On Hill, Kittle Emphasizes Servicers' Commitment to Borrowers

MBA (7/28/2008 ) Sorohan, Mike
Mortgage Bankers Association Chairman-Elect David Kittle, CMB, in testimony Friday before the House Financial Services Committee, emphasized that servicers' and borrowers' interests remain aligned in avoiding foreclosure and working together to help keep borrowers in their homes.
Kittle, president of Principle Wholesale Lending Inc., Louisville, Ky., said lenders and servicers, particularly those working with the HOPE NOW Alliance, of which MBA is a members, actively devote “significant time and resources to find ways to help borrowers keep their homes, including forbearance, repayment plans, advance claims, loan modifications and refinances, as well as short sales and deeds in lieu of foreclosure.

“It makes good economic sense for mortgage servicers to help borrowers who are in trouble,” Kittle said. “The increase in mortgage delinquencies and foreclosures has brought significant attention to the costs of foreclosure to homeowners, communities and mortgage industry participants. Mortgage lenders and servicers do not profit from foreclosures. Every party to a foreclosure loses—the borrower, the community, the servicer, mortgage insurer and investor. It is important to understand that profitability for the mortgage industry rests in keeping a loan current and, as such, the interests of the borrower and lender are mostly aligned.”

HOPE NOW Executive Director Faith Schwartz said the group’s members have helped more than 1.7 million homeowners stay in their home. Since the first week of March, more than 5,700 homeowners have attended HOPE NOW workshops.

“HOPE NOW mortgage servicers participate in these events and provide workout solutions on site, and non-profit counselors provide in-depth debt and credit management assistance,” Schwartz said. “These collaborative workshops are enabling more homeowners to meet with their mortgage company representative and develop workout solutions that help them stay in their home. The reactions of homeowners who have attended these events are overwhelmingly positive and we look forward to reaching even more borrowers.”

Kittle said servicers want to assist borrowers who are having difficulty paying their mortgages. “Servicers and investors have an economic incentive to avoid foreclosure. As a result, servicers are performing a growing number of workouts, including modifications, as evidenced by the HOPE NOW Alliance data,” he said. “Servicers have increased staff, have funded new technology, are sponsoring home retention workshops, are using third parties to go to the borrower's home to facilitate the workout and are funding advertising to educate borrowers about foreclosure prevention options. They are paying for housing counseling so that they remain free to the homeowners and are working with regulators and others to resolve legal impediments to loss mitigation.

“All these efforts demonstrate the industry's dedication to avoiding foreclosure and help delinquent borrowers get back on their feet. The industry is working to keep pace with changes and seeking new and financially responsible ways to increase workouts.”

Committee Chairman Barney Frank, D-Mass., who convened the hearing, iterated his call for mortgage servicers to delay foreclosure proceedings until after October 1, when the omnibus housing bill expected to pass the Senate this week would go into effect.

“I want to urge those of you here—the servicers—know that this will be the law,” Frank said. “I don’t want anyone to be foreclosed on between now and October 1st who would be eligible for this law. I think it would be a shame and an embarrassment if someone who was eligible for this program was foreclosed on between now and October 1st.”