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By California Assemblymen Pedro Nava – On October 13, 2009, as Chair, I conducted an informational hearing of the Assembly Banking & Finance Committee to examine current efforts aimed at preventing foreclosures. This hearing gave the committee expert information on the scope of the current problems and the potential for establishing a monitored workout program for borrowers in foreclosure in order to expedite negotiations and promote face-to face contact between borrowers and lenders.
The largest financial institutions were invited to this hearing but were unable to attend, thereby not allowing the committee to receive a full picture of the market conditions. I am therefore writing now to request additional information that will help the committee evaluate the foreclosure crisis from your perspective.
Prior to the Assembly Committee on Banking and Finance convening additional informational hearings on this issue, I am asking that your institution answer the following questions:
How does your institution define a loan modification? Please be as specific as possible.
What exactly is your loan modification process once a borrower has asked for a loan modification?
Once the financial institution receives all the paperwork, how long does it take for a long modification to be complete?
In addition to the Home Affordable Modification Program (HAMP), does your institution use any other modification programs?
If your institution does have another program in places besides HAMP, how do you determine which program to use? Do you pursue the loan modification under all the programs and then base your decision on what is in the best interest of the borrower?
Of mortgage loans in portfolio or securitized, how many are eligible for modification under HAMP
During the loan modification process, what information is disclosed to the borrower?
What is your predicted modification pace for each quarter of 2010? Please provide data.
What are the top factors that delay a loan modification offer? Please provide data.
What are the top reasons a loan modification is denied? Please provide data.
Do loan modifications, either in the trial period, or once finalized, have any negative impact on a borrower’s credit score? What do you report to the credit agencies if the borrower is not in default?
What happens when the trial period of a loan modification has ended?
How do you determine net present value relating to a loan modification?
Generally, how often are requests for loan modifications initiated by counseling agencies on behalf of a borrower? Directly from the borrower? Please provide data.
What has been the formal position of your institution regarding foreclosure mediation programs in other states?
Please respond to the committee no later than Monday, November 9, 2009 so that this information may be part of the committee’s background materials.
Sincerely,
Pedro Nava
Chair, Assembly Banking & Finance Committee.
