congress watch

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Barney Frank’s committee to hold hearing on the $300 billion “Hope for Homeowners” program

November 12th, 2008 by selise

Apparently the program is not going well and the House Financial Services will hold a hearing at 10am this morning to find out why: Private Sector Cooperation with Mortgage Modifications-Ensuring That Investors, Servicers and Lenders Provide Real Help for Troubled Homeowners.

This is a follow up of the Sept 17th, 2008 hearing: The Implementation of the Hope for Homeowners Program and A Review of Foreclosure Mitigation Efforts. From that hearing summary:

In July, Congress passed and President Bush signed legislation designed to help at least 400,000 borrowers who have fallen behind in their payments due to a combination of unaffordable mortgages and falling home prices. The rescue provisions, which will refinance qualified individuals through the FHA program, will take effect on October 1.

From AP via Forbes on today’s hearing:

As the mortgage crisis deepens and the government joins with the lending industry in a new effort targeting struggling homeowners, Congress is examining the roles played by investors, lenders and loan servicers in the process.

Representatives of those three sectors are scheduled to testify at a House Financial Services Committee hearing Wednesday morning.

Democratic lawmakers have expressed frustration with the scope of industry cooperation. Committee Chairman Barney Frank, D-Mass., and five other Democrats accused hedge fund investors of blocking mortgage modifications.

"For the hedge fund industry, which has flourished for much of the past decade, to take steps so actively in opposition to what is currently in the national economic interest is deeply troubling," they said in a recent letter to industry representatives.

The government said last week it expects that only 20,000 troubled borrowers will apply to refinance into more affordable home loans by next fall under a new mortgage aid program enacted by Congress over the summer.

The $300 billion "Hope for Homeowners" program was launched Oct. 1. Designed by lawmakers eager to respond to the mortgage crisis, the Congressional Budget Office had projected it would let 400,000 troubled homeowners swap risky loans for conventional 30-year fixed rate loans with lower rates.

But the early results have been discouraging: the government received only 42 applications in the program’s first two weeks, according to the Federal Housing Administration.

Live coverage at the committee website and on CSPAN.

Witness List:

  • Mr. Benjamin Allensworth, Senior Legal Counsel, Managed Funds Association [represents hedge funds - forbes]
  • Mr. Thomas Deutsch, Deputy Executive Director, American Securitization Forum [representing Wall Street institutions that transform mortgages and other debt into bonds that are traded - forbes]
  • Mr. Michael Gross, Managing Director of Loan Administration Loss Mitigation, Bank of America
  • Ms. Molly Sheehan, Senior Vice President, Home Lending Division, JPMorgan Chase

x-posted at oxdown

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