Thursday, December 16, 2010

Yet Further Congressional Hearings on the Foreclosure Crisis

As reported in the media, the House Committee on the Judiciary held a further hearing on the mortgage foreclosure crisis on December 15, 2010. The witness list included Senator Sheldon Whitehouse (D-RI). It is reported that Senator Whitehouse is seeking "to introduce legislation early next year that would give [Bankruptcy Court] judges comfort that they have the authority to force parties, including banks, to the table to discuss modifications."

Senator Whitehouse noted that in today's "age of securitization, the [mortgage] servicer merely serves as processing agent and may not work in the interests of the people who actually own the mortgage and in the age of corporate bureaucracy, the left hand may not know what the right hand is doing." He further reviewed his efforts to give bankruptcy court judges the power to modify mortgage on principal residences just as they are able to for other loans including those on vacation homes, cars, and boats. He reviewed efforts in various Bankruptcy Court loan mitigation programs and some mortgage servicer challenges thereto. He noted his proposal to pass legislation to clarify the power of Bankruptcy Courts to run foreclosure loss mitigation programs.

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