[House Hearing, 111 Congress] [From the U.S. Government Publishing Office] FORECLOSURE PREVENTION PART II: ARE LOAN SERVICERS HONORING THEIR COMMITMENTS TO HELP PRESERVE HOMEOWNERSHIP? ======================================================================= HEARING before the COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION __________ JUNE 24, 2010 __________ Serial No. 111-97 __________ Printed for the use of the Committee on Oversight and Government Reform Available via the World Wide Web: http://www.gpoaccess.gov/congress/ index.html http://www.house.gov/reform FORECLOSURE PREVENTION PART II: ARE LOAN SERVICERS HONORING THEIR COMMITMENTS TO HELP PRESERVE HOMEOWNERSHIP? FORECLOSURE PREVENTION PART II: ARE LOAN SERVICERS HONORING THEIR COMMITMENTS TO HELP PRESERVE HOMEOWNERSHIP? ======================================================================= HEARING before the COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION __________ JUNE 24, 2010 __________ Serial No. 111-97 __________ Printed for the use of the Committee on Oversight and Government Reform Available via the World Wide Web: http://www.gpoaccess.gov/congress/ index.html http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 63-041 WASHINGTON : 2011 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected]. COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM EDOLPHUS TOWNS, New York, Chairman PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California CAROLYN B. MALONEY, New York DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida DENNIS J. KUCINICH, Ohio JOHN J. DUNCAN, Jr., Tennessee JOHN F. TIERNEY, Massachusetts MICHAEL R. TURNER, Ohio WM. LACY CLAY, Missouri LYNN A. WESTMORELAND, Georgia DIANE E. WATSON, California PATRICK T. McHENRY, North Carolina STEPHEN F. LYNCH, Massachusetts BRIAN P. BILBRAY, California JIM COOPER, Tennessee JIM JORDAN, Ohio GERALD E. CONNOLLY, Virginia JEFF FLAKE, Arizona MIKE QUIGLEY, Illinois JEFF FORTENBERRY, Nebraska MARCY KAPTUR, Ohio JASON CHAFFETZ, Utah ELEANOR HOLMES NORTON, District of AARON SCHOCK, Illinois Columbia BLAINE LUETKEMEYER, Missouri PATRICK J. KENNEDY, Rhode Island ANH ``JOSEPH'' CAO, Louisiana DANNY K. DAVIS, Illinois BILL SHUSTER, Pennsylvania CHRIS VAN HOLLEN, Maryland HENRY CUELLAR, Texas PAUL W. HODES, New Hampshire CHRISTOPHER S. MURPHY, Connecticut PETER WELCH, Vermont BILL FOSTER, Illinois JACKIE SPEIER, California STEVE DRIEHAUS, Ohio JUDY CHU, California Ron Stroman, Staff Director Michael McCarthy, Deputy Staff Director Carla Hultberg, Chief Clerk Larry Brady, Minority Staff Director C O N T E N T S ---------- Page Hearing held on June 24, 2010.................................... 1 Statement of: Das, Sanjiv, CEO, Citimortgage, Inc.; Barbara J. Desoer, president, Bank of America Home Loan; David Friedman, president and CEO, American Home Mortgage Servicing, Inc.; Michael J. Heid, co-president, Wells Fargo Home Mortgage, Wells Fargo & Co.; David Lowman, CEO, Chase Home Finance, Inc., JPMorgan Chase Bank; and Edward J. Pinto, Real Estate Financial Services Consultant.............................. 15 Das, Sanjiv.............................................. 15 Desoer, Barbara J........................................ 26 Friedman, David.......................................... 35 Heid, Michael J.......................................... 51 Lowman, David............................................ 63 Pinto, Edward J.......................................... 74 Letters, statements, etc., submitted for the record by: Connolly, Hon. Gerald E., a Representative in Congress from the State of Virginia, prepared statement of............... 122 Das, Sanjiv, CEO, Citimortgage, Inc., prepared statement of.. 18 Desoer, Barbara J., president, Bank of America Home Loan, prepared statement of...................................... 28 Friedman, David, president and CEO, American Home Mortgage Servicing, Inc., prepared statement of..................... 37 Heid, Michael J., co-president, Wells Fargo Home Mortgage, Wells Fargo & Co., prepared statement of................... 53 Issa, Hon. Darrell E., a Representative in Congress from the State of California, prepared statement of................. 120 Jordan, Hon. Jim, a Representative in Congress from the State of Ohio, prepared statement of............................. 9 Lowman, David, CEO, Chase Home Finance, Inc., JPMorgan Chase Bank, prepared statement of................................ 65 Pinto, Edward J., Real Estate Financial Services Consultant, prepared statement of...................................... 76 Towns, Chairman Edolphus, a Representative in Congress from the State of New York: Letter dated June 30, 2010............................... 104 Prepared statement of.................................... 4 FORECLOSURE PREVENTION PART II: ARE LOAN SERVICERS HONORING THEIR COMMITMENTS TO HELP PRESERVE HOMEOWNERSHIP? ---------- THURSDAY, JUNE 24, 2010 House of Representatives, Committee on Oversight and Government Reform, Washington, DC. The committee met, pursuant to notice, at 10:06 a.m., in room 2154, Rayburn House Office Building, Hon. Edolphus Towns (chairman of the committee) presiding. Present: Representatives Towns, Cummings, Kucinich, Clay, Watson, Lynch, Connolly, Quigley, Kaptur, Norton, Davis, Cuellar, Speier, Driehaus, Chu, Issa, Duncan, Turner, McHenry, Bilbray, Jordan, and Luetkemeyer. Staff present: John Arlington, chief counsel-- investigations; Beverly Britton Fraser, counsel; Kwame Canty and Gerri Willis, special assistants; Velginy Hernandez, press assistant; Adam Hodge, deputy press secretary; Caria Hultberg, chief clerk; Marc Johnson, assistant clerk; Mike McCarthy, deputy staff director; Jason Powell, senior counsel; Brian Quinn and David Rotman, investigative counsels; Ophelia Rivas, assistant clerk; Shrita Sterlin, deputy director of communications; Lawrence Brady, minority staff director; John Cuaderes, minority deputy staff director; Jennifer Safavian, minority chief counsel for oversight and investigations; Adam Fromm, minority chief clerk and Member liaison; Benjamin Cole, minority policy advisor and investigative analyst; Seamus Kraft, minority director of new media and press secretary; Justin