Sen. Franken pushes to create office to help homeowners avoid foreclosure

Washington, D.C. — Families who face foreclosure but believe their mortgage services are breaking the rules could have a new place to turn for help, thanks to legislation reintroduced today (Wednesday, March 30) by U.S. Sens. Al Franken (D-Minn.), Olympia Snowe (R-Maine), Robert Menendez (D-N.J.), and Jay Rockefeller (D-W.Va.) that would create an Office of the Homeowner Advocate.

The bill would establish a new office that would protect homeowners seeking mortgage modifications within the Home Affordable Modification Program (HAMP), an entity developed by the U.S Treasury Department to help struggling homeowners.

Currently, over 12,000 Minnesotans would stand to benefit immediately from the proposal. If the legislation passes, even more homeowners would be able to participate in the program; as many as 3 to 4 million would benefit nationwide.

“When Minnesota families feel their mortgage servicer is treating them unfairly or giving them the run around, they need to know there’s someone out there they can turn to,” said Sen. Franken. “This bill would establish an office dedicated to helping these families navigate the already-stressful and complicated process of avoiding foreclosure.”

“In the aftermath of a housing crisis, compounded by a number of mortgage lenders who took advantage of families in Maine and across the nation, the Office of the Homeowner Advocate will provide the vital support Americans require when faced with the prospect of home foreclosure,” said Senator Snowe.

Sen. Menendez said, “The prospect of losing your home is overwhelming– but struggling homeowners aren’t alone.  This will give families facing foreclosure a one-stop shop where they can turn for financial assistance and advice. Thousand of NJ families and millions nationwide would benefit immediately – protecting our communities from the devastating ripple effect foreclosures have on our economy. ”

“As recent news has shown, there have been serious problems with the current foreclosure modification program that have caused problems for too many homeowners,” said Sen. Rockefeller.  “By creating an Office of the Homeowner Advocate, we would enable those homeowners who are receiving unfair treatment to have their issues resolved.  Particularly during these tough economic times, too many families are struggling financially and we should reward those who are working to modify and pay off their mortgages, not punish them.”

Just yesterday, the U.S. Treasury Department announced that they would be taking new actions to keep mortgage servicers in line, threatening to withhold financial incentives from servicers that receive unsatisfactory grades after quarterly compliance reviews by the Department. The Department’s acknowledgement that further action is needed to prevent abuse in the mortgage servicer industry highlights the need to establish an entity that would advocate on behalf of homeowners.

The Office of the Homeowner Advocate is modeled after the successful Office of the Taxpayer Advocate at the Internal Revenue Service. It aims to help resolve problems with HAMP and would be funded from money that is available for the costs of administering the HAMP program, but is not otherwise committed.

The Office of the Homeowner Advocate would have three primary functions: To assist homeowners, housing counselors, and housing lawyers in resolving problems with the HAMP program; to identify areas where homeowners are having problems in dealing with the HAMP program; and to identify possible administrative and legislative changes to HAMP.

The Office of the Homeowner Advocate would:

• Have an independent director, appointed by the Secretary of the Treasury in consultation with the Secretary of Housing and Urban Development.  This director would have a background as an advocate for homeowners and have experience dealing with mortgage servicers.  The director cannot have worked for a servicer or for the Treasury Department within the past four years.

• Make the Director available to testify in front of the Senate Banking Committee and House Committee on Financial Services at least four times a year, or at any time at the request of the Chairs of either committee, and issue a formal report to Congress once a year.

• Have staff designated by the Director to have the authority, on a case-by-case basis, to implement servicer remedies, subject to the approval of the Assistant Secretary for Financial Stability. This will help to ensure that the staff of the Office of the Homeowner Advocate actually have the ability to make servicers follow the rules.

Originally introduced in 2010, this legislation was supported by the Department of the Treasury and passed the Senate with broad bipartisan support by a vote of 63-33. Additional cosponsors of the bill include Sens. Sherrod Brown (D-Ohio), Dick Durbin (D-Ill.), Frank Lautenberg (D-N.J.), Patrick Leahy (D-Vt.), Jeff Merkley (D-Ore.), Patty Murray (D-Wash.), Jack Reed (D-R.I.), Bernie Sanders (I-Vt.) and Jeanne Shaheen (D-N.H.).

The Franken-Snowe-Menendez-Rockefeller bill has Minnesota endorsements from the Central Minnesota Housing Partnership, Greater Minnesota Housing Fund, Housing Preservation Project of St. Paul, Jewish Community Action, Legal Services Advocacy Project, Minnesota Housing Partnership, Catholic Charities of St. Paul & Minneapolis, Community Action Partnership of Ramsey & Washington Counties, Minnesota Community Action Partnership, Twin Cities Habitat for Humanity, and Project for Pride in Living.

It also has national endorsements from the Alliance for a Just Society, Americans for Financial Reform, California Reinvestment Coalition, Center for NYC Neighborhoods, Center for Responsible Lending, Community Organizations in Action, Consumer Action, Consumer Federation of America, HomeFree-USA, International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, Leadership Conference on Civil and Human Rights, National Association of Consumer Advocates, National Association of Consumer Bankruptcy Attorneys, National Consumer Law Center (on behalf of its low-income clients), National Council of La Raza, National Legal Aid and Defender Association, National People’s Action, Neighborhood Economic Development Advocacy Project, PICO National Network, and Service Employees International Union.

Tags: Franken , Home Affordable Modification Program (HAMP)