Following the Obama administration's announcement that it was stepping up pressure on servicers participating in the Home Affordable Modification Program (HAMP), Center for Responsible Lending President Michael Calhoun issued a statement saying the program adjustments ‘do little but highlight the continued failure of lenders' voluntary efforts to stop the foreclosure crisis.’
‘Lenders have insisted for almost three years now that they will voluntarily address the foreclosure crisis, but the record shows they've made too few long-term modifications,’ Calhoun said. "The HAMP program the administration introduced last spring was an improvement, but it was originally designed as just one part of the solution, along with allowing homeowners to seek loan modifications through the existing court system."
Calhoun called on Congress to take additional steps, including allowing homeowners the option of lowering their principal mortgage balance through bankruptcy courts – the so-called bankruptcy cramdown. Lawmakers, including House Financial Services Committee Chair Barney Frank, D-Mass., have called for passage of cramdown legislation. Earlier this year, a cramdown bill introduced by Sen. Richard Durbin, D-Ill., was decisively defeated in the Senate.
Calhoun also recommended the creation of a "low cost, short term" loan program for unemployed homeowners who have no other option for keeping current on their mortgage. Moreover, Calhoun said the Treasury Department should be required to make all loan servicing HAMP data available to the public so that taxpayers can better evaluate the program and the efforts of individual companies.
SOURCE: Center for Responsible Lending