Cummings Awaits Treasury Foreclosure Prevention Efforts

United States Congressman Elijah E. Cummings
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March 26, 2010                                                 Paul Kincaid, 202-225-4289

Cummings Awaits Treasury Foreclosure Prevention Efforts

Congressman cautiously optimistic about efforts to reduce home losses.

(Washington, DC) – Congressman Elijah E. Cummings, (MD-07) was pleased with published reports of new Treasury plans to reduce foreclosures and encourage mortgage modification efforts by both public and private lenders. Cummings has been a constant advocate of foreclosure mitigation and prevention efforts, and has frequently spoken with Treasury Secretary Timothy Geithner, encouraging him to pursue every possible avenue to protect American homeowners.

 “During numerous personal meetings and discussions with Secretary Geithner, I have encouraged him to change the way our government deals with foreclosures,” said Cummings. “The Secretary promised me he would make foreclosures a personal focus and I am pleased that he has followed through.”

The Treasury announcements followed a hearing Thursday, held by the Committee on Oversight and Government Reform, with regard to the Home Affordable Modification Program (HAMP) currently operated by the Treasury Department. Special Inspector General for TARP, Neil Barofsky, indicated to Cummings and the Committee that HAMP has been a great disappointment.

“Obviously, I remain excited by the prospect of homeowners remaining in their homes,” said Cummings. “However, with the difficulties HAMP as shown thus far, I urge Secretary Geithner to ensure that adequate resources are available for full oversight of the new programs. We must work as efficiently and as effectively as possible to keep Americans in the homes for which they have worked so hard.

“Thousands who are suffering in Maryland, and millions throughout America may have new hope. A light has appeared on a horizon that was previously only filled with storm clouds. That ray of sun must not be dimmed by continued ineffectiveness.”

The new Treasury programs will address different aspects of foreclosure prevention.

The largest of the three programs will allow many of the 11 million homeowners whose mortgages are “underwater,” to refinance those mortgages through the Federal Housing Administration. Loans that are “underwater” have more debt remaining than the home is worth. FHA would guarantee “underwater” mortgages that were refinanced by the lender, with partial loan forgiveness. This would allow homeowners to afford the payments needed to keep their homes.

The second leg would provide financial incentives for private lenders to write down the principal of underwater loans, allowing homeowners to stay in their homes, while paying the actual worth of the homes.

Finally, the third piece of the plan will require lenders to offer a three to six month reduction in payments for any homeowner who is unemployed and looking for work.

“These actions show a clear intention by Treasury,” said Cummings. “They show that Wall Street will not be the only concern as our economy recovers. Efforts must be improved to help Main Street. However, we cannot fail. Too many homeowners are counting on us, and improving their plight is too crucial for our economic recovery. Along with all Americans, I am relying on Secretary Geithner to prove to us that this can be a success.”

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