Corker Offers Amendment to Prevent Unintended Consequences of Housing Bill: Increased Mortgage Rates, Higher Down Payments, Reduced Supply of Consumer Credit
May 06 2009
WASHINGTON – U.S. Senator Bob Corker, R-Tenn., a member of the Senate Banking, Housing and Urban Affairs Committee, today offered an amendment (#1019) to the housing bill (S. 896) to ensure servicers consider all options available to homeowners, not just modification or foreclosure.
"This bill does a lot of good, but I’m concerned the servicer safe harbor arrangement doesn’t necessarily do what is best for homeowners. It does an excellent job of taking care of the large four banks that do the bulk of servicing in the country: J. P. Morgan, Wells Fargo, Citigroup, and Bank of America. We are essentially paying them to do what is in their own best interests; it’s the fox guarding the hen house."
"Some have compared servicer safe harbor to cram-down but it’s even worse than cram-down because you could have banks – rather than bankruptcy judges – overturning contracts in their best interests and not necessarily the homeowner’s.
"My amendment would have improved the servicer safe harbor language by ensuring servicers considered all options available to the homeowner, not just modification or foreclosure. I believe programs like Hope for Homeowners should also be considered and a balance should be reached so that in addressing the immediate housing crisis, we do not jeopardize long-term private capital investment in housing," Corker said.
Corker’s amendment would have allowed a servicer the benefit of safe harbor only if it considered other available resolution methods – foreclosure, short sale, refinance, short refinance, forbearance – before deciding that a loan modification was appropriate.