LoFranco, minority press assistant and clerk; Christopher Hixon, minority senior counsel; Hudson Hollister, minority counsel; Mark Marin, minority senior professional staff member; Brien Beattie, minority professional staff member; and Sharon Casey, minority executive assistant. Chairman Towns. The committee will come to order. Good morning, and thank you for coming. It took massive Federal intervention, using billions of taxpayer dollars, to save the banks from the edge of complete disaster. The banks and the financial system are now stabilizing, and, in fact, the major banks are even beginning to make money again. Unfortunately, the same cannot be said for millions of people who are unemployed or who are in danger of losing their homes. The threat of foreclosure is still at an all time high. More than 3.1 million Americans are delinquent on their mortgages by 60 days or more. A letter from the banks or phone call from the mortgage company is still keeping many homeowners awake at night agonizing over the potential loss of their home. For these people, the economic crisis is far from over. As I have said before, to its great credit, the Obama administration recognized early on that an important part of the Nation's economic recovery is keeping as many people as possible in their homes. This makes sense from both an economic standpoint and a public policy standpoint, and I salute him for that. The Home Affordable Modification Program [HAMP], is a central piece of the Treasury Department's effort to carry out that objective. HAMP had a troubled start, but it appears that some significant improvements have recently been made. More than 1.2 million homeowners have now started a HAMP trial modification, and 346,000 have obtained a permanent modification. The median savings to these homeowners is a little over $500 per month. Moreover, the number of permanent modifications has more than doubled in the last 3 months. But there are still major problems with HAMP. The chief complaint is the slow pace at which servicers are permanently modifying troubled mortgages. There is still considerable concern over confusing and conflicting communications from loan servicers to borrowers. And while more permanent modifications are being made, fewer delinquent borrowers appear to be qualifying for HAMP. Perhaps most important, many of the borrowers who obtain a trial modification drop out of the program later. In fact, it appears that a majority of the mortgage modifications obtained under HAMP may not be successful. A separate and deeply troubling issue is raised by a new study by the Center for Responsible Lending, which found that minority communities continue to experience significantly higher foreclosure rates than whites, regardless of their income levels. This confirms similar findings reported by the National Community Reinvestment Coalition in the committee's last hearing on HAMP. Today, I would like to hear from the banks exactly how this disparity can be addressed. Clearly, we need to do a lot better than we have done in the past. But this is not just about HAMP. I think the mortgage banking industry has to recognize that HAMP cannot be the only solution to the foreclosure crisis. Some of the banks appearing today have begun to save homes from foreclosures with principal reductions, second lien modifications and other help for the unemployed. These sound like good first steps, but I want to hear more, and I want to see broad participation throughout the mortgage loan industry. Foreclosure is a losing proposition for everyone involved if you stop and analyze it. The homeowner loses the house, the bank loses a big chunk of its investment, and the community loses a family with a stake in the community. What I am asking the banks to do is to help us find an effective way to stop these foreclosures. I want to thank our witnesses today for appearing, and I look forward to your testimony. I will now yield 5 minutes to the committee ranking member, but let me just say this before we move any further that we are going to give 5 additional minutes on each side, of course after your opening statement, we will give 5 minutes on the Democratic side and 5 minutes on the Republican side, and that can be split up five ways, six ways, as many ways as you want to split it up. But you have 5 minutes. [The prepared statement of Chairman Edolphus Towns follows:] [GRAPHIC] [TIFF OMITTED] T3041.001 [GRAPHIC] [TIFF OMITTED] T3041.002 [GRAPHIC] [TIFF OMITTED] T3041.003 [GRAPHIC] [TIFF OMITTED] T3041.004 Mr. Jordan. Thank you, Mr. Chairman. Mr. Chairman, thank you for holding today's hearing to examine the continuing failure of this administration's response to the foreclosure crisis. At the outset, I must express my extreme disappointment that the committee will not hear from the Treasury Department today. Since the committee's last hearing on HAMP 3 months ago, Treasury has continued its pattern of secrecy, dishonesty, and failure. Treasury has refused to implement the Special Inspector General's recommendations for reform of the program; it continues to misrepresent the original goals of the program so as to disguise its ineffectiveness; and, most importantly, the Obama administration's technocratic tinkering in the housing markets has continued to fail the American people. Just this week, we learned that Treasury has kicked substantially more people out of the HAMP program than have received sustainable mortgage modifications. As the Wall Street Journal recently reported, many of these Americans are actually worse off for relying on the administration's promises. I look forward to hearing from the mortgage servicers here today. They play a vital role in the process, and their perspective is necessary and helpful in examining this Federal program. But inviting the implementers of the program while ignoring the designers of the program and the people ultimately responsible for the waste of $75 billion of taxpayer money is simply a failure of oversight. I am also disappointed, Mr. Chairman, that GAO was disinvited from today's hearing. GAO has been investigating HAMP on an ongoing basis and they published a report this morning focused on the performance of mortgage