CQ TODAY – BANKING & FINANCIAL SERVICES
Aug. 5, 2008 – 6:00 p.m.
Frank Asks Mortgage Industry to Wait for Anti-Foreclosure Program

Massachusetts Democrat Barney Frank, one of the primary writers of landmark housing legislation the president signed into law last week, continued Tuesday to pressure the mortgage industry to delay foreclosures.

Frank, the chairman of the House Financial Services Committee, wants to forestall foreclosures until a program aimed at helping at-risk homeowners takes effect Oct. 1.

The new law (PL 110-289) authorized $300 billion in loan guarantees for a voluntary program called Hope for Homeowners to help eligible borrowers refinance into viable mortgages.

In a letter sent to 19 different banking and mortgage industry executives — including the heads of Fannie Mae and Freddie Mac — Frank requested they “forbear foreclosures for potentially eligible homeowners over the next few months, review their loan documents and prepare to refinance eligible borrowers by Oct. 1.”

Fellow panel members Melvin Watt, D-N.C., Maxine Waters, D-Calif., and Brad Miller, D-N.C., also signed the letter.

Letter recipients were asked to provide information on the anticipated need for principal write-downs — generally a last option for lenders in which lenders reduce the amount owed on a mortgage in an effort to ease payments.

The members also asked recipients to provide information on whether prior loan modifications would disqualify borrowers from the program.

The letter comes a little more than a week after the Financial Services panel held a hearing on mortgage servicing practices and foreclosure mitigation, during which Frank first laid out his request for cooperation from lenders.

“I would hope that no one would be foreclosed upon between now and Oct. 1 who would have qualified for this program had the effective date been immediate,” Frank said. “And that is within your power to do. You can show some forbearance.”

The letter requested all recipients respond to the Financial Services Committee by Aug. 31. The panel is expected to hold a followup hearing Sept. 17.

Source: CQ Today
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