Friday, April 1, 2011
Senate Panel Advances Bankruptcy Foreclosure Mediation Bill -- Fannie and Freddie Restart Frozen REO Sales
President Obama said Friday that he intends to nominate North Carolina Banking Commissioner Joseph A. Smith, Jr. to head the Federal Housing Finance Agency (FHFA), which oversees mortgage giants Fannie Mae and Freddie Mac.
If confirmed by the Senate, Smith will replace Edward DeMarco, who has served as acting director of the agency since September 2009.
Lawmakers have been urging the president to appoint a permanent FHFA director for months now. More specifically, they’re calling for someone who will “aggressively pursue claims” on behalf of Fannie Mae and Freddie Mac to force lenders to buy back bad loans that were sold off to the GSEs during the housing boom, according to letters sent to the president from Rep. Barney Frank and Rep. Paul Kanjorski.
The timing of Smith’s appointment would put him at the center of the administration’s efforts to reform the nation’s housing finance system and decide the future of Fannie and Freddie. Officials have said they plan to put forth a proposal for restructuring the two mortgage companies early next year.
Senate Panel Advances Bankruptcy Foreclosure Mediation Bill
The Senate Judiciary Committee on Thursday approved legislation that would give bankruptcy courts the authority to order face-to-face meetings between homeowners and their lenders for foreclosure mediation.
The Limiting Investor and Homeowner Loss in Foreclosure Act (S. 222) passed the committee with a 10 to 8 vote, clearing the way for it to move on to the full Senate.
The legislation would not give bankruptcy judges the power to modify mortgages or slice off a portion of the principal like the controversial bankruptcy cramdown proposals that have repeatedly failed in Congress.
Instead, it would give bankruptcy judges a mechanism for opening up the lines of communication between homeowners and creditors in order to explore work out options and optimally, avert a foreclosure action.
Sen. Sheldon Whitehouse (D-Rhode Island) authored the bill. His proposal is modeled after a program in his home state.
“Too many families…have been hurt by a broken foreclosure system fraught with long waits on the phone, lost paperwork, and an inability to speak with someone who’ll give their last name or make a decision,” Whitehouse said.
Fannie and Freddie Restart Frozen REO Sales
Both Fannie Mae and Freddie Mac have instructed their selling agents to move forward with transactions involving foreclosed properties in cases where sales were suspended due to potential problems with the legal paperwork.
The GSEs were forced to temporarily halt the sale of certain properties two months ago when news surfaced that some of the nation’s largest servicers – including Bank of America, JPMorgan Chase, and GMAC Mortgage – had been employing robo-signers who failed to comply with clearly defined state laws when handling foreclosure documentation.
Fannie and Freddie also employed the services of the so-called foreclosure mill law firm of David J. Stern in Florida, which is currently under intense investigation for forging foreclosure documentation. Both companies terminated their business dealings with the Stern firm in early November.