Saturday, March 12, 2011

What we need for S.O.H to succeed.

There has been a lot happening with regard to policy. Most people that are involved are just trying to handle their own situation the best they can – searching for help. They do not see themselves participating in a national effort to protect everyone by trying to change policy.  But I ask you to remember – like everyone else who is directly impacted by policy or lack thereof, everyone needs to help everyone else. 

We cannot count on the House of Representatives, we cannot count on the AGs at this point, we cannot count on Treasury, but we have a small opening in the Senate. Our strategy is based on the general concept that we need Congressional action if we want to remove the sole underwriting authority from the hands of the servicer and into a neutral third party to review.

I know many believe the legal route is the way to go.  For those I would say this: despite all the great legal work taking place - how much capacity does the State Court system have? How many cases can they hear a week, a month or a year? They do not have the judges, clerks, or budgets to hear millions of cases. Those that want to take that fight I say great, but it will not help the millions that need to be helped today, next week, and next month.  

I hope you will read on.

I would first like to thank everyone that supported the first action.  Although we were unsuccessful and the bill to cancel HAMP did get out of committee, we cannot give up. In order to stop the vote on the Floor we would need many more people than we have now.  For the past few weeks I have been reaching out to other blog sites - posting an invitation to join our SAVE…OUR…HOMES… effort. Just posting is not an effective method because not everyone will see the information.

What we need are the administrators of those blogs to send an email directly to their members, which I have not been successful in convincing them to do. If we had this support from Being Middle Class, Americans for Financial Reform, Shame the Banks, 4foreclosurefraud, foreclosurehamlet, and any others, we could aggregate the people required to make a difference. We have had some of those members visit the blog and join in the effort. If anyone has connections with those administrators, I would ask you to reach out to them on behalf of S.O.H.

I also reached out to the people from Crime Shouldn’t Pay, but they never responded to my many emails. I congratulate them on their strong action this week in Washington; they were able to get 500 people to come out in support of their message. They advertise they had 8,900 signatures to their petition. This would be a great source of help for our effort.

I was able to get a piece published in on thursday in support of our message.
I am quoted in a separate article with regard to the House actions this week.

Analysis of the past two weeks and what direction we should move:

In order to understand and support the strategy you must have a clear understanding of what is going on. Our strategy is based on the general concept that we need Congressional action if we want to remove the sole underwriting authority from the hands of the servicer and into a neutral third party to review; or else the banks will retain sole authority to underwrite and deny at will.

Relevant bodies;
House Committee on Financial Services
US Senate
State Attorneys General (50 States) Investigation and Settlement Proposal
Federal Regulatory Agencies

The House of Representatives held hearings and debates on the elimination of HAMP, HUD Short Refi's, NSP and EHLP programs. The Republicans were successful in getting all four bills out of committee, and voted on HUD Short Refi's and EHLP on the Floor this past week. Floor votes are expected this upcoming week on HAMP and NSP, and it appears these two bills will also pass.
Their actions sent a clear message to the servicing industry that they have nothing to fear from the US House and Treasury. With no new efforts being brought forth by Treasury with regard to improving HAMP, the program guidelines and directives will continue to be ignored by the servicing industry.

18 Members of the US Senate: 17 Democrats and 1 Republican sent a letter to Sec. Geithner and other relevant government agencies requesting three changes be implemented to the foreclosure prevention efforts.
  1. Single point of contact
  2. Stop Dual Track foreclosures
  3. Review by a neutral third party before foreclosure
This is very good and supports our position of a neutral third party review.  It is also a process that can be accomplished quickly. This will be part of our strategy – see below.

The Attorneys General proposal was leaked this week - you can read more about that in the Housingwire article. In an effort to keep the article short I did not include other information about the proposal that I feel is important in determining a strategy moving forward. 
1.      The AG’s proposal calls for a third-party review, but this escalation comes only after an applicant requested a supervisor and is not happy with the initial results. If they are not happy with the supervisor, it will go to an “Internal” separate division within the institution for review. If after going through the process with the “Internal” escalation division, only then will the case be looked at by the AG or newly formed CFPB.
2.      The majority of the requirements set forth in the AG proposal are based on HAMP guidelines and directives. As has been argued for the past two years, HAMP is basically a good program, which has been validated by a second look by the AGs and others in formulating procedures for this proposed settlement.
3.      The time-frames, as outlined in the proposal, are the same as HAMP and are good. An application could be completed and underwritten for the modification process in 30 days. You will know if you have been approved or not.
4.      The proposal does include fines but they are not discussed in the 27-page proposal. It literally says, “To be discussed at a later date.”
5.      Implementation by the servicers of the guidelines and procedures will be a problem because they have not been able to do it in the past two years.

The Escalation process, although better, enters in the third stage. It provides for a third-party review, but not until the homeowner has gone through the first two stages. Even with the new time-frames called for in the proposal, the escalation process could take a few months. The same Fatal Flaw in HAMP still exists in this new proposal: The underwriting is still left to the servicer, until it reaches the third stage. This delays the process and adds to all the problems for the homeowners that exist with these delays. 

Time is the main problem.  People are in trouble NOW; they need help now, not one year from now. The AG’s proposal is good but will take too long to offer relief for hundreds of thousands of families.

Although HAMP was defeated in the House of Representatives, the Senate Banking Committee said the bill was “dead on arrival."  That means the Banking Committee will not debate the bill or bring it to a vote in Committee. The White House also said the bill would be vetoed.  This, along with a one-year delay until implementation under the AG’s proposed Settlement, will be the basis of the action.

General benefits for requiring a third party review:
Function of neutral third party after decline
·        To assign a single point of contact to every applicant
·        Compile all docs electronically, attached to the file
·        HUD DE underwriter to determine eligibility for HAMP
·        Supply a completed “Recommendation” to the servicer.
The majority of current problems are corrected with this process.

Need for HAMP:
The original design of HAMP was to provide a set of Standardized Underwriting Guidelines for every applicant, so everyone is playing on a level field, with no discrimination based on credit score, location, general market conditions, and property value. This has not happened, as we all know. We need to maintain those HAMP guidelines,and the servicers to follow those HAMP guidelines, and we are demanding that it be fixed by the 18 Senators. Just some quick numbers on HAMP: only 5% of applicants where denied based on income;  27% were denied because of lost documents. That means at lease 240,000 families were affected.

Support of the Senators' letter to Sec. Geithner:
I only see one quick solution to help the hundreds of thousands of Americans that cannot wait for a Settlement. We as a large group have to support the 18 Senators, and must contact every Democratic Senator first. We have to show them they have the support of the people. We have to grow that number from 18 Senators to at least 60, which means we need a few Republican Senators.  The reason I say at least 60 is because we want to show all parties - including the House, Treasury and the Servicing Industry - that there are enough votes to pass a bill if necessary. I have already sent each of the 18 a copy of my organization's plan to implement the policy immediately, so they have an operational plan available to them. We will next turn our efforts to the White House to demonstrate to the President that he must instruct his Treasury Department if he wants this action done without new legislation. And the President needs the support of the millions of Americans who are losing their homes if he wants to get re-elected.

Targeted effort:
As in our last effort, a list of targets will be provided, with a sequence of when they are to be contacted and given our single message.  This effort cannot be haphazard.
  1. 18 supporting Senators
  2. Senate Majority leadership
  3. Rep. Senator DeMint, who is sponsoring a bill to end HAMP
  4. All Members of the Senate Banking Committee
  5. All remaining Democrats and a few Republicans.

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1 comment:

  1. Congress is closed next week (Mar 21 - 27) We should try to build our numbers and be prepared to start our effort on Thursday Mar 24.