WHO IS TALKING ABOUT WHAT MATTERS?

Aren’t job losses and foreclosures as important as a “Ground Zero Mosque” (that has not been built, isn’t a mosque or even at ground zero?)

By Danny Schechter, Author of The Crime Of Our Time

We know we live in hard times that are on the verge of getting harder with 500,000 new claims for unemployment last week, a recent record. The stock market may be over for now as fear and panic drives small investors out. Big corporations hoard stashes of cash rather then hire workers.

Foreclosures are up, and the Administration’s programs to stop them are down, well below their stated goals, only helping 1/6th of those promised assistance.

And here’s a statistic for you: 300,000. That’s the number of foreclosure filings every month for the past 17 months. This year, 1.9 million homes will be lost, down from 2 million last year. Is that progress? In July alone, 92, 858 homes were repossessed.

At the same time, the number of cancelled mortgage modifications exceeded the number of successful ones. According to Ml-implode.com, last month, “the number of trial modification cancellations surged to 616,839, greatly outnumbering the 421,804 active permanent modifications.”

The Treasury Department admits its HAMP program did not meet expectations but justifies it on the grounds that it gave homeowners lower payments—thatr is, until they were tossed out of their homes. Critics call this “extend and pretend.”

And don’t think this is only a problem that affects the homeowners about to go homeless. The New York Times quotes Michael Feder, the chief executive of the real estate data firm Radar Logic to the effect that we are all at risk.

“My concern is that if we have another protracted housing dip, it’s going to bring the economy down,” Mr. Feder said. “If consumers don’t think their houses are worth what they were six months ago, they’re not going to go out and spend money. I’m concerned this problem isn’t being addressed.”

The larger point is that even if you believe the economy is already down, it can go lower. No one knows how to “fix it” either just as BP couldn’t plug the “leak” that, truth be told, is still oozing oil, and is 650 feet in scope.

So what are we doing about it? Are we demanding debt relief or a moratorium on foreclosures? Are we shutting down the foreclosure factories

Continue Reading…NewsDissector

SAN JOSE, Calif., Aug. 20 /PRNewswire/ — A group of homeowners today filed a class-action lawsuit against Aurora Loan Services LLC, claiming the mortgage company duped them into paying tens of thousands of dollars each to have troubled mortgages reviewed by the company with promises of loan modifications, only to have their property foreclosed with little or no notice.

The suit states that Aurora reaped more than $100 million in what the court documents call “illicit profits” from the alleged scheme.

Filed in the U.S. District Court for the Northern District of California in San Jose, the suit seeks to represent homeowners who paid the Littleton, Colo.-based company money in exchange for the company’s help in ‘curing’ delinquent home mortgages.

In exchange for between three and six large monthly payments, Aurora said it would halt the foreclosure process and work with homeowners to restructure, modify or resell the loan, allowing homeowners a chance to keep their homes, the suit states.

“We intend to prove that Aurora’s workout plan was nothing more than a cynical ploy to take advantage of homeowners desperate to hold on to their homes,” said Steve Berman, managing partner of Seattle-based Hagens Berman Sobol Shapiro LLP and the attorney representing the proposed class.

The suit contends that, after a period of months, Aurora foreclosed on the homes without giving the borrowers any notice that their requests for loan modification were denied and without allowing borrowers access to any method for ending their loan deficiency, despite the provisions of the workout agreements.

The suit states that the workout agreements provided for four methods for ending loan deficiency: bringing the loan current, refinancing with another lender, modification of the terms of the loan at the discretion of Aurora and another workout option at the company’s discretion.

“The past three years have been tough enough on homeowners without them having to worry about being preyed upon by unscrupulous loan services,” Berman said.

The complaint outlines the stories of two married couples who engaged Aurora in an attempt to forestall foreclosure. The first couple, from San Jose, refinanced their home with a mortgage company in early 2006. Two years later, the couple suffered economic setbacks in the form of poorly performing investments and a temporary loss of work. In late 2009, the couple contacted Aurora and signed one of the so-called workout agreements.

Over the next several months, the couple paid a total of $33,500 in return for Aurora’s promise to work on modifying the terms of the loan, among other possible outcomes. In May 2010, the family was served with a Notice to Vacate, indicating their home had been sold in foreclosure. The family had received no prior notice that the foreclosure process had been completed. In addition, Aurora did not notify the family that it had been denied a loan modification, according to the complaint.

