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House Committee to take up second liens on April 13
WASHINGTON (4/8/10)--The House Financial Services Committee on April 13 will hold a full committee hearing entitled “Second Liens and Other Barriers to Principal Reduction as an Effective Foreclosure Mitigation Program.” While an official witness list for the hearing had not been announced at press time, it is thought that representatives from the largest banks, as well as government agencies, will be in attendance. In a letter sent last month to the CEOs of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, Committee Chairman Rep. Barney Frank (D-Mass.) said that there was “no more important priority” than saving homes on “a large scale” by moving “past temporary modifications in interest rates or terms” to “focus on permanent principal reductions that result in truly sustainable mortgages.” Frank said that “failure to modify” second lien mortgages “has become a major and unnecessary obstacle to thousands of Americans being able to stay in their homes.” He added that he would work to remove any legal obstacles that may impede them from taking “immediate steps to write down these second mortgages and allow principal reduction modifications of the underlying first liens to take place.” Credit union lending practices have historically been conservative and credit unions have not been impacted by the current mortgage crisis as much as other types of lenders, Credit Union National Association Senior Assistant General Counsel Jeffrey Bloch said. “However, credit unions have also been impacted when they have made second lien loans. To the extent property values decline and foreclosure becomes an issue, the second lien becomes worthless in most situations, with or without a loan modification ” Bloch added. The Obama Administration’s Home Affordable Modification Program (HAMP) provides monetary incentives, “but so far these incentives have not proven effective in addressing these problems,” Bloch said.

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