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Regulator Calls for Foreclosure Suspension, Banks Consent

On Wednesday, the ""Office of Thrift Supervision"":http://www.ots.treas.gov/ (OTS) - the primary regulator of federal savings holding companies and thrifts, including the nation's largest banks and mortgage lenders - called on the more than 800 OTS-regulated institutions to suspend foreclosures on owner-occupied homes until the Financial Stability Plan's ""home loan modification program"" is finalized.
At a congressional hearing on the same day, lawmakers pressed the chiefs of major banks who were present to agree to at least a three-week moratorium, the timeframe Treasury officials have given for nailing down the specifics of the proposed mortgage aid program.
The CEOs of JP Morgan Chase and Bank of America both agreed to a temporary foreclosure freeze through March 6th, Citigroup through March 12th. BofA's Kenneth Lewis said his company would comply as long as it wasn't an ""open-ended"" suspension and stayed within the three-week window. Vikram Pandit from Citi said his bank would commit to ensuring persons living in the home were not foreclosed on, but said he could not extend the same concession to property investors.
Wells Fargo's and Goldman Sachs' chief executives, in attendance on Capitol Hill, said they were already underway with their own aggressive loan modification initiatives, which included necessary foreclosure halts when applicable. ING Direct, another one of the largest thrifts regulated by OTS, said that it also has a moratorium in place for owner-occupied properties, lasting through the end of March.
Following OTS' call-to-arms, House Financial Services Committee Chairman Barney Frank (D-Massachusetts) said he expects that more than 95 percent of U.S. banks will halt foreclosures until the Treasury rolls out its mortgage relief plan. Frank is currently pushing for legislation that would protect lenders from lawsuits resulting from modifications made on mortgages held by secondary market investors - something banks say poses the biggest obstacle to meaningful mortgage relief for troubled homeowners.
The new Financial Stability Plan was ""unveiled on Tuesday"":http://dsnews.comindex.php/home/news_story/2537 by Treasury Secretary Timothy Geithner, and although at that time he failed to divulge any specifics on government-led mortgage aid, administration officials have said Geithner intends to commit at least $50 billion in funding to prevent avoidable foreclosures by reducing monthly payments for homeowners.
According to a _""Washington Post"":http://www.washingtonpost.com_ report, Geithner and Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD), met yesterday with more than two dozen officials from large banks, nonprofit organizations, and industry groups at the Treasury Department to discuss ideas for foreclosure prevention. The _Post _said that participants from both sides of the debate -- consumer advocates and the financial industry -- were unaware the other side was invited but said there appeared to be consensus on the depth of the nation's housing crisis.
John Taylor, president of the ""National Community Reinvestment Coalition"":http://www.ncrc.org/, told the _Post_, ""The thing that was striking was the uniformity of support for the idea that we can no longer rely on a voluntary system"" within the financial services industry to lead the foreclosure prevention effort.
According to Taylor, there was also strong support for a federal program to buy troubled mortgages at a discount and modify the loans for borrowers, the _Post _reported. ""I know that is going to cost some people some money, but the truth is the foreclosures keep driving us further into this recession,"" Taylor said.
OTS Director John Reich said in a statement issued on Wednesday, ""OTS-regulated institutions would be supporting the national imperative to combat the economic crisis by suspending foreclosures until the new plan takes hold.""
Reich and other OTS officials participated in the inter-agency effort led by the Treasury Department to develop the Financial Stability Plan.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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