In another instance, a second San Jose couple refinanced their home in mid-2007. Two years later, the couple suffered financial hardship as a result of an illness and the death of a parent, which led to increased expenses and loss of income. In early 2009, the couple contacted Aurora and signed one of the company’s workout agreements, the complaint alleges.

Over the next several months, the family paid a total of $23,700 in return for Aurora’s promise to work on modifying the terms of their loan. Like the first couple, the family was served with a Notice to Vacate in late June 2010, signaling their home had been sold in foreclosure. The family was not told prior to receiving the notice that the foreclosure process on their home had begun, according to the complaint.

“We’ve heard of cases like this a lot over the last few years,” Berman said. “We’d like to bring struggling homeowners some sense of relief.”

The complaint, which can be found at www.hbsslaw.com/cases-and-investigations/aurora, accuses Aurora of negligent misrepresentation, unjust enrichment, breach of the implied covenant of good faith and fair dealing, violation of the California Unfair Business Practices Act and other violations of California law.

Hagens Berman believes the workout agreements were fraudulent in nature and seeks to have the agreements declared void. The firm also seeks an injunction against Aurora forbidding the company from continued offering of its deceptive workout agreements, restitution to be determined at trial, damages to be determined at trial and trial and attorneys’ fees.

If you entered into a so-called workout agreement with Aurora, you are encouraged to join this case.

About Hagens Berman

Seattle-based Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices in San Francisco, Chicago, Boston, Los Angeles, Phoenix and Washington, D.C. Founded in 1993, HBSS continues to successfully fight for consumer rights in large, complex litigation. More about the law firm and its successes can be found at www.hbsslaw.com.

Contact: Mark Firmani, Firmani + Associates Inc., 206.443.9357 or mark@firmani.com

SOURCE Hagens Berman Sobol Shapiro LLP

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http://www.hbsslaw.com

Hundreds of mortgage fraud lawsuits planned

Published: Saturday, July 24, 2010

By Jameson Cook, Macomb Daily Staff Writer

Macomb, Oakland cases in federal court but may return to state

Officials at an organization representing homeowners battling their mortgage lenders say hundreds more people in the tri-county area will join additional lawsuits.

Officials at Michigan Loan Compliance Advisory Group Inc. in Troy said they plan to file lawsuits including up to another 1,000 plaintiffs against financial institutions for deceptive lending, excessive fees and other wrongdoing in granting subprime mortgages.

That’s on top of the 88 plaintiffs representing 78 mortgages in Macomb and Oakland counties who through Michigan Loan Compliance sued more than two dozen banks for awarding inflated mortgages to borrowers.

“We’re not stopping,” said May Brikho, senior consultant at Michigan Loan Compliance.

“We’re trying to convince judges there is fraud, there is a scam. The banks are not the victims. They never lost anything.

“We are getting a lot of new plaintiffs who are out of a job and they do not qualify for loan modification. People are telling other people and they are contacting us.”

The pending cases in Macomb, Oakland and a third in Wayne County were filed in state circuit court, but have since been moved to U.S. District Court in Detroit.

However, Loan Compliance attorney Ziyad Kased has asked federal Judge Arthur Tarnow to return the Oakland case to Judge Colleen O’Brien in the Oakland court in Pontiac and said he believes federal Judge Nancy Edmunds on her own may return the Macomb case back to circuit Judge John Foster in Mount Clemens.

Kased said the Oakland case should remain in state court because all of the defendants and plaintiffs do not have different state residences, which is a requirement to get the case moved.

He said that Ocwen and Saxon must gain “concurrence” of the other defendants to warrant permanent transfer and that all of the defendants must be located outside the state.

Attorney Chantelle Neumann, representing Ocwen Loan Servicing LLC, named in the Macomb case, and Saxon Mortgage Co., named in the Oakland case, gained “removal” to federal court for the time being. Neumann said the defendants did not have to gain concurrence from other defendants because the plaintiffs improperly got together.

“Plaintiffs have aggregated their grievances into one mass action in an effort to evade federal jurisdiction,” said Neumann, a Rochester Hills-based lawyer also representing Saxon, in a legal brief.

Kased says the plaintiffs have similar claims.

“There were all victims of the same predatory lending practices listed in the complaint (inflated income, understated debt, manufactured debt to income ratios etc.),” Kased says in a court document.

He contends that the case should remain since three of the defendants are “domestic Michigan corporations.”

He also said that all but three mortgages in the Oakland case are affiliated with co-defendant Mortgage Electronic Registration Systems Inc., so there is a “common thread” among them.