servicers to coincide with their expected testimony at this particular hearing. Their perspective would also have been valuable for this committee to hear. Mr. Chairman, I respectfully urge you to invite the Treasury Department to answer for its failures at another hearing in the near future. We have a joint responsibility to the American people to hold this administration accountable, regardless of political affiliations. The servicers we hear from today have worked to comply with 800 HAMP rules issued in over 15 different sets of guidelines. Not surprisingly, they have been able to offer far more mortgage modifications privately outside of HAMP than within it. Ultimately, however, the best mortgage modification is a job, and, unfortunately, this Congress and this administration has stifled private sector job creation through their big government anti-economic growth agenda. The implications of these policy mistakes are being felt by former homeowners across this great country. Thank you, Mr. Chairman, and I yield back. [The prepared statement of Hon. Jim Jordan follows:] [GRAPHIC] [TIFF OMITTED] T3041.005 [GRAPHIC] [TIFF OMITTED] T3041.006 Chairman Towns. I thank the gentleman for his statement. But let me just indicate to you that we did have Treasury in, we did have GAO and we had SIGTARP. And, of course, you can't do but so much in 1 day. Mr. Jordan. GAO's report came out this morning, Mr. Chairman. That is what we needed to hear about. Chairman Towns. The gentleman from Maryland, Mr. Cummings. Mr. Cummings. Thank you very much, Mr. Chairman. Mr. Chairman, first of all, thank you for holding the hearing. I am concerned about the claims published in the Washington Post this past Monday that a growing number of borrowers are failing to move from the HAMP program's initial stage into a permanent loan modification. More than 100,000 borrowers lost their mortgage aid in May. About half of those dropped from the Federal program received another type of loan modification from their banks, according to the government data. But housing counselors have complained that those alternative loan modifications are typically not as generous as what the government program offers and often come with hefty up-front fees. I am interested to see how these options have been communicated with the borrowers. Getting started and understanding the process can be one of the toughest steps in loan modification efforts. Mr. Chairman, for over the last 15 months I have held four foreclosure prevention workshops in my district, and I can tell you that the key is that we have to have effective and efficient programs. It is one thing to talk about them. It is another thing to actually carry them out. Hopefully, the people who are testifying before us today can help us get better insight as to how we can keep people in their homes. I have told my constituents that they must protect their house. The house is their No. 1 investment in most instances, and a very, very important investment, and I think that we need to be doing more and more to help people retain their home so that they can have stability, and so they can keep their families stable and also, of course, so that we can keep neighborhoods stable. With that, Mr. Chairman, I yield back. Chairman Towns. The gentleman yields back. I now recognize Mr. Turner. Mr. Turner. Can you clarify for us how the time is allocated? Are you saying there is 5 minutes over there and there is 5 minutes over here? Chairman Towns. He yielded back. We still have 3 minutes left on this side. Now you have your entire 5 minutes on your side. Mr. Turner. OK, great. Mr. Chairman, you said, as you know, you acknowledged the request by the ranking member for a representative from Treasury, and you said we can only do so much in 1 day. I can tell you that we would come back. We are a hard-working committee and everybody would be delighted to be here. Chairman Towns. Would the gentleman yield for a second? We have had Treasury. Mr. Turner. You haven't had them since Monday when they had their report issued that said that this program is failing, and I have some very serious questions. You know, just yesterday, just yesterday, the Treasury Secretary appeared before the congressional oversight panel where he was asked a question about HAMP, and do you know what he said? He said, ``This program was not designed to prevent foreclosures. It was not designed to sustain homeownership at a level that would be unachievable, imprudent to try to do.'' He goes on to say when someone asked him, ``Well, do you think it should go to 65 percent of homeownership level?'' He said, ``I think you are describing exactly the objectives that have shaped this program.'' The chair of the congressional oversight panel responding to his comments said this: ``I was very surprised and very frustrated by the notion that the Secretary seemed to be saying that a program that helps only a tiny handful of families facing foreclosures is a successful program because in effect the rest deserves to lose their homes.'' She says, ``I thought that was shocking.'' I find it shocking. I find it inconsistent with the chairman's opening statement about what this program is to do, and certainly Secretary Geithner is responsible for ensuring the success of the program. I also find it inconsistent with what the President told the American people this program was going to do. Now, we have an absolute crisis, and it is not over. I am from Montgomery County, OH, and the foreclosure rate is staggering in my community. Ohio has seen the foreclosures continue to mount. And clearly this needs to be addressed, not only by Treasury addressing this program and giving people real answers as to its goals and objectives, but also for the financial institutions, because we cannot lose focus here that the financial institutions got us in this mess, this is not a government-created mess, by their lending practices that did not make sense, that were not sound business decisions, that did not protect the banks, and did not protect capital investments. The concern that I have as I looked at Treasury and then to the financial institutions is that decisions are being made currently that don't