The Senate Committee on the Judiciary held a hearing Tuesday regarding possible legislation granting bankruptcy judges the power to require foreclosure mediation between banks and homeowners.
Sen. Sheldon Whitehouse (D-R.I.) railed against the Home Affordable Modification Program, or HAMP, for falling short of the Obama administration's early targets, and lenders for improperly filing and executing foreclosures. Whitehouse said one possible solution would be bankruptcy court loss-mitigation programs that put homeowners in touch with their bank.
"Tragically, these foreclosures are often unnecessary, indeed often not even in the mortgage holder's best interests, but they are driven forward by conflict-ridden bureaucratic machinery that lacks the most basic American failsafe: the chance to talk to a responsible human being who can make an actual decision," Whitehouse said. "The bankruptcy court loss-mitigation programs won't save every home, but they can help countless frustrated homeowners cut through the bureaucratic nightmare and get answers to their modification requests."
Robert Drain, a judge for the U.S. Bankruptcy Court for the Southern District of New York, testified that half of the mediations that take place in his court's loss-mitigation program end in an agreement, often a modification. The other half, he said, at least give the homeowner a clear understanding for why they're losing their home.
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