Continue reading….MacombDaily

When Denying Loan Mods, Loan Servicers Often Wrongly Blame Investors

by Karen Weise
ProPublica, Yesterday, 7:50 a.m.

Arthur and Alberta Bailey are about to lose their home near New Orleans, and their mortgage company says one thing stands in the way of relief: The investors who own their mortgage won’t allow any modifications.

It’s a story heard again and again across the country as desperate homeowners try to participate in a federal program created to foster loan modifications and prevent foreclosures. Loan servicers say their hands are tied by Wall Street.

Federal officials, bank officers, housing counselors and investors themselves say that excuse is cited far more often than is justified. In fact, they say, few mortgage deals include such restrictions.

Consider the case of the Baileys. Litton, a subsidiary of Goldman Sachs, services their loan, and Litton’s contract with investors has no clear language banning modifications. In fact, documents show that over 115 other mortgages [1] from the same investment pool have already been modified.

Even the representative of investors in the Baileys’ mortgage says only the servicer can decide when to modify loans. While he couldn’t comment on an individual case, Bank of New York Mellon spokesman Kevin Heine says it’s “misinformation” to say that investors make these decisions.

Servicers can pass the buck because one mortgage often involves many different companies. During the housing bubble, banks often sold mortgages to investors on Wall Street so they wouldn’t have to keep the loans on their own books, freeing them to make even more loans and protecting them from those that went bad. They then hired servicers to handle the day-to-day work of collecting payments from homeowners ­– and to decide when to modify loans. Now loan servicers have been inundated with requests from homeowners trying to avoid foreclosure through the government’s $75 billion mortgage modification program. The Treasury Department estimates that 1.7 million homeowners should qualify for help.

For homeowners, it can be difficult to understand who is responsible for what. This confusion gives servicers a ready excuse for refusing modifications.

Indeed, nobody knows the exact extent to which servicers are passing blame on to investors. Some housing counselors estimate that 10 percent of the denials they see are attributed to investors; others say they see as many as 40 percent. Either way, tens of thousands of homeowners may be affected, their attempts to modify their mortgage wrongly denied.

The prevalence of such false claims by servicers is a “legitimate concern,” said Laurie Maggiano, the Treasury Department’s director of policy for the modification program. “It’s been very frustrating for us.”

Investors are also dismayed, saying servicers are not acting in their best interests. “This is one of those rare alliances where investors and borrowers are on the same page,” according to Laurie Goodman, senior managing director at Amherst Securities, a brokerage firm that specializes in mortgage securities. She says investors have “zero vote” in determining individual loan modifications and, instead of foreclosures, prefer sustainable modifications that lower homeowners’ total debt.

Investor-owned mortgages represent more than a third of trial and permanent modifications in the government’s program [2]. Under the program, servicers must modify the loans of qualified [3] borrowers unless contracts with investors prohibit the modification, or if calculations [4] determine that the investors won’t benefit from a modification. Investors’ contracts rarely prohibit modifications, and at times, ProPublica found, they have been blamed for denials even though other mortgages owned by the same investors have been modified.Even when contracts with investors do have restrictions, servicers don’t appear to be following federal requirements that they ask investors for waivers to allow modifications.

Such requests “never happen,” says David Co, a director at Deutsche Bank’s department that oversees 1,600 residential securities, the complex bundles of mortgages sold to investors.

Treasury’s Maggiano says the government is investigating investor denials and considering greater consequences for servicers that wrongfully deny modifications. Servicers’ compliance and accountability have been a major problem for the government’s program. Treasury has threatened penalties before, but it hasn’t yet issued any [5].

Whose decision is it?

“The very phrase ‘investor restriction,’ I think, is deliberately confusing,” says Joseph Sant, an attorney with Staten Island Legal Services, which represents homeowners in foreclosure. “What we’re talking about are not business entities or people, but inert documents.”

Typically, financial institutions set up mortgage-backed securities as a trust — legally their own entities — and then sell bonds from the trust to investors, which can range from mutual funds to pension funds. At the same time, they sign up trustees to manage the security and hire divisions of their own banks or other companies to act as servicers that work directly with homeowners.

While servicers often tell homeowners that investors decide whose loans can be adjusted, Heine, the spokesman for Bank of New York Mellon, one of the largest trustees that administer mortgage securities, says the responsibility to modify loans “falls squarely to the servicer.”

And the contracts that servicers often blame are usually not a roadblock. A report by John Hunt, a law professor at the University of California, Davis, looked at contracts [6] (PDF) that covered three-quarters of the subprime loans securitized in 2006 and found that only 8 percent prohibited modifications outright. Almost two-thirds of the contracts explicitly gave servicers the authority to make modifications, particularly for homeowners who had defaulted or would likely default soon. The rest of the contracts did not address modifications.