protect capital. Every Member of Congress can tell you that the realtors in their communities tell them that it is virtually impossible to get loan servicers, banks, financial institutions, to work with the home buyer, to get a short sale, to do things that would avoid foreclosure. This is what I don't understand, and I am looking forward to some information today. The test under the HAMP program, it is supposed to preserve capital for the banks, but apparently it is not a program that even the banks are with zeal pursuing. When you look at the market, any time that we can avoid foreclosure, you make more, you preserved your capital; the market sustains more because when the home goes into foreclosure, prices in the neighborhood drop; and families are sustained. So I am interested today in why isn't this program working, why isn't Treasury here, but also from you guys, why aren't you operating in what we would all believe a market standard of capital preservation, because we are continuing to proceed toward foreclosure at rates where we all know people are approaching the financial institutions with deals and offers that are being rejected that would have a higher return than foreclosure does. I am interested in some of those answers today. I yield back. Chairman Towns. I now recognize Mr. Kucinich. Mr. Kucinich. Thank you very much, Mr. Chairman. Chairman Towns. You have 3 minutes. Mr. Kucinich. I am going to take 1 minute, if you will let me know when that is done. We know that the State of Ohio received another $172 million so that people could be counseling individuals on how to stay in their home, and I am grateful to the administration for that. But we also know that servicers have been referring eligible borrowers to foreclosure until they have been evaluated for HAMP. Treasury had to intervene to try to put a stop to that practice. We know that Bank of America has 13 percent permanent modifications; JPMorgan Chase, 20 percent; Wells Fargo, 22 percent; CitiMortgage, 23 percent; American Home Mortgage Servicing, 16 percent. This whole program is about keeping people in their homes, and yet we are finding that the servicers apparently are not stepping up in a way that can encourage more and more people to stay in. We know that people are not given reasons, understandable reasons, why their home affordable mortgage modification program is denied, that it is sketchy as to how people appeal a denial, and to have their denials reviewed before they face foreclosure. These are all things that this hearing is going to get into. We are glad you are doing what you are doing, but it is not enough. Chairman Towns. The gentleman's 1 minute is up. The gentleman from Virginia, he has 2 minutes left. Mr. Connolly. I thank the chairman. I just want to say I appreciate the steadfastness of our friends on the other side of the aisle in wanting to look at a program and make sure it is better and working. But I think it is important to remember that our friends on the other side of the aisle are the same ones that stood by and allowed for no or loose regulation that created the subprime mortgage bubble in the first place, and to a person they opposed helping anybody who was under water or threatened with foreclosure, including in Ohio. Not one person in America would have been helped if their vote had actually been the majority vote when we looked at the Recovery and Reinvestment Act. So when we are looking at the subject and we are looking at imperfect models---- Mr. Turner. Will the gentleman yield? Mr. Connolly. I will not yield--that are not succeeding to the fullest extent. Lets's remember that there are some among us who it would have helped not at all. Thank you, Mr. Chairman. I yield back. Mr. McHenry. Mr. Chairman. Chairman Towns. The gentleman from North Carolina has 1 minute. Mr. McHenry. I would just say to the chairman that my colleague on the left is flat wrong. What he is saying is actually not the case. We want a workable program that will actually help homeowners, not a failed program that is expensive to the taxpayers and doesn't actually help homeowners. It has been an absolute failure. GAO report after report, if we talk to folks in our communities and our districts, they will tell you it is not working. And I have been front and center on this issue trying to help homeowners at home and here in Washington with policies, and it was the party over there that would do nothing about Fannie Mae and Freddie Mac, which really added fuel to the fire of subprime and this mortgage crisis that we are inheriting and that we are trying to work through right now. So rather than this guy blaming Bush, let's move forward. Let's try to do something reasonable for homeowners. They are sick and tired of this kind of petty politics. We want to fix this problem, not simply throw some money at it. We want a workable solution, not some empty rhetoric. So, with that, I would be happy to yield back. Chairman Towns. The gentleman's time has expired. Let me just say to all of the members of the committee, there is enough blame to go around. I want you to know that. We just have sort of put things in the proper context. We have had the Treasury Department, GAO and the SIGTARP to testify at our first hearing on this issue. Treasury was questioned by the committee for more than 3 hours on the performance of HAMP at the first hearing. Now it is the banks' turn, and we are going to hear from them today. But more importantly, let me state, HAMP is not the only way to address the foreclosure problem. HAMP is just a part of the solution, but not the whole solution. We need the wholehearted cooperation of everybody across the board, even this committee. On that note, I see no recognition. We have a minute left on this side. Yes, 1 minute to the gentlewoman from California, Ms. Speier. Ms. Speier. Thank you, Mr. Chairman. I think the American homeowners who are grieving right now and pleading for some kind of modification don't care if it is HAMP or something organized by the bank. They just want some relief. And I think it is shameful that my colleagues feel compelled to point fingers one way or the other. The one issue that is really critical that we