Posted on Wednesday, October 13, 2010
October 12, 2010
The Honorable Timothy F. Geithner
U.S. Department of the Treasury
1500 New York Ave., NW
Washington, DC 20220
The Honorable Shaun Donovan
U.S. Department of Housing and Urban Development
Washington, DC 20410
Mr. Edward J. DeMarco
Federal Housing Finance Agency
1700 G St. NW
Washington, DC 20552
Dear Secretary Geithner, Secretary Donovan, and Acting Director DeMarco:
I am writing on behalf of the 1.1 million members of the National Association of REALTORS®
(NAR) about deficiencies in the foreclosure process by some mortgage servicers in violation of state
law. The National Association of REALTORS® is America’s largest trade association, including
NAR’s five commercial real estate institutes and its societies and councils. REALTORS® are
involved in all aspects of the residential and commercial real estate industries and belong to one or
more of some 1,400 local associations or boards, and 54 state and territory associations of
REALTORS® are extremely concerned about the confusion and uncertainty that questions about
the validity of foreclosures are causing in local communities, even where foreclosures are not a
major problem. The response by federal and state officials and lenders demonstrates an
understanding of the seriousness of the problem. With the strong support of Federal Housing
Finance Agency, Fannie Mae and Freddie Mac have both reiterated that servicers handling
mortgages they own or guarantee must comply with applicable state laws governing foreclosures.
HUD is reported to have asked their approved servicers, including the largest banks, to audit their
foreclosure operations to see if they are in compliance with state law.
Several major lenders have announced moratoriums, of varying scopes, as they determine the extent of foreclosure processing problems. NAR hopes that they are able to complete this effort expeditiously so they not only assure the protection of the rights of borrowers but also remove doubt that buyers may have about whether the seller is able to convey clear title.
The housing recovery, which even in the Nation’s stronger markets is still fragile, could be derailed if potential homebuyers and investors are discouraged from buying because of the turmoil, even if the property is not affected by any possible foreclosure processing errors. Already, our members are reporting that sales have been cancelled or delayed indefinitely, to the detriment of homebuyers and others involved in the transaction, as well as the neighborhood and the community. Lenders must assess the situation and correct any problems they identify, as soon as possible, to restore confidence in the system.
NAR has long urged the lending industry to take every feasible action to keep families in their homes with a loan modification and, if that is not possible, to give them a “graceful exit” through a short sale. These options are far better than a foreclosure, and nothing has driven this point home more clearly than the questions being raised about foreclosures. Lenders should place additional resources into processing loan modifications and short sales. This will not only minimize losses to the owners of the mortgages, but also minimize harm to homeowners facing unprecedented financial challenges and avoid reversing gains being made towards the recovery of housing markets, especially in high foreclosure areas.
Vicki Cox Golder, CRB Ron Phipps, ABR, CRS, GRI, GREEN, e-PRO
2010 President 2010 President-Elect
National Association of REALTORS® National Association of REALTORS®