06/17/2010 12:04 pm ET Updated May 25, 2011

Finally Some Hope of HAMP Oversight

Last month I wrote a piece on ShametheBanks and in HuffPost about an amendment sponsored by Sens. Al Franken (D-Minn.), Olympia J. Snowe (R-Maine), and Patty Murray (D-Wash.) The amendment to the Financial Reform Bill would create an Office of Homeowner Advocate to assist homeowners who have been denied a loan modification through HAMP. This office would provide a much needed outlet for homeowner's who have been denied HAMP modifications, for whatever reason.

The piece generated a number of calls to legislators and was picked up by other notable bloggers and homeowner advocates like, MFI-Miami, and

The hope, in May, was that the amendment would at least make it into the Manager's Amendment and would be part of the final bill. As it happened, there was no Manager's Amendment, but that didn't stop Franken and his allies on both sides of the aisle from making sure it wasn't overlooked. It passed Tuesday evening by a surprising and satisfying vote of 63-33.

True to form, Franken, not being content to give up after he didn't get the amendment into the financial reform bill pushed for it in the Tax Extender Bill (a bill separate from the amendment's original target that deals with unemployment insurance and other safety net legislation. It was passed by the House in March and is currently being debated in the Senate. A very impressive effort that shows Franken's commitment to homeowners and to foreclosure prevention.

"This victory means help for the many [homeowners] who are in danger of losing their homes through no fault of their own," Franken said. "These families are doing their best in a tough economy that they didn't create. And they need to know there's someone who has their back when they're trying to navigate the already stressful system of avoiding foreclosure."

"As Mainers and Americans know too well, these turbulent economic times, in which we have witnessed record high unemployment rates, have been confounded by the housing market crisis and certain mortgage servicers who are, frankly, taking advantage of our nation's families," said Sen. Olympia Snowe, once again showing her loyalties to the American people. A departure from her own party who prefers to believe that, "families that have chosen to stop paying their mortgage and instead use the extra money they are saving each month to buy season tickets to Disneyland...take a Carnival cruise to Mexico...and go out to dinner more often," according to a GOP memo sent out last week.

"By creating an Office of the Homeowner Advocate, these Americans will receive the vital assistance they require when they are faced with the daunting foreclosure system," Snowe continued.

It's well known that the servicers and banks have not been forthcoming in their reasons for denying loan modifications and in some cases have given outlandish reasons to home owners like, "early payments". That wasn't a typo. GMAC denied an Indiana couple a permanent modification because they made their trial payments early.

Anyone having tried to get a loan modified knows it can be a painful and frustrating process. After months of lost paperwork and jumping through hoops at the whim of the servicer, homeowners are left precariously paying trial payments that could go on for several months - well beyond the requisite three months. Once the trial payments are over (and of course collected) a staggering amount of them are denied permanent status with no reason offered by the servicer who still collects the servicing fees from investors, racks up fees and fines on the homeowner's account, and in some cases collects taxpayer subsidies for their "efforts." In many cases the homeowner is slapped with a lump sum of the accumulated difference in the adjusted payments, now making a tough situation even more daunting.

The proposed office would provide a much needed and long awaited means for homeowners to appeal the denial and would provide oversight to a program that up until now has allowed servicers and banks to continue gaming a system they helped destroy and fleece already struggling homeowners.

A former servicer employee and HuffPost reader, Richard Lindow commented on Crucial Help for Homeowners Could Never See the Light of Day about the proposed amendment last month, referring to the provision and defending the servicers:

"The persons speaking with the customers, unfortunately, do not appear to know why a particular action was taken, and, I assume, from articles such as yours and complaints I have received, that lenders do not do a very good job of explaining it either.

If this amendment will help to provide clarity and information to borrowers who really have no idea why they were denied a modification, then please sign me up as a proponent.

If, however, it is merely, another avenue for people to vent who were legitimately denied (e.g., because his pay stubs showed he worked in NY and the property was in FL, and his employer confirmed in writing that he has worked for that company in NY full-time for the last 10 years), then perhaps we should perhaps assess whether this fiasco is worth any more time or money."

I have to say, I agree. If homeowners are in fact to blame for the shoddy results of the HAMP program and the banks and servicers are really working in the best interest of the borrower, but the borrower isn't co-operating, then what better vehicle to prove that? Banks and servicers have been claiming for almost over a year now that denials are a result of uncooperative homeowners. The banks and servicers should be pleased to finally have a government office dedicated to exposing the real reason for 230,000 HAMP applications being denied in April alone. This should finally shed some light on where the blame should be cast and help everyone sleep better at night. After all, there is close to $4 billion in monthly charges, taxpayer subsidies, fees, and fines at stake.