House Financial Services Committee chairman Barney Frank (D-MA), and Housing and Community Opportunity Subcommittee Chairwoman Maxine Waters (D-CA) sent a letter to President Bush on Monday, urging that he appoint Federal Deposit Insurance Corp. chairman Sheila Bair to supervise and coordinate the on-going efforts to reduce foreclosures nationwide. “Giving one official clear responsibility, particularly one as knowledgeable on the subject as Chairman Bair, will improve the effectiveness of the efforts of the federal government at a time when prompt and efficient action is most urgently needed,” wrote Frank and Waters in the letter. Read the full letter. The government has faced increasing pressure from consumer groups and related organizations to rescue homeowners facing foreclosure, amid its intensely focused efforts to unfreeze ailing credit markets and inject stability into the banking system. (You know, the whole Main Street versus Wall Street debate?) “I’m getting anxious about the lack of attention” on homeowners, Waters said in an interview, as reported by Bloomberg News earlier in the week. According to Frank and Waters, there are several aspects of recent actions by the Treasury that allow the government to have a major impact in mitigating foreclosures and stabilizing the housing market. For example, they cite language in the Emergency Economic Stability Act that requires the administration to implement the program “in a way that will maximize foreclosure mitigation.” In order to achieve “maximum success on the foreclosure mitigation front,” Waters and Frank said the various programs “must be effectively coordinated by authorities available to the government” — Bair, as suggested in this case. Bair’s agency, which is currently managing the mortgage loan servicing portfolio at failed IndyMac Bancorp Inc., has mailed foreclosure-prevention offers to more than 7,400 borrowers, under a program meant to set a precedent for the rest of the industry. On Aug. 20, Bair unveiled a broad loan modification program at IndyMac Federal Bank — the FDIC’s reincarnation of the failed lender — in an effort to move loans into a set of “affordability criteria” wherever possible. The success of the plan has yet to be discussed publicly by FDIC officials since its announcement, however. Nonetheless, the program has been lauded by consumer groups, who have since said other servicers should be forced to follow the same model; in particular, advocates have argued that Fannie Mae (FNM) and Freddie Mac (FRE) — both of which were placed into federal conservatorship earlier this year — should force servicers to follow similar procedures on the loans they own or guarantee. The letter suggesting Bair’s expanded role came ahead of remarks by Treasury secretary Henry Paulson, who said he is aiming to intensify efforts to prevent foreclosures by using part of the government’s $700 billion financial-rescue package. “There still are a disturbing number of foreclosures where people are walking away from their mortgages,” Paulson told PBS Television’s Charlie Rose in an interview in New York, according to Bloomberg News. “There is clearly more that can be done — needs to be done.” Editor’s note: To contact the reporter on this story, email email@example.com. Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.
Sights on FDIC’s Bair to Lead Foreclosure Mitigation Efforts
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