have to look at is the conflict of interest that exists where there is a mortgage and a second mortgage and the servicer has an interest in the second mortgage and therefore will not negotiate a modification with the first mortgage. That is a really serious issue and one we should address here today. I yield back. Chairman Towns. All time has now expired. We will turn to our panel of witnesses. It is committee policy that all witnesses are sworn in. If you would stand and raise your right hands. [Witnesses sworn.] Chairman Towns. Let the record reflect that all witnesses answered in the affirmative. Mr. Das is the chief executive officer of CitiMortgage, Inc. Welcome, Mr. Das. Ms. Barbara Desoer is the president of Bank of America Home Loans, which is the Nation's largest home mortgage servicer. Thank you, Ms. Desoer. Mr. David Friedman is the president and chief executive officer of American Home Mortgage Servicing, which is the Nation's largest independent non-prime servicer. Welcome, Mr. Friedman. Mr. Michael Heid is the co-president of Wells Fargo Home Mortgage, which services one out of every six mortgage loans in the Nation. Welcome, Mr. Heid. Mr. David Lowman is the chief executive officer of Chase Home Finance. Welcome, Mr. Lowman. Mr. Edward Pinto is a real estate financial services consultant. Welcome. We are delighted to have you here as well. At this time I would ask the witnesses to deliver their statement. Let me just explain, just in case you don't know how it works. There is a light that comes on and it is green, and then after 4 minutes it becomes caution, and then it turns red. Now, red means stop. I just want to sort of remind you how it works so we have that straight. Mr. Das, why don't we start with you and come right down the line. This will allow us an opportunity to raise questions. STATEMENTS OF SANJIV DAS, CEO, CITIMORTGAGE, INC.; BARBARA J. DESOER, PRESIDENT, BANK OF AMERICA HOME LOAN; DAVID FRIEDMAN, PRESIDENT AND CEO, AMERICAN HOME MORTGAGE SERVICING, INC.; MICHAEL J. HEID, CO-PRESIDENT, WELLS FARGO HOME MORTGAGE, WELLS FARGO & CO.; DAVID LOWMAN, CEO, CHASE HOME FINANCE, INC., JPMORGAN CHASE BANK; AND EDWARD J. PINTO, REAL ESTATE FINANCIAL SERVICES CONSULTANT STATEMENT OF SANJIV DAS Mr. Das. Thank you. Chairman Towns, Ranking Member Issa, and members of the committee, thank you for the opportunity to discuss Citi's efforts to help families stay in their homes and describe our progress in implementing the Home Affordable Modification Program [HAMP]. I am Sanjiv Das, CEO of CitiMortgage, and I am honored to be speaking with you today. As Citi CEO Vikram Pandit has said, we owe a debt of gratitude to the American taxpayer and our government for providing Citi with TARP funds. We believe it is our responsibility to help American families in financial distress, and in particular to help families stay in their homes. As one recent example, just last week Citi became the first major lender to announce a 90-day moratorium on mortgage foreclosures in the Gulf Coast region. Our goal is to help families who have been hard hit by the devastating oil spill to remain in their homes. At Citi, we are focused on two key priorities: Working hard to make the HAMP program as successful as possible; and providing solutions for distressed borrowers that do not qualify for, or have fallen out of, the HAMP process. Our focus has produced significant results. Citi is consistently ranked among the top performing servicers, and since 2007 we have assisted more than 900,000 families in their efforts to avoid foreclosure. We know that the HAMP process can be somewhat complicated, so we strive to make it easier for our customers. We have hired special staffers to focus solely on the HAMP process and given them detailed training. In addition, we have added more than 1,400 new employees to support our foreclosure prevention efforts. We have invested in our HAMP processing systems so that HAMP applicants can now view their application status and documents online. Customers are also notified electronically when they meet key milestones in the application process. We have learned that borrowers can be reluctant to work directly with servicers, so we increasingly work with third parties in local communities on mortgage modification outreach. We have also partnered with HOPE NOW to conduct document collection events in face-to-face meetings with borrowers who need help. Our goal is to give every, every distressed borrower the opportunity to reach us for assistance. We have designed and implemented procedures to ensure the fair application of HAMP standards for all applicants. Despite these initiatives, challenges remain. For example, HAMP has been revised multiple times since March 2009. With each change additional training and systems are required, which in turn impact program efficiencies. Further, factors beyond our control often prohibit customers from moving from a trial modification to a permanent HAMP modification. In the majority of these cases, the required documents are not submitted, required trial payments are not made, or the borrower is ineligible for the program. Since the HAMP program does not fit every distressed borrower's needs, Citi is providing solutions that helps borrowers who do not qualify for the HAMP process or who have not achieved HAMP modifications. As part of this effort, we offer a number of supplemental modification programs that are designed to address customer needs on a case-by-case basis. These solutions are tailored to homeowners' unique circumstances and deliver an outcome that is affordable and lasting. Citi's own proprietary programs assist customers with a variety of solutions, addressing challenges such as unemployment and imminent risk of default and utilizing a variety of strategies to solve for affordability of payments. These solutions are described in the appendix attached to this testimony in more detail. We believe the issue of affordability is the most important consideration in modifications. We do not believe there is one- size-fits-all approach to affordability. The proof of this is in our low default rate, which continues to be significantly below industry averages. For those