U.S. Senator Sherrod Brown, a Democrat from Ohio and the Ranking Member of the Senate Banking Committee, and U.S. Representative Elijah Cummings, a Democrat from Maryland and the Ranking Member of the House Committee on Oversight and Government Reform, wrote a letter to HUD Secretary Julián Castro this week asking the Secretary for more information on foreclosure prevention options available to the borrowers on loans sold through the Department’s Distressed Asset Stabilization Program.
The lawmakers are concerned over the large percentage of HUD’s distressed mortgage loans being sold through the program to investors and private equity firms rather than nonprofits which they believe will provide the best possible outcomes for borrowers. Servicers of loans in the pools sold through the program are required to exhaust all loss mitigation possibilities before starting foreclosure, but the lawmakers are concerned that not all loss mitigation options are being pursued before foreclosure is started.
The Federal Housing Finance Agency, Fannie Mae, and Freddie Mac announced Tuesday the establishment of an independent dispute resolution process for solving mortgage repurchase disputes. In 2012, FHFA, Fannie Mae, and Freddie Mac made the representation and warranty framework a priority to complete in the conservatorship scorecards. The 2016 scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions provided direction to complete IDR as part of that framework.