By Michael R. Crittenden
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- U.S. House lawmakers are expected to put heavy pressure on mortgage-servicing firms at a Wednesday hearing, even as financial firms seek to show they are taking more aggressive steps to help struggling borrowers.
"We're ready to say that next year we will have to rewrite the servicer laws," House Financial Services Chairman Barney Frank, D-Mass., said Tuesday.
Frank's panel is scheduled to hear testimony from trade groups representing a wide range of mortgage servicers, as well as individual banks such as Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM).
Lawmakers have been increasingly disappointed that financial firms have only half-heartedly embraced efforts to stem the record numbers of foreclosures that have been a major cause of the global financial crisis. Rep. Melvin Watt, D-N.C., said lawmakers continue to favor bolder steps, including a 90-day halt on all foreclosure proceedings.
"I think there's a growing recognition that more and more and more needs to be done," Watt said. "We will certainly continue to press the issue."
Some firms, such as Bank of America and JPMorgan Chase, have been stepping up their efforts to work with borrowers in response to the political backlash. Two weeks ago, JPMorgan announced a plan to modify the terms of $70 billion in mortgages for borrowers who are either behind on their payments or soon could be. Bank of America has already unveiled two loan modification proposals, and Citigroup Inc. (C) announced its own effort Tuesday.
Servicers have long complained that the contracts and laws governing loan-servicing agreements have prevented them from more aggressively modifying the terms of loans. The situation is frustrating to Frank, who said the system cannot work if all of the interested parties are prevented from making a decision on a loan because of existing laws.
A backdrop for the hearing will be the Bush administration's announcement Tuesday of a new plan to modify the terms of mortgages with help from Fannie Mae (FNM) and Freddie Mac (FRE). U.S. officials were optimistic the plan would speed the modification of certain loans that are more than 90 days or more past due, although documents released by the government estimated the plan could "ultimately help thousands of borrowers."
Watt said he was "pleased" that the administration was attempting to help more borrowers, though he noted that it was more limited than steps Democrats have endorsed.
Some Senate lawmakers were more critical.
"These voluntary plans sound nice, but they don't do the job," Sen. Charles Schumer, D-N.Y., said in a statement.
Senate Banking Chairman Christopher Dodd, D-Conn., said the new program announced Tuesday shouldn't be considered a replacement for a broader foreclosure-mitigation program that is under debate within the administration.
-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com
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(END) Dow Jones Newswires
November 11, 2008 17:12 ET (22:12 GMT)

Publié le 11 novembre 2008 Copyright © 2008 Dowjones