U.S. REP. GABRIELLE GIFFORDS CALLS FOR FORECLOSURE MORATORIUM
Congresswoman says a halt to foreclosures would allow lenders and loan servicers time to ‘get their act together’
TUCSON – U.S. Rep. Gabrielle Giffords today called for an immediate three-month national moratorium on foreclosures so lenders and loan servicers can address rampant problems that have led to homeowners being wrongly removed from their homes.
“Foreclosures are at an all-time high nationally and Arizona has the third-highest foreclosure rate in the country,” Giffords said. “Standing by and doing nothing is not an option when the men and women I represent face the prospect of losing the roof over their heads. A moratorium would help make sure that homeowners facing foreclosure will be treated fairly.”
Giffords’ call for a moratorium comes amid numerous reports of turmoil in the home lending industry. A story on the front page of today’s New York Times reported that “questionable foreclosure practices” are plaguing two of the country’s biggest home lenders.
One of those lenders, JPMorgan Chase, announced Wednesday that it will freeze foreclosures for 56,000 borrowers in 23 states because of flawed paperwork. According to a front page story in The Washington Post, the problems included a bank employee who signed off on thousands of foreclosure affidavits without reviewing them thoroughly.
On Sept. 20, Ally Financial, formerly GMAC Mortgage, halted evictions and the resale of repossessed homes after it disclosed similar problems.
“One family wrongly foreclosed on is a tragedy we simply cannot accept,” Giffords said. ”The widespread disarray among lenders and loan servicers is making a bad situation worse for many homeowners. A moratorium would give lending institutions and servicers time to get their act together and prevent any more mistakes from being made.”
The congresswoman wants lenders to voluntarily follow suit and believes that a three-month halt to foreclosures would provide lenders and loan servicers sufficient time to rectify many of the problems. She also believes that there should also be mandatory mediation by an independent third party.
According to the latest figures, one in every 165 homes in Arizona is in the foreclosure process. Only Nevada and Florida have higher foreclosure rates.
Cris Yonsetto Poor, director of Family Housing Resources, a Tucson non-profit homeowner advocacy organization, welcomed Giffords’ call for a moratorium.
“Congresswoman Giffords is doing the right thing by calling for this moratorium,” she said. “As counselors, we must repeatedly make sure that the lenders have the updated information that we have sent them. When a case nears the foreclosure date but is still pending a modification, we not only call the servicer, but also call the foreclosure attorney at least weekly to request that foreclosure plans be postponed to allow more time for the modification. Often times, the two do not communicate. I hesitate to think about what could happen if we miss making one of these calls.”
Beverly Parker, housing and public benefits manager for Southern Arizona Legal Aid, also applauded the move. “It would be great to have a moratorium,” she said “With a moratorium, we would be able to work with homeowners and negotiate in a less stressful environment.”
Parker said there are frequent communications problems among divisions in a lender’s organization that leads to unexpected foreclosures. Arizona law requires that homeowners who face foreclosure be told the date of a trustee’s sale of the property. But if that sale is postponed, there is no legal requirement that the lender tell the homeowner of the new sale date, Parker said. That has led to some homeowners being evicted and having their mortgage foreclosed while they believed they still were in negotiations with their lender.
Evelia Martinez, the special projects manager for Don’t Borrow Trouble, said her foreclosure avoidance organization supports any efforts to halt foreclosures.
“We continue to see families displaced because of the servicers’ lack of action or incorrect action when assessing homeowners’ qualifications for mortgage modifications,” she said. “We have families that have been struggling in excess of two years to have their mortgages modified.”
Since January 2009, Giffords’ office has been contacted by at least 600 Southern Arizonans who were facing the risk of foreclosure. About 85 percent of those homeowners were dealing with problems caused by lender delays in processing paperwork, lenders that have lost paperwork or lenders that have not responded to repeated requests for information.
“The problems we are seeing approach gross carelessness,” Giffords said. “Just two days ago, my office helped a family that has lived in their home for 12 years. In one hand, they had a letter from their bank stating they were being reviewed for a loan modification. In the other, they had a summons to appear in court to be evicted.”
But, the congresswoman added, this was just one of many similar cases.
“Earlier this week, my office contacted a lender who was foreclosing on a constituent’s home,” she said. “The lender claimed to never have received my constituent’s signed loan modification agreement and mortgage payment. My office provided the lender with the delivery confirmation tracking number, the name of the employee who received the delivery and proof of the cancelled check. We had to prove to this lender that not only had they received the documents, but had also already deposited my constituent’s payment.”
One of the most appalling cases in which Giffords’ office got involved concerned a Gulf War veteran who was chronically two weeks late on his mortgage because he was undergoing chemotherapy. His attempts to work with his bank proved fruitless, his home was foreclosed and he was served with eviction papers.
“Only after my office stepped in did the bank agree to allow this veteran to keep his home,” Giffords said. “Human tragedies like this should not be happening.”
Giffords also is cosponsoring legislation aimed at reducing to market rates 30 million mortgages held or backed by Fannie Mae and Freddie Mac.