borrowers who face severe hardship, Citi introduced dedicated Short Sale and Deed in Lieu teams in 2009, which offer a number of customized solutions. Further, we are participating in HAFA and will participate in the Second Lien Modification Program when it becomes available this summer. These programs enable borrowers to avoid foreclosure and allow for a dignified transition to the next phase of their lives. I understand there is much more work to be done. Citi remains focused in achieving affordability, and we support the Treasury's programs to help consumers. Thank you for the opportunity to speak before this committee. I would be happy to answer any questions you might have, sir. [The prepared statement of Mr. Das follows:] [GRAPHIC] [TIFF OMITTED] T3041.007 [GRAPHIC] [TIFF OMITTED] T3041.008 [GRAPHIC] [TIFF OMITTED] T3041.009 [GRAPHIC] [TIFF OMITTED] T3041.010 [GRAPHIC] [TIFF OMITTED] T3041.011 [GRAPHIC] [TIFF OMITTED] T3041.012 [GRAPHIC] [TIFF OMITTED] T3041.013 [GRAPHIC] [TIFF OMITTED] T3041.014 Chairman Towns. Thank you very much. Ms. Desoer. STATEMENT OF BARBARA J. DESOER Ms. Desoer. Chairman Towns, Ranking Member Issa, and members of the committee, thank you for holding a hearing on this very important issue. Since January 2008, Bank of America has completed more than 630,000 loan modifications. We continue to innovate, first with our own proprietary loan modification programs, and more recently with the adoption of 2MP and our own principal forgiveness program. With the acquisition of Countrywide in July 2008, Bank of America's servicing portfolio changed dramatically, both in loan type and in volume, more than tripling to nearly 14 million customer loans. We have undertaken a massive retooling of the servicing organization to address the needs of distressed homeowners. We have built a new default management capability, new processes, new technology, and a 60 percent increase in staffing to more than 18,000. Bank of America has participated in more than 360 community outreach events, opened assistance centers for in-person counseling, and gone door-to-door to help customers understand their options. We are also participating in the HOPE NOW loan portal so housing counselors can directly submit completed customer applications. There have definitely been rough spots and customers have experienced service that is very inconsistent with our standards. We continue to learn and improve as we work through these difficult times, never losing sight of the impact that foreclosure has on the individual or the community. Since HAMP launched in March 2009, Bank of America has built momentum in the program. For the past 3 months, we have led servicers in the number of completed modifications. Bank of America also became the first major loan servicer to begin implementing the Treasury's second lien program on April 1st. We took this step to provide customers a more affordable combined monthly mortgage payment. This March, we announced an industry leading principal reduction program for qualifying customers who owe significantly more than their homes are worth. We began mailing offers May 17th to provide immediate relief to those in the most imminent danger of foreclosure. Treasury also announced a similar principal reduction program that will be effective later this year, and we are working to align our own program with theirs. As we execute and evaluate programs that can expand HAMP's reach, it is vital to understand the current eligibility of delinquent customers. Many customers do not and will not qualify for HAMP. Within Bank of America's servicing portfolio, 1.4 million first mortgage customers are more than 60 days delinquent on their mortgage payment. Of those customers, Treasury estimates that about 478,000 are potentially eligible for a modification through HAMP. As of the end of May, Bank of America has mailed more than 1 million solicitations, made trial offers to over 400,000 customers, started active trials with more than 300,000 customers, and we have 70,000 permanent modifications under HAMP. As our results demonstrate, HAMP has been largely successful in making offers to customers. However, getting customers to accept the offers and complete the requirements to obtain a permanent modification has been a challenge. In April, Bank of America began HAMP process changes that will require income and other documentation up front before the trial period is started, and we believe these changes will improve the trial to permanent conversion rate. Still, given the depth and length of the recession, a considerable number of customers will not be able to afford to stay in their home. In these cases, we invite customers to consider short sales or deeds in lieu programs to support a dignified transition from homeownership to alternative housing. We inform customers about these options as part of the HAMP decline process. For customers who have not met the requirements of the trial period, they receive letters that clearly state the reason for ineligibility. More than 40 percent of the declines we have mailed are because of missed payments in the trial period. Bank of America provides a dedicated toll-free number for customers to appeal the decision, provide updated financial information or discuss other options. We will not complete a foreclosure sale until the appeal period has expired. Innovative solutions have been created to help customers sustain homeownership, and Bank of America is committed to executing those programs well. All of us at Bank of America, including the thousands of associates who work on these issues every day, take seriously our role in helping customers through this difficult cycle. Thank you, and I will be pleased to take questions. [The prepared statement of Ms. Desoer follows:] [GRAPHIC] [TIFF OMITTED] T3041.015 [GRAPHIC] [TIFF OMITTED] T3041.016 [GRAPHIC] [TIFF OMITTED] T3041.017 [GRAPHIC] [TIFF OMITTED] T3041.018 [GRAPHIC] [TIFF OMITTED] T3041.019 [GRAPHIC] [TIFF OMITTED] T3041.020 [GRAPHIC] [TIFF OMITTED] T3041.021 Chairman Towns. Thank you very much. Mr. Friedman. STATEMENT OF DAVID FRIEDMAN Mr. Friedman. Chairman Towns, Ranking Member Issa, and members of the committee, we at American Home