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Crucial Help for Homeowners Could Never See the Light of Day

Once a homeowner has been denied a modification, they have no available resources to question or appeal the decision. Al Franken's proposed financial reform amendment would provide that. But it has to make it in first.
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Senator Al Franken (D-Minnesota), who in my opinion should be wearing a cape to work every day, introduced an amendment to the Financial Reform Bill that would create an Office of Homeowner Advocate to assist homeowners who have been denied a loan modification through HAMP.

The Franken Homeowner Advocate Amendment, according to the press release, would be funded from existing sources and its focus would be to assist homeowners who believe their mortgage servicer is breaking the rules.

Prominent homeowner and consumer advocates from sites like, MFI-Miami,, and my, to name a few, have shown support for this amendment because it would add an obvious and much needed appeals process to a program that has been abused by lenders and loan servicers since its introduction early last year.

There is, however, a possibility that because of a push to move the Financial Reform Bill along before lobbyists manage to gut the thing with their toxic amendments that crucial amendments, like this one, may not make it into the bill.

In addition, since Franken's amendment on credit rating agencies was up for debate last week, it's unlikely that this amendment will make it to the floor in time. It could however make the cut for the Manager's package - particularly since it already has bi-partisan support.

Bloggers and consumer advocates are hoping to see this one make it. Most notably, White House communications director Dan Pfeiffer, who praised the amendment in his White House Blog post listing it as one of ten amendments that would strengthen the bill. "Simple, straightforward improvements that would further strengthen an already strong bill and really help American families. We'll call them the "Good Guys". Let's hope they prevail over the "Lobbyist Loopholes" as the debate moves forward," Pfeiffer wrote.

Back in January I wrote a piece called Loan Modifications: A $4 Billion Con Game. I noted that nearly one million homeowners had entered trial modifications and that the majority of them were denied permanent modifications. According to Propublica the total number of modifications that have been granted permanent status stands at less than 230,000. That would imply that nearly 800,000 were denied. None of them were given the opportunity to appeal the decision.

The reasons given by loan servicers and banks for denying modifications - after approving homeowners for a trial period and taking their money for several months - come in varying degrees of lunacy.

In one glaring example, after three months of receiving trial payments, GMAC told one couple they were denied a permanent modification because they made their payments early. has received hundreds of stories from homeowners who have been denied for equally ridiculous reasons. Kathleen Burt, from Fort Lauderdale, Florida was told by a Chase representative, "we're not obligated to follow the federal guidelines.True the numbers work, but the bank doesn't have to take you on if we won't make enough money."

Catherine and Brian D., of Paso Robles, CA were denied twice. Once for having too much income and another time for not having enough - their income never changed.

Other reasons homeowners have cited for being denied include, Brenda Reed, who was accused of forging survivor benefits awards; Staci K. was told she had equity in the house despite being $90k underwater; Martha W. was told that her address could not be verified; Michael L. was denied because "the investors wouldn't make money" after having taken his trial payments for nine months; Rick L. was told he didn't have sufficient income to make the payments he's been making for eight months - the bank subsequently increased his monthly payments by $500; and that's just a sampling.

In an interview with Huffington Post, Franken said, "One of the problems is that the servicers or representatives who talk to people on the phone don't seem to [have the necessary expertise]. That's sort of the problem that this [amendment] is addressing."

Once a homeowner has been denied a modification, they have no available resources to question or appeal the decision. There are no viable official channels available to them. They are, for the most part, left to the mercy of the arbitrary, unfair, and deceptive practices that were initially responsible for this mess.

According to a press release from Franken's office, "Lawyers report stories of contacting regulators about problems with the HAMP program, only to be told, 'If the servicer says this is correct, it must be correct.'" Are these the same regulators and servicers that didn't foresee the collapse of the housing bubble and created "liars loans"?

For anyone who's been through this process and in most cases ultimately been denied a modification, this idea of regulating and auditing this program makes so much sense that it should have been part of the program to begin with.

This amendment has already received impressive bi-partisan support . Keeping it from a vote would clearly not be in the best interest of the American people.

The decision to bring this amendment up for a vote or at the very least add it to the Manager's Package lies with Senator Dodd, whose constituents have also told their stories on Some GOP senator, despite the stories from constituents, are still on the fence when it comes to helping homeowners.

Those of you, like me, who have been through this process, are still in this process, or are about to experience this process know the crucial role an office like this would play. I urge you to reach out to your GOP Senators and Senator Dodd and let them know that this amendment must be considered and that without it homeowners are at the mercy of arbitrary and ridiculous decisions on the part of the banks.

Quashing this amendment would be tantamount to actively participating in the foreclosure and eviction of millions of families from their homes.

Call your GOP Senators. Find out how they feel about the amendment ... then tell them how you feel. You can find their number here:

Chris Dodd's office number is (202) 224-2823. Let him know that Franken Homeowner Advocate Amendment is important to the success of the modification program and needs to be part of the bill. Tell him to go to and read the stories from his constituents in Connecticut.

Here's a summary of the amendment from Franken's office:

When homeowners think that their mortgage servicer is breaking HAMP's rules, has lost their paperwork, or has otherwise done something wrong, it's very hard to figure out where to turn. They can call their servicer--but that often is a dead end. They can call the official hotline for homeowners at risk of foreclosure--but that only gets them to housing counselors who are working on a government contract and have no real authority to fix the problem or withhold servicer incentives. Homeowners who use their own lawyers or housing counselors to help them navigate HAMP often fare no better--lawyers report stories of contacting regulators about problems with the HAMP program, only to be told, "If the servicer says this is correct, it must be correct."


This amendment would address this problem, creating an Office of the Homeowner Advocate (OHA) modeled after the successful Office of the Taxpayer Advocate at IRS. OHA would be funded from money that is available for the costs of administering the HAMP program, but is not otherwise committed. OHA would:

*Have three primary functions:

- To assist homeowners, housing counselors, and housing lawyers in resolving problems with the HAMP program
- To identify areas (both individual and systemic) where homeowners, housing counselors, and housing lawyers are having problems in dealing with the HAMP program
- To identify possible administrative and legislative changes to HAMP

*Have an independent director, appointed by the Secretary of Treasury in consultation with the Secretary of Housing and Urban Development. This director would have a background as an advocate for homeowners and have experience dealing with mortgage servicers. The director cannot have worked for a servicer or for the Treasury Department within the past four years.

*The Director of OHA will be available to testify in front of the Senate Banking Committee and House Committee on Financial Services at least four times a year, or at any time at the request of the Chairs of either committee, and will issue a formal report to Congress once a year.

*Staff designated by the Director would have the authority, on a case-by-case basis, to withhold incentives from servicers or require repayment of previously paid incentives.

*While a person is appealing their case through OHA, homes may not go to foreclosure sale until the OHA process is finished or 60 days have passed, whichever is shorter.

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