Brown Has Authored Legislation to Keep Ohioans in their Homes and Stem Foreclosure Crisis; Sent Letter to Federal Regulators Urging Them to Better Protect Consumers and Prevent Further Illegal Practices
CLEVELAND, OH—In the wake of reports that banks and mortgage processors have continued a practice known as “robo-signing”—forging signatures and submitting false affidavits—U.S. Sen. Sherrod Brown (D-OH) held a news conference in Cleveland today to call for renewed federal efforts to crackdown on this risky, illegal practice that undermines Ohio’s housing market. This unlawful act has forced thousands of homeowners into foreclosure and raised doubts about the ownership of hundreds of thousands of mortgages. Recently, both the Associated Press and Reuters reported that despite regulators’ assurances to the contrary, illegal robo-signing allegedly remains rampant in both foreclosure and non-foreclosure cases. The reports also suggest that some regulators are aware of these violations.
“Earlier this year, Wall Street assured us that “robo-signing” —a fraudulent and illegal practice that damages Ohio’s housing market—was a problem of the past. But recent reports have made clear that the foreclosure mill is alive and well,” Brown said. “A complete economic recovery requires a recovery of our housing market, too—and “robo-signing” makes that goal impossible. We should be helping families stay in their homes, not gouging homeowners and forcing more houses onto an already depressed housing market. That’s why I have fought for increased oversight from federal regulators, meaningful penalties for services that break the law, and strong, pro-consumer legislation that protects homeowners, not bank executives.”
Brown was joined by Neighborhood Housing Services of Greater Cleveland Executive Director Lou Tisler and Ward 12 Councilman Anthony Brancatelli, both of whom discussed the practice of “robo-signing” and its harmful effects on not just homeowners, but also Ohio’s housing market and economy as a whole. According to RealtyTrac, in Cuyahoga County, approximately 9,335 homes are in foreclosure as of June 2011—the highest rate of any county in Ohio. Brown was also joined by Richard Nicholson, a Cleveland resident who was a victim of robo-signing.
“Cutting corners in the foreclosure process is not a privilege given to homeowners—why should it be acceptable for servicers?” Tisler said. “Fraud on any side of the equation should not be tolerated.”
“We must end the illegal act of fraudulent robo-signing which escalates wrongful foreclosures. We are on a path of recovery in Slavic Village and welcome the Senator’s support on this issue,” Councilman Brancatelli said.
Following the news last week of continued abuses by mortgage servicers, Brown today outlined landmark legislation he authored to prevent future servicer fraud and errors, improve foreclosure counseling and prevention, and reform oversight of mortgage-based investing. The Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011 would expand access to foreclosure prevention services, while increasing protections for homeowners and investors in mortgage-backed securities. Specifically, the Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011 would:
- Protect homeowners from servicer errors, miscommunications, and abusive fees
- End the rush to foreclosure and require servicers to work with homeowners to find sustainable mortgages
- Improve standards for staffing and casework by mortgage servicers
- Protect the interests of investors who buy securities backed by residential mortgages
- Reform oversight of pools of securitized mortgages
The Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011 is endorsed by the Alliance for a Just Society, Center for Responsible Lending, Community Organizations in Action, National Association of Consumer Advocates (NACA), National Consumer Law Center (on behalf of its low-income clients), Coalition on Homelessness & Housing in Ohio (COHHIO), Neighborhood Housing Services of Greater Cleveland, and the Columbus Housing Partnership (CHP). Click here for additional information on the bill.
At today’s news conference, Brown also urged federal regulators to better protect consumers by publicly releasing information related to the mortgage servicer settlements. Brown requested increased transparency of independent audits because consultants, chosen by the mortgage servicers to perform foreclosure reviews, have other business relationships—and therefore conflicts of interest—with those same mortgage servicers. Brown also requested the public release of Engagement Letters, Action Plans, Foreclosure Reviews, and other plans, policies, or processes submitted to regulators by mortgage servicers or third-party servicers to ensure that abuses in foreclosure practices are not being ignored by the review process.
Brown, chair of the Financial Institutions and Consumer Protection Subcommittee, is a leading proponent of providing assistance to communities affected by the housing crisis and population loss, and has led the fight against wrongful foreclosures and unfair practices by Wall Street. He encouraged federal regulators to freeze foreclosures after the discovery last year that many servicers were wrongfully foreclosing on homeowners and not following existing foreclosure procedures and laws. In July 2010, he sent a letter to the executives of the nation's four largest banks calling on them to work with responsible homeowners to avoid foreclosure. Brown also fought for the creation of the Neighborhood Stabilization Program (NSP) in the Housing and Economic Recovery Act of 2008 and the continuation of the program in the American Recovery and Reinvestment Act (ARRA) of 2009.