host posted on August 04, 2011 15:16
Written by The Bridgeport News
Wednesday, 03 August 2011 16:28
Senators seek information about lenders’ policies and practices
WASHINGTON – Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Committee Member Richard Blumenthal (D-Conn.) last week sent letters to several of the nation’s leading mortgage servicers, requesting information about policies and practices related to foreclosures in the bankruptcy courts.
Leahy and Blumenthal, in letters to 11 leading mortgage services, inquired about steps the companies are taking to ensure that homeowners are treated fairly, consistently and honestly in foreclosure proceedings.
A review of servicer filings from several districts conducted by the Executive Office for the United States Trustee (EOUST) revealed that the rate of obvious, facial errors in proofs of claim in the bankruptcy courts may be far greater than previously disclosed. The review was recently discussed publicly by Clifford J. White, III, the director of the EOUST.
“The foreclosure crisis is profoundly affecting millions of hardworking Americans in this time of economic uncertainty,” said Leahy. “I am very concerned that homeowners who are compelled to turn to the bankruptcy process far too often face serious misconduct by mortgage servicers. We need a full understanding of the mortgage servicing policies and practices at the heart of these problems. We have a responsibility to ensure that Americans are protected from fraud and other misconduct when they seek relief in our federal bankruptcy courts."
“Ongoing abuses and fraudulent practices by mortgage servicers are needlessly forcing foreclosures on families struggling to stay in their homes — slowing our economic recovery,” said Blumenthal. “This investigation will ask the tough questions to bring about real changes to this broken system so that people can no longer be given the run-around when trying to stay in their homes.”
In order to provide the mortgage lending institutions with an opportunity to respond to the inquiry, the Senators have not publicly disclosed the recipients of the letters. The Senators’ letter is a first step toward understanding and addressing widely reported problems in the bankruptcy courts related to home foreclosures.
In May, Leahy introduced legislation cosponsored by Blumenthal to strengthen the tools available to the United States bankruptcy trustee to protect American homeowners from creditor fraud in bankruptcy court. The Fighting Fraud in Bankruptcy Act will bolster the Trustee and bankruptcy courts’ ability to fight creditor fraud and protect homeowners in the bankruptcy process.