appreciate the committee's consideration of the complex issues surroundings the efforts of servicers to implement HAMP. American Home Mortgage Servicing is a non-prime residential loan servicer that does not own, originate nor have any interest in any of the loans that we service. Our focus is on keeping borrowers in their homes while balancing our obligation to provide continued cash-flows to investors. Contrary to popular opinion, servicers do not make money on foreclosures. They benefit no one and are undertaken only as a last resort when other foreclosure solutions are not available. We aggressively pursue any reasonable modification opportunity in the best interest of the investor through early intervention. All troubled loans are routinely reviewed for HAMP or other loss mitigation workout consideration. Although we already have made thorough solicitation efforts of our portfolio, we are again in the process of resoliciting every borrower that has potential for HAMP eligibility. To assist borrowers in avoiding foreclosure, we have, among other things, established a dedicated team of housing counselors and trained our call center associates as to loss mitigation opportunities. We have invested in the development of improved proprietary information systems, built relationships with housing agencies, counseling agencies and housing alliances, participated extensively in outreach events, considered borrowers for proprietary modifications in situations where we are unable to offer a HAMP modification, and we have offered other foreclosure alternative solutions whenever a modification is not appropriate. Several barriers remain, despite significant progress by the industry in the implementation of HAMP. Even with relaxed standards, the required underwriting documents are too burdensome. Many borrowers are unable to provide these documents or simply choose not to do so. Servicers such as AHMSI who experience redefault rates that are significantly less than industry averages should be allowed to rely upon a proven, less stringent underwriting requirement. Many borrowers delay in responding to standard HAMP solicitations and others are confused by program enhancements that are prematurely announced. Frequent program changes have overtaxed servicer systems and processes, and the newly announced HAMP principal reduction program has increased the number of so-called strategic defaulters, otherwise able borrowers who purposely stop paying on their mortgages to seek HAMP assistance. By failing to emphasize the necessity of a valid hardship, HAMP has not discouraged this type of behavior. The HAMP program has experienced significant issues in converting trial period plans to permanent modifications. Many borrowers fail to make the required trial payments and now are permanently ineligible for HAMP. Many others failed to timely return executed modification agreements, despite our extensive efforts to collect those documents. Deficiencies in and complexities of the HAMP reporting system, IR2, have made it difficult to officially report many permanent modifications. Not all borrowers qualify for HAMP modification. The top three factors for denial are the property is not the borrower's primary residence, the applicable securitization servicing documents restrict or prohibit modifications, and the borrower failed to provide a complete underwriting package. AHMSI has established an appeal process for HAMP denials and an independent team reviews and confirms denials. Borrowers that do not qualify for HAMP mod are reviewed to determine if other proprietary home retention options will prevent foreclosure. We maintain a robust complaint tracking and resolution process that is dedicated to handling all borrower complaints. We take our responsibilities under the HAMP program seriously. We have been audited by MHA compliance twice. Each time there were no major findings or enforcement actions. HAMP compliance often imposes unnecessarily complex burdens on servicers that divert resources away from more productive customer facing activities. While performance is improving, challenges persist even as the program matures. In conclusion, AHMSI is firmly committed to HAMP and to its goals and standards. We are anxious to see the program succeed and look forward to working with the Treasury and Congress to implement any needed improvements. Thank you for your time. [The prepared statement of Mr. Friedman follows:] [GRAPHIC] [TIFF OMITTED] T3041.022 [GRAPHIC] [TIFF OMITTED] T3041.023 [GRAPHIC] [TIFF OMITTED] T3041.024 [GRAPHIC] [TIFF OMITTED] T3041.025 [GRAPHIC] [TIFF OMITTED] T3041.026 [GRAPHIC] [TIFF OMITTED] T3041.027 [GRAPHIC] [TIFF OMITTED] T3041.028 [GRAPHIC] [TIFF OMITTED] T3041.029 [GRAPHIC] [TIFF OMITTED] T3041.030 [GRAPHIC] [TIFF OMITTED] T3041.031 [GRAPHIC] [TIFF OMITTED] T3041.032 [GRAPHIC] [TIFF OMITTED] T3041.033 [GRAPHIC] [TIFF OMITTED] T3041.034 [GRAPHIC] [TIFF OMITTED] T3041.035 Chairman Towns. Thank you very much. Mr. Heid. STATEMENT OF MICHAEL J. HEID Mr. Heid. Chairman Towns, Ranking Member Issa, and members of the committee, I am Mike Heid, co-president of Wells Fargo Home Mortgage. Thank you for the opportunity to share the results Wells Fargo has achieved in assisting homeowners across America. Because of the product choices we have made, our disciplined underwriting and the manner in which we approach foreclosure prevention, our delinquency and foreclosure rates in the first quarter of 2010 were three-fourths of the industry average, and on an annual basis, less than 2 percent of our owner occupied servicing portfolio has gone to foreclosure sale. To begin with, just a few examples of the actions we have undertaken to achieve these results. Since January 2009 through May 2010, we have helped more than 2.2 million homeowners with new low rate loans either to purchase a home or refinance their existing mortgage. We have assisted about half a million loan customers with trial or completed modifications, about one- fifth of which are through the HAMP program. We have assisted more than 100,000 unemployed customers with short-term modifications. Starting in January 2009, several months before the creation of HAMP, we led the industry