Jeffrey Gentes, an attorney at the Connecticut Fair Housing Center who works with hundreds of homeowners across the state, estimates that in 80 percent of the cases in which he has seen the servicing contracts, no language prevents modifications as the servicers have claimed.

Homeowners’ advocates say that when they successfully disprove a contractual restriction, the servicer just gives another reason for denying the modification. “The investor is cited first until the borrower can prove it otherwise,” says Kevin Stein, associate director of the California Reinvestment Coalition, which helps low-income people and minority groups get access to financial services.

Sant, the Staten Island attorney, says a servicer told one client that the contract with investors forbade extending the length of the mortgage, one key way monthly payments can be reduced through government’s program. But the government has addressed the objection, ruling that if a servicer can’t extend the length of a mortgage, it can still give a modification and just add a balloon payment to the end of the loan. Sant pushed back on the servicer’s attorney, who dropped that reason for denial and instead said the homeowner had failed the computer model [4] that determines eligibility. Sant currently is reviewing the case to determine how to proceed.

Continue reading ….ProPublica

By ALAN ZIBEL (AP) –

WASHINGTON — The number of people dropping out of the Obama administration’s program main program to help those at risk of losing their homes outstripped those who received aid for the second-straight month.

The Treasury Department says about 530,000 borrowers have dropped out of the program as of last month. That’s more than 40 percent of the nearly 1.3 million enrolled since March 2009. It’s a sign that foreclosures could rise and weaken an ailing housing market.

Treasury officials say few of these borrowers will wind up in foreclosure. But many analysts still fear a new wave of foreclosures will weaken the housing market.

Another 390,000 homeowners, or 30 percent of those who started the program, have received permanent loan modifications and are making payments on time.

Copyright © 2010 The Associated Press. All rights reserved.

DinSFLA here…take note on this “Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.”

This being said any of these fool third-party collection agencies that DO NOT do their due diligence will be in a world wind of a surprise! Now not only are they buying of fraud they will have a hard time getting repaid on fraud!

They are going to try to suck the living day lights out of us…Do NOT let your guard down.

ORLANDO, Fla. – July 6, 2010 – With more than half of the Central Florida’s homeowners owing more for their homes than the properties are worth, the question for some has become: How do I get out of this?

Of all the existing-home sales reported by Realtors in the core Orlando market in May, 23 percent were short sales. They are called “short” sales because the sales price come up “short” of, or less than, the amount owed on the mortgage.

What these homeowners, whose loans are “underwater,” may not realize is that they could successfully complete a short sale of their house but then face a lawsuit from their lender for not paying off the entire loan, a shortfall known as a “deficiency.”

At particular risk of being hit with such a debt judgment are owners of second homes and investment properties, homeowners who haven’t faced any kind of financial hardship, and owners who have a second mortgage.

“That’s going to be a huge problem moving forward in the next few years,” said Orlando lawyer Matt Englett, who specializes in home foreclosures. “These people who use Realtors to advise them on the transactions can end up facing deficiencies, and the deficiency notes will go to third-party collections agencies, and they will start suing and progressively pursuing those people.”

Homeowners have several options if they wish to avoid getting calls and lawsuits from debt collectors.

In a mortgage document called the “payoff letter,” a lender may include a blanket provision stating that it reserves the right to sue the seller at any time for unpaid mortgage debt. At the very least, Englett said, sellers need to make sure they do not give lenders that right.

Some lenders, particularly smaller ones, have been willing to state just the opposite — that they will not pursue any mortgage debt from the seller, he added.

Simply asking the lenders to cooperate by removing any wording about collections isn’t enough, Englett said. The seller is usually faced with building a case that details errors and omissions made by the lender in its mortgage documents, to gain leverage and force the lender to forgive the debt.

A new option that emerged in June is a federal program that calls on banks to forgive some of the mortgage debt of certain, qualified short-sale sellers. To qualify, sellers must:

Meet the criteria of the federal government’s Home Affordable Modification Program.

Have the house as their primary residence.

Face a financial hardship, and their mortgage payment must be more than 31 percent of their gross income.

The new program makes short sales a good option for homeowners facing a financial hardship, though it’s not meant for homeowners who can afford their mortgage but want to walk away from an upside-down loan, said Frank Rubino, vice president of the Chase Homeownership Center in Orlando.

