Federal regulators took another beating on Capitol Hill Thursday for not getting ahead of problems in the mortgage servicing industry and not taking greater steps to stem foreclosures.
At a House Judiciary Committee hearing on the foreclosure crisis, the fourth such hearing in Congress since the robo-signing scandal came to light, lawmakers from both parties voiced disappointment and frustration, challenging claims that the situation is improving.
"You are saying that you see some progress, and I must be very honest with you: those of us who work very closely with this just don't see the progress," Rep. Maxine Waters, D-Calif., said to Phyllis Caldwell, the Treasury Department's chief of homeownership preservation, who testified at the hearing.
Waters said servicers still appear ineffective at reaching troubled borrowers. She said the administration's Home Affordable Modification Program (HAMP) is "not working."
"We are still bombarded with requests for help … and we really need to see more aggressive action," Waters said. "The more we hammer away at how to deal with this we are uncovering more and more problems that the regulatory agencies should be able to deal with, should know about, should be on top of, and it's just blowing my mind."
Regulators insisted that modification efforts have made steady improvements.
"HAMP is not helping as many people as we would like but it has had tremendous growth," Caldwell said. "We can't lose sight of the fact modifications within Hamp are affordable and sustainable, and they have changed the way the servicing industry has done business."
But committee chairman John Conyers, D-Mich., was also unimpressed. "In the vast number of cases that is not happening," he said.
Conyers then went on to needle Edward DeMarco, the acting director of the Federal Housing Finance Agency, criticizing him for not knowing about a projection estimating 13 million borrowers will lose their homes, and for his lack of an estimate.
"Are you telling me you never heard 13 million foreclosures before today?" Conyers said. "You have a pretty big role in all this … It would seem to me that you would have some projection of your own."
Meanwhile, Rep. Bob Goodlatte, R-Va., asked why the Treasury Department, which has been invested in modification efforts, became aware of the servicing issues with robo-signing only through press accounts.
"With all the work that Treasury has done on loan modifications and working with lenders … did Treasury have any indication that there were such widespread documentation problems with foreclosures?" Goodlatte said.
