WASHINGTON, DC - As foreclosure rates around the country continue to rise, it has become increasingly difficult for many homeowners seeking to modify their mortgages to get a hold of their loan servicers. In an effort to help struggling homeowners and ensure that banks and loan servicers are held accountable to requests for help, U.S. Senator Jack Reed (D-RI) and 14 of his Senate colleagues sent a letter to Housing and Urban Development (HUD) Secretary Shaun Donovan urging HUD to develop and implement a strategy requiring banks and loan servicers, particularly those that have agreed to participate in the Obama Administration's foreclosure prevention initiatives, to respond to homeowners in a timely fashion.

"Companies that have agreed to participate in these government programs must be held accountable, especially when they are simultaneously receiving taxpayer dollars," said Reed, a senior member of the Banking Committee, which oversees federal housing policy. "Many homeowners are struggling to make ends meet, and they are right to expect a timely response to their questions. The Administration must ensure that servicers' public pronouncements translate into real relief for homeowners."

For those homeowners who do get responses, the wait is often lengthy. A recent report from the National Foreclosure Mitigation Counseling Program indicates that homeowners are waiting, on average, 45-60 days for responses to requests for help.

Other homeowners have found servicers reluctant to make meaningful changes to the terms of their mortgages despite advertised participation in the Administration's foreclosure prevention initiatives.

Senator Reed recently raised this issue with Assistant Secretary-Designate for Financial Stability Herbert M. Allison, Jr. following his confirmation hearing. Reed urged Treasury to consider collecting data on the volume of homeowner inquiries, average response time, and number and type of workouts offered to ensure that servicers make good on their commitments to help responsible homeowners.

A copy of the letter to HUD follows:

The Honorable Shaun Donovan
Secretary
U.S. Department of Housing and Urban Development
451 7th Street, SW
Washington, DC 20410

Dear Secretary Donovan:

We write to express our deep concern about the current economic crisis and its impact on our nation. Like you, we believe that we need to quickly act to address this situation, which has its roots in the collapse of the housing market. However, assistance must be offered in a manner that eliminates the multiple hurdles that many homeowners currently face.

Regrettably, we hear on a daily basis from constituents who are struggling under the burden of unsustainable mortgages and are in danger of foreclosure. Of particular concern are homeowners who have been instructed by HUD-approved counselors to contact their servicers only to be rebuffed or worse, never even reach their servicer. Furthermore, statistics from the National Foreclosure Mitigation Counseling Program indicate that homeowners who do reach their servicers are waiting, on average, 45 to 60 days for a response. Responsible homeowners are seeking help but simply running out of time.

The original Bush Administration effort to help homeowners refinance their mortgages was a failure. Since then, you have taken steps to improve the situation. Additionally, Congress recently passed the Helping Families Save Their Homes Act to further encourage servicers to offer loan modifications and to provide you authority to expand the reach of existing homeowner assistance programs.

As you implement this law, how will you use your new authority to help homeowners in crisis, and what is your time frame for doing so? Additionally, what steps are you able to take to address the concerns raised by our constituents who have been unable to access answers or adequate help from servicers? Are there further legislative tools that you require to address this problem, or to meet the broader needs of struggling homeowners?

We look forward to learning more about your strategies for solving these problems and to continuing to work with you to ensure that individuals and families get the assistance they need.

Sincerely,

Jack Reed (D-RI)
Harry Reid (D-NV)
Chuck Schumer (D-NY)
Robert Menendez (D-NJ)
Daniel Akaka (D-HI)
Patrick Leahy (D-VM)
Jeff Bingaman (D-NM)
Thomas Carper (D-DE)
Debbie Stabenow (D-MI)
Jeanne Shaheen (D-NH)
Carl Levin (D-MI)
Amy Klobuchar (D-MN)
Tom Udall (D-NM)
Frank Lautenberg (D-NJ)
Kirsten Gillibrand (D-NY)