“It’s not right. It’s not moral. It’s not the right thing to do,” Rubino said. “Why should customers look to the bank to substantiate a loss for the house they bought? … If they bought the house and sold it for $100,000 more than they paid, they wouldn’t share those profits with the bank.”

The decision of whether to pursue a former homeowner for outstanding debt varies from mortgage servicer to mortgage servicer, Rubino said, and can hinge on such things as whether the customer mismanaged his or her finances, Rubino said.

Sellers with a second mortgage face particular challenges if they try to walk away from a short sale without any remaining debt.

Jennifer Davis, a real estate agent for Lifestyles Home Sales Inc. of St. Cloud, said she recently almost lost a sale because of outstanding debt the seller owed on the house. Fortunately, she said, the buyer wanted the house badly enough to cover the outstanding note.

Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.

In cases where the seller has a second mortgage or can’t qualify for the federal programs, Davis said, she usually directs them to a real estate lawyer and a tax adviser.

Copyright © 2010, The Orlando Sentinel, Fla., Mary Shanklin, Knight Ridder/Tribune Business News. Distributed by McClatchy-Tribune Information Services.

On June 24, PACT, CCISCO and the PICO National Network hosted a U.S. Treasury Hearing with 500 community members to urge Policy Director Laurie Maggiano: Treasury must do more to hold banks accountable for modifying loans to keep families in their homes. Tax payers bailed out the big banks, and now they need to be a part of stopping preventable foreclosures and rebuilding the economy.

Treasury is responsible for implementing President Obama’s Home Affordable Modification Program (HAMP) that promised to help 3-4 million homeowners avoid foreclosure. Fewer than 10% of these homeowners have received permanent loan modifications. We are working to change that!

Treasury Policy Director Laurie Maggiano agreed to:
• Make the program more inclusive of homeowners in need of loan modifications.
• Get back to PACT in writing within 30 days after taking all the stories, research, and demands for change back to Treasury Secretary Timothy Geithner.

CAN YOU FEEL the ANGER? ….I DID!

You Walk Away is a site that advertises heavily on Loansafe.org. This is the first place I ever heard, encountered them…I thought this was their company. I wonder what the outcome of this will be?

The Attorney General of Indiana announced that they were suing five foreclosure consultant companies. Included in this law suit was “You Walk Away” LLC of California. The attorney General is filing law suits on these companies as a result of an investigation into alleged fraudulent business activity.

These companies like so many fraudulent foreclosure consultants have been charging distressed homeowners upfront for negotiation services and then never rendering these services. O to put it another way “You walk away” walked away with your money.

Continue reading …. articlerich

This is happening all over….Make sure you have everything in writing and do not let your gaurd down! You will get evicted…it’s part of the game!

They were evicted, and late fees and charges added over $20,000 to their mortgage.

Loraine and Kerry Swope likely would have lost their south Charlotte home to foreclosure last year had they not been trying to resolve issues with their lender and get a loan modification.

They rejected an offer last summer from GMAC that would have reduced their monthly mortgage payment by 40 percent because of several concerns, including their contention the debt wasn’t valid. GMAC reviewed their account several times, and the Swopes tried a court appeal, which they lost. During the battle, late fees and other charges added more than $20,000 to what had been a $197,000 mortgage.

This May, during a morning rainstorm, the Swopes were evicted. They hadn’t finished loading their belongings.

“Everything sat outside and got rained on,” she said.

The Swopes’ saga started in the summer of 2007 with a relocation decision that snowballed into economic disaster.

They were drawn to Charlotte from Florida by the city’s bustle and banking industry. He was also seeking better medical care for complications from a knee replacement.

Jun. 29, 2010
Copyright © Las Vegas Review-Journal

Homeowner gets foreclosure reprieve

Company barred from evicting tenant while case is pending

By JOHN G. EDWARDS
LAS VEGAS REVIEW-JOURNAL

Julie Hayden FOX31 Investigative Reporter
June 25, 2010

WHEAT RIDGE, Colo – The Wheat Ridge woman who had the Bank of America sell her house out from under her could be getting her home back.

On Thursday FOX31 News first reported 61-year-old Stephanie Martin’s story. She’s lived in her home for 20 years and now takes care of her 84-year-old mother and 7-year-old granddaughter.

Martin never had any trouble making her house payments, until last June when her legs were crushed in a horrible accident at the Target store where she worked.

She applied for and was accepted into a Freddie Mac program that lowered her mortgage payments and stopped any foreclosure proceedings.

