WASHINGTON, D.C. – Following Treasury Secretary Lew’s announcement of an initiative to reform mortgage securities, Brown issued the following statement:
“Treasury’s announcement is long overdue but significant. If we want to bring private capital back into the mortgage market, we must ensure protections for pension funds and other investors in mortgage securities. Any reforms to our housing finance system would be incomplete without these protections.
“Servicers and trustees must act in the best interest of investors like pension funds. If mortgage servicers and trustees have a stake in preventing defaults, more Americans will stay in their homes rather than face abuses while trying to modify their mortgages or avoid foreclosure.”
In a speech today, Lew outlined a new effort at the Treasury Department aimed at developing guidelines to protect issuers of mortgage securities and investors.
During markup of legislation to reform the housing finance system, Brown filed but did not offer two amendments that would help keep more Americans in their homes and protect investors of mortgage-backed securities by assigning fiduciary responsibility to trustees.
Brown’s amendments would ensure that trustees have a fiduciary responsibility to investors of mortgage-backed securities. This would address the concerns over legal liability for mortgage-backed securities among trustees, servicers, and investors, while creating protections that are essential to attracting private capital back into the market.
Brown’s amendments were based on provisions in his Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011, legislation that would prevent future servicer fraud and errors, improve foreclosure counseling and prevention, and reform oversight of mortgage-based investing. The bill would expand access to foreclosure prevention services, while increasing protections for homeowners and investors in mortgage-backed securities.