Senate Panel Berates Bank Execs Over Foreclosures
STEVE INSKEEP, host:
One potential consequence of losing your job is losing your home. And in Congress yesterday, you could hear an expression of the emotion brought on by home foreclosures. Members of the Senate Banking Committee berated bank executives. They complained about faulty paperwork affecting foreclosures and home-loan modifications. And the lawmakers weren't the only ones complaining.
NPR's Yuki Noguchi reports.
YUKI NOGUCHI: This was the latest in some 80 hearings on the issue of housing since that market started going south several years ago. And Banking Chairman Christopher Dodd tried, at the outset, to make sure this one would proceed in a civil way.
Senator CHRISTOPHER DODD (Democrat, Connecticut; Banking Committee Chairman): Let me assure everyone here that I don't want this hearing to be simply about casting blame.
NOGUCHI: But even before the banking executives sat down, things were not going their way. In the morning, a congressional oversight panel released a scathing indictment of the banking industry's rubber-stamping practices on foreclosure documents. The report said it's unclear how big the problem is, but went on to highlight a worst-case scenario - saying the banks' shoddy paperwork, such as failing to properly record ownership of a home, raises questions about whether Wall Street might still have billions of bad assets on its books, or whether the government's attempts to modify home loans were based on bad information, and even whether homeowners who purchased foreclosed homes might now have to unravel those deals.
The bank executives in charge of foreclosure operations said, time and again, that they consider it good business not to foreclose, when possible. And they admitted their errors, and apologized. Here, Barbara DeSoer, president of Bank of America home loans.
Ms. BARBARA DESOER (President, Bank of America home loans): We have an obligation to do our best to protect the integrity of the proceedings of foreclosure. And when that has not happened, we accept responsibility for it, and we deeply regret it.
NOGUCHI: If banks were trying to sound conciliatory, the audience and the other panelists were not buying it. Iowa Attorney General Tom Miller is heading the 50-state investigation into the banks' practices. Speaking on the panel, he criticized some banks for - among other things - advising their customers to stop making payments in order to be considered for a loan modification.
Mr. TOM MILLER (Iowa Attorney General): To be honest with you, some heads have to roll if they're giving that kind of advice. That's just the way it is.
(Soundbite of applause)
NOGUCHI: During Chase Home Lending CEO David Lowman's testimony, there was an outburst from the audience.
Mr. DAVID LOWMAN (CEO, Chase Home Lending): I want to emphasize that Chase strongly prefers to work with borrowers to reach a solution that permits them to keep their homes. Foreclosures...
Mr. BRUCE MARKS (Housing Advocate, Neighborhood Assistance Corporation of America): Chairman, that's a lie...
Mr. LOWMAN: ...cause significant hardship...
Mr. MARKS: That's a lie.
NOGUCHI: The shouting came from Bruce Marks, the outspoken housing advocate, and chief of the Neighborhood Assistance Corporation of America. Marks was protesting what his group calls Chase's refusal to modify home loans for troubled homeowners. Marks was dragged out of the hearing room by security guards. Senator Dodd, with some difficulty, regained order.
(Soundbite of applause)
Senator DODD: All right, please; audience, please. This is not a rally; it's a hearing.
NOGUCHI: It was a hearing that the senators said they hoped would lead them to a solution. Yet years into this crisis, many of them said they're still getting letters from constituents, complaining of wrongful foreclosures and botched loan modifications. Oregon Democrat Jeff Merkley.
Senator JEFF MERKLEY (Democrat, Oregon): I have stacks of these stories. Can't we just change this policy and suspend the foreclosure proceedings when a modification is under way - not keep it going forward, and create this enormous confusion and stress for America's families?
NOGUCHI: Another hearing on the same issue is scheduled, in the House, for tomorrow.
Yuki Noguchi, NPR News, Washington.
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