Panel to Look at Foreclosure Practices

New York Times (04/29/08) P. C3; Morgenson, Gretchen
The Senate Judiciary Committee's Subcommittee on Administrative Oversight and the Courts will hold a hearing on May 6 to look into claims that mortgage lenders are responsible for rising foreclosures because they impose questionable fees on struggling borrowers or take improper action to seize properties in bankruptcy court. Experts note that homeowners typically do not contest foreclosure proceedings and simply accept that the fees the lender says they owe are correct, but representatives of the United States Trustee have expressed concern that lenders and their attorneys are taking advantage of cash-strapped borrowers. Iowa University law professor Katherine Porter is scheduled to testify at the hearing with regard to her study of lenders' practices during the bankruptcy process, which determined that nearly 50 percent of the 1,733 foreclosures she examined in 2006 involved questionable fees. Sen. Charles Schumer, D-N.Y., who chairs the subcommittee, wants legislation to be introduced as a result of the hearing, possibly allowing bankruptcy trustees to investigate lenders and levy fines for questionable practices or mandating that warnings of upcoming late fees be made by loan servicers.