors are now more willing to restructure a loan given the collapse of the mortgage market and the significant loss they would incur with a foreclosure.

Read more at:

http://www.naca.com/program/homesaveProgram.jsp

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