WASHINGTON, D.C. - U.S. Sen. Sherrod Brown (D-OH) wrote to the Obama Administration today regarding high foreclosure rates in Ohio and the need to improve foreclosure mitigation efforts that help Americans stay in their homes. Brown pointed to the need to improve the U.S. Department of Treasury's Home Affordable Modification Program (HAMP) so that it helps more Ohio families avoid foreclosure by allowing them to refinance their mortgages and achieve lower monthly payments.
"Rather than being driven by subprime mortgages as in past years, foreclosures now come as the result of more systemic problems like unemployment and medical bills," Brown wrote in a letter to Treasury Secretary Timothy Geithner. "In the face of these sobering statistics, I am concerned that not enough is being done to address the foreclosure problem and the burden will ultimately be put on families and entire communities."
Brown pointed to the foreclosure crisis in Ohio as need to improve federal efforts that help Americans avoid foreclosure.
"National figures indicate that one in seven mortgages is now past due. Northeast Ohio, considered by many to be the front line of the subprime mortgage crisis, has been particularly hard hit. Just last week my own local paper reported a record number of foreclosures in Lorain County in 2009."
Brown requested that improvements be made to the HAMP program, which was designed to encourage banks to modify mortgages to prevent foreclosures. Fewer than 10 percent of temporary mortgage modifications have been converted into permanent modifications under the program, and Ohio has had a success rate of less than 8 percent. Brown also urged more federal funding for foreclosure prevention counseling programs.
A full copy of Brown's letter to Geithner can be found below:
February 9, 2010
The Honorable Timothy Geithner
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Geithner:
I write to you today regarding an issue of national importance and one of particular concern to my constituents in Ohio: the ongoing foreclosure crisis.
The economic downturn has weighed heavily on the lives of Americans in countless ways, perhaps none so devastating as the loss of a home. I have heard from Ohioans frustrated by their experiences with the mortgage modification process and distressed at losing the homes they worked so hard to earn.
I am particularly interested in the efforts to promote mortgage modifications. Studies have confirmed what appears commonsense: homeowners are less likely to re-default on loan modifications that lower monthly premiums. Encouraging banks to modify mortgages so that homeowners can remain in their homes while making good on their obligations is sound public policy.
The Department of the Treasury's Home Affordable Modification Program (HAMP) was designed to implement this policy, though there is some indication that HAMP is not as effective as it could be. Fewer than 10 percent of temporary mortgage modifications have been converted into permanent modifications. The numbers are even worse in Ohio, where the success rate is less than 8 percent.
A number of changes to the program have been proposed, such as barring servicers from proceeding with a foreclosure without first considering a modification, providing consumers with a formal denial and appeal system, or creating a mediation process. Ohio's State Foreclosure Prevention Working Group has joined investor groups and consumer groups in calling on Congress to explore mortgage principal reduction to stem foreclosures. I would like to know more about what actions you and your Department plan to implement in order to increase access to mortgage modifications.
I am also concerned that the President's FY 2011 budget reduces funding for mortgage counseling. Foreclosure counseling is a vital service. According to a national study by the Urban Institute, homeowners who are assisted by mortgage counselors have a 60 percent better chance of saving their homes. I urge you to reconsider your decision to cut funding for foreclosure counseling. These services will continue to be essential for homeowners in Ohio, as the Mortgage Bankers Association projects that foreclosures will not peak until the end of 2010, at the earliest.
I look forward to your response to my requests.
United States Senator