“She is the poster child for this type of program. Somebody who is doing everything they can but, hit some hard times and needed a little bit of help,” her lawyer, Darrell Damschen says.

But, even though her participation in the program was supposed to stop all foreclosure proceedings, Bank of America earlier this month sold her house at a foreclosure auction, to itself.

Martin says they never sent any warning or notification. And she found out about the foreclosure only after her lawyer coincidentally saw the public notice at the courthouse.

“I think this is a situation where the Bank of America made a mistake,” says Damschen. “They’re not communicating internally at all.”

“It’s clear the sale could have never been appropriate,” he adds.

For nearly a month, Martin unsuccessfully tried to get some answers or help from the Freddie Mac program and the bank.

After she contacted FOX31 News and KHOW Radio Talk Show host Peter Boyles, her case received attention.

She and her lawyer say the Bank of America called them Friday and said they are going to rescind the sale and give Martin her house back.

They indicated they will also work with her to keep the lower house payments.

Martin is relieved, but says after all she’s been through, she’ll believe it when she sees it.

“I hope this is true because I’ve been told so many things.”

(Updates with Treasury official Herb Allison’s comments)

By Corbett B. Daly

WASHINGTON June 24 (Reuters) – The four largest mortgage lenders in the United States were grilled on Capitol Hill on Thursday about the limited number of home loans they have modified for homeowners facing foreclosure.

“I just wonder how hard you are really trying?” Rep. Dennis Kucinich asked David Lowman, chief executive of home lending at JPMorgan Chase & Co (JPM.N).

Lowman said JP Morgan had been understaffed to handle the demand from struggling homeowners seeking to restructure payments, though they have added staff in recent months.

“Why are you denying loan modifications to my constituents?” Kucinich, an Ohio Democrat, asked Lowman, calling JP Morgan Chase uncooperative with borrowers.

Ohio has been one of the hardest-hit states in the U.S. home foreclosure crisis.

The House Oversight and Government Reform Committee also summoned chief executives of the home lending units of Bank of America Corp (BAC.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) to answer questions about their loan modification practices.

Also at the witness table was American Home Mortgage Servicing Inc, which collects loan payments but does not make or hold loans. AHMSI is known in the industry as a monoline servicer, while the other four firms both make and service loans.

In 2009, the Obama administration announced the $75 billion Home Affordable Modification Program, known as HAMP, which provides incentives to loan servicers to modify loans for troubled borrowers. HAMP has been widely criticized as ineffective. Less than $200 million has been spent to date.

The Treasury Department said on Monday more people had been kicked out of trial loan modifications than had received permanent modifications.

About 150,000 borrowers who could not prove their income or keep up with the new payments had their modifications canceled in May, bringing the total number of cancellations to about 430,000, or more than one-third of the 1.24 million trial modifications started since the program’s inception.

HAMP NOT THE ONLY SOLUTION

The number of borrowers who have received a permanent loan modification rose to 340,459 in May — about 11 percent of 3.2 million HAMP eligible loans.

“This is not just about HAMP,” the panel’s chairman, Edolphus Towns, said, referring to the modification program.

“I think the mortgage banking industry has got to recognize that HAMP cannot be the only solution to the mortgage foreclosure crisis,” the New York Democrat told the financial executives.

Herb Allison, assistant Treasury secretary for financial stability, noted that there was little precedent on how to design a large national program and the administration has now begun to put pressure on servicers to increase modifications by publicly releasing data on their performance.

“The HAMP program fundamentally changed the servicer industry from one based on collecting payments and processing foreclosures, to one that provides payment assistance to qualified homeowners,” Allison said in a prepared statement released after the hearing.

All of the executives said they have made more loan modifications than just HAMP modifications.

JP Morgan Chase said it has completed about 173,000 permanent modifications, including roughly 47,500 HAMP loans, since the beginning of 2009.

Bank of America said it has completed more than 630,000 loan modifications since January 2008, including roughly 70,000 HAMP loans.

Rep. Steve Driehaus, an Ohio Democrat, urged the executives to stop foreclosure proceedings while they negotiated new loan terms with borrowers.

“We are sending a very mixed message when we are proceeding with foreclosure while negotiating” a loan modification, Driehaus said.

Citi and Wells Fargo said they do stop foreclosure proceedings as soon as loan repayment talks begin. Bank of America, JP Morgan Chase and AHMSI said they continue to pursue foreclosures on a dual track strategy, though foreclosure remains an option of last resort. (Reporting by Corbett B. Daly; Editing by Jan Paschal and Jeffrey Benkoe)