The Housing Opportunity and Mortgage Equity (HOME) Act was introduced in the House this week by Rep. Dennis Cardoza, a California Democrat. The bill would stabilize the foreclosure crisis through the federal government’s conservatorship of Fannie Mae and Freddie Mac. It would use the federal government’s conservatorship and backing of Fannie and Freddie mortgages to secure the current low market rates for longer fixed terms.
The bill would help stabilize the housing market by decreasing the inventory of foreclosed homes and reducing declines in property values from issues surrounding blight and abandonment. At the same time, those with mortgages backed by Fannie and Freddie would have additional disposable income, providing a direct economic stimulus.
The legislation initially was introduced in January 2009. It has been modified based on new input received from leading economists and the House Financial Services Committee. It also reflects changes in the housing market.
It was reintroduced with development from Columbia Business School Senior Vice Dean Christopher Mayer and Moody’s Analytics Chief Economist Mark Zandi. The proposal has gained increased interest as more economists realize that measures aimed at addressing the foreclosure meltdown have not been sufficient.
Mortgages currently held by Fannie Mae and Freddie Mac that meet some basic criteria will qualify for the opportunity to refinance without penalty fee barriers. To fund the program, Fannie and Freddie would issue new mortgage-backed securities to fund the refinanced mortgages and use the proceeds to pay off the existing mortgages.
Fannie and Freddie would receive the same cash flow to cover default risk that they do now, passing along the reductions in financing costs to borrowers.
one thing that all of these posts seem to leave out is the economic motive driving this fraud . in research that I have done over the last three years , it appears that foreclosures mean 30 to 50 Billion dollars in revenue to the foreclosing servicer from fees from the mortgage owner. in my case, the owner on both of m ytrusts allegedly is the FEDERAL RESERVE BANK OF NEW YORK and the FEDERAL RESERVE Chairman. the SEC has confirmed this as well as other sources. in testimoney to congress as well as new york times articles, this allegation above was confirmed. most people do NOT know abuot qualifed written requests allowed under RESPA federal law to find out who owns their mortgages.
The implications of the FEDERAL RESERVE BANK OF NEW YORK and Mr Bernake being behind much of this predatorly lending aka reverse redlining and all of these illegal fraduelent foreclosures based on fraudulently prepared mortgage origination documents from when the homeowner is very major in terms of its implications.
when are we homeowners going to realize that the authority to do this crap is coming from the Senate and House banking committees and the federal regulators like the OCC Comptrollers Office. Until we start writing our senators and congressman in mass we are not going to counter the Capitol Hill Banking Blob that lobbies Congress to write theselaws to allow this fraud.
We need to stand up and write and write and call and call Congress demanding investigations and prosecutions. Five trillion dollars was paid to bail out these banks and that money came form the middle class since all of your homes are worthless .
this is the bigggest scam in us history and no one has gone to jail.
Law enforcement and regulators already have plenty of evidence to present to grand juries for indictments, and many prosecutors have opened investigations. However, many prosecutors will look the other way when the rich and powerful break the law. Perhaps it is time to vote them out of office where we can and seek impeachment and indictment of other prosecutors who continue to drag their feet and protect banksters while they steal the homes of millions of Americans.
Thank you for your reply. You are correct. However, it is bit more fundamental than that. In CUOMO vs Clearinghouse (this is federal reserve system) nicely disguised in the styling federal case, the court ruled against cuomo, atty general of new york concerning his trying to go after national banks for fraud etc. in other words, the federal reserve appears allegedly to be protecting these banks along with the OCC . this protection enables these institutions to think they are the U.S. Government and do anything they want and get away with it. in other words, they do what they want and when they want. I have read the latest RICO lawsuit against some national banks. Federal lawsuits need to be suing the fed and the occ as well in their list of plaintiffs. voters need to be writing and calling their congressman and senators and especially their local state capitols. if they don”t , these banks will continue to operate their PONZEII scheme. They want to make trillions so until we stand up to them , they are going to continue allededly this unmitigated interstate fraud. finally, while focusing on foreclousre, the homeowner should conduct their own forensic audit of their mortgage documents and find the flaws that may be there . These flaws may undermine any bank claim against their house and demand a certified forensice true copy of the DEEDS of TRUST for their mortgages which is notarized and examined by a forensic document specialist. Many of these loans have no original signed by the howneowner DEED of TRUST. without that original document, banks do NOT have a legitimate legal claim to foreclose in many states. in non judicial foreclosure states , like oregon and washington, we homeowners need to get the law changed back to judicial foreclosure. Right now we are sitting nakend and vulnerable to all these lenders t oconduct total wholesale fraud.
thanks for your replying to my post.
Alot of us have written and e-mailed and called our elected officials including the White House. It falls on deaf ears. Just like it did when the FBI warned about the rampant mortgage fraud in the industry as well as the coming financial collapse due to all of the fraud. I say we should not vote for any of them next time because obviously EVERYTHING IS RIGGED in their favor. From Wall Street to the Banksters to the halls of Congress to the courtrooms of America and including our elections and so on. There is no other explaination for the utter disregard for the people who are having their homes stoled from them Illegally from banksters with the blessings of our own elected officials. Who OWNS FANNIE/FREDDIE? They back 70% or more of the home loans in this Country and they are a GSE. A Government that STEALS FROM IT’S OWN PEOPLE IS A KLEPTOCRACY. What a bunch of lousy OLIGARCHS.