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Conyers: Mortgage Settlement Agreement is First Step Toward Recovering Losses for Victims of Reckless and Abusive Mortgage Practices; But Much More Needs To Be Done

Washington, DC, February 9, 2012

House Judiciary Committee Ranking Member John Conyers, Jr. (D-Mich.) commented on today’s announcement that the federal government and 49 state attorneys general have reached a $25 billion settlement agreement with the Nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. 

“Today’s announcement is a first step towards providing homeowners mortgage relief,” said Conyers.  “While I did not support the initial terms of the settlement on the ground that it did not go far enough, based on available reports, the final deal represents a starting point whereby those who engaged in fraudulent mortgage servicing practices will now be held accountable and subject to stiff penalties if they violate the servicing standards required under this settlement.  It also offers some financial relief to homeowners in the form of principal reduction, lower interest rates, and greater incentives that will hopefully lead to more mortgage modifications.  The most important aspect of this settlement is that mortgage servicers – before they can pursue foreclosure – must first evaluate homeowners for other loan mitigation options.  As a result, foreclosure should be a last resort, rather than a first resort.  Another critical aspect of the settlement is that it preserves the ability of the Justice Department and state attorneys general to pursue criminal enforcement actions against these servicers.  

 “However, much more must still be done.  In particular, the Nation’s largest mortgage holders and guarantors – Fannie Mae and Freddie Mac – should temporarily cease all foreclosure actions and actively seek alternatives to foreclosure.  I continue to hear report after report that these entities refuse to negotiate in good faith.  All American taxpayers would benefit if unnecessary foreclosures were avoided and struggling homeowners were given a viable opportunity to modify their mortgages.

“As Mark Zandi, one of the Nation’s leading economists testified today before the Senate Banking Committee, more mortgage modifications ‘particularly those involving substantial principal write-downs’  have the ‘best odds of ending the housing crash more quickly and definitively.’  Since 2008, I have proposed legislation that would facilitate meaningful mortgage modifications, especially principal write-downs. This Congress the bill was reintroduced as H.R. 1587, the Home Foreclosure Reduction Act of 2011.

“I look forward to continuing to work with the Administration and my colleagues in Congress to promote alternatives to foreclosure, such as ways that would facilitate the writing down of mortgages to their actual market value to deal with the pervasive problem of underwater mortgages.”