by permanently forgiving more than $3 billion in principal for more than 55,000 customers, which amounts to more than $50,000 per loan. We have begun offering home payment relief to customers affected by the oil spill in the Gulf Coast. With respect to our loan modification efforts, while very difficult to achieve, we believe we must continue to balance the needs and interests of homeowners in financial distress with those who have remained diligent in making their mortgage payments. While much focus deservedly is directed to those consumers behind on their payments, we cannot lose sight of the fact that about 92 percent of Wells Fargo's mortgage customers are current in their home payments as of the first quarter of 2010. HAMP is a good option for people who meet certain criteria, but it is only parts of the home retention story. By the Treasury Department's own April 2010 estimates for Wells Fargo, only 3 of every 10 customers 60 or more days past due on their home payments are potential candidates for HAMP. As a result, servicers and investors have additional programs for the vast number of customers who are not eligible or likely will not qualify for HAMP. Taking all of these programs into account, about two-thirds of Wells Fargo's customers more than 60 days behind on their home payments are provided an option to prevent foreclosure. Finally, with the benefit of hindsight, it is clear the industry was not prepared for the significant number of customers that would face financial hardships as the economy continued to become more challenging. Wells Fargo is not always consistent in providing the level of service we expect to deliver to our customers, but over the past year we have committed tremendous resources and believe we have come a long way in providing and improving our service. For example, we have hired more than 10,000 people, for a total of 17,800 U.S.-based home preservation jobs. By the end of this month, we will complete the process of assigning one person to manage one loan modification from beginning to end. In other words, our customers will know exactly who they are working with from start to finish. We continue our work with other industry participants to accelerate the credit decision process setting a 5-day decision target once all documents are in hand as compared to the HAMP standard of 30 days. We have invested in improvements in workflow systems and document imaging. We have participated in more than 300 home preservation events, including 10 large scale events solely for our customers, and established 27 home preservation centers in six States where we have concentrations of at-risk customers. We now give Wells Fargo home mortgage loan customers a short sale decision in 5 to 15 days and we continue to have a dedicated phone line for your staff to use in the event one of your constituents, our customer, has an issue that needs resolution. In conclusion, Wells Fargo will continue to lead the industry in further improving methods and programs to assist homeowners. We believe very strongly and feel very deeply about our responsibility to help homeowners in a balanced and fair way, and we believe our actions demonstrate our commitment to achieving this goal. Thank you for your time today. [The prepared statement of Mr. Heid follows:] [GRAPHIC] [TIFF OMITTED] T3041.036 [GRAPHIC] [TIFF OMITTED] T3041.037 [GRAPHIC] [TIFF OMITTED] T3041.038 [GRAPHIC] [TIFF OMITTED] T3041.039 [GRAPHIC] [TIFF OMITTED] T3041.040 [GRAPHIC] [TIFF OMITTED] T3041.041 [GRAPHIC] [TIFF OMITTED] T3041.042 [GRAPHIC] [TIFF OMITTED] T3041.043 [GRAPHIC] [TIFF OMITTED] T3041.044 [GRAPHIC] [TIFF OMITTED] T3041.045 Chairman Towns. Thank you very much, Mr. Heid. Mr. Lowman. STATEMENT OF DAVID LOWMAN Mr. Lowman. Chairman Towns, Ranking Member Issa, and members of the committee, thank you for the opportunity to appear before you today. My name is Dave Lowman, and I am the chief executive officer of home lending at JPMorgan Chase. JPMorgan Chase shares your commitment to helping home owners and stabilizing our Nation's housing market. At Chase, we are working hard to help families meet their mortgage obligations and keep them in their homes by making their payments affordable. To date, we have helped prevent hundreds of thousands of foreclosures through our own proprietary modification programs, HAMP, and other agency programs. In addition, we have refinanced nearly $21 billion of loans under HARP. HAMP modification performance has been strong. At Chase, we are now completing more than 10,000 permanent modifications per month. On average, homeowners are seeing their monthly payments reduced by more than $530, an average payment reduction of 28 percent. We are also adopting and implementing the Federal Government's Foreclosure Alternative Program and Second Lien Modification Program to help more borrowers. We actively use temporary forbearance agreements for unemployed borrowers, similar to the program recently announced by the administration. You have asked us to focus our testimony on how we can make foreclosure prevention initiatives, including HAMP, more effective for borrowers. From the beginning of 2009 through the end of May 2010, Chase offered almost 850,000 modifications to struggling homeowners and made 172,000 of these modifications permanent under HAMP and other programs. HAMP is one of the tools we use to help these borrowers. Chase has offered HAMP trials to nearly 260,000 borrowers. Of these, 88,000 are in active HAMP trials and 48,000 have converted to permanent modifications. Our experience has demonstrated that HAMP loans with a meaningful reduction in monthly payment perform very well. In particular, once borrowers have successfully completed the 3- month trial period, the loans redefault less frequently than we or Treasury predicted, even where the loan was previously delinquent or has a high loan-to-value ratio. We conduct extensive outreach and have made significant investments in people, technology, and infrastructure. In response to our customers' needs, we have developed more creative approaches to reach borrowers in ways that work for them. We have opened 51 Chase Homeownership Centers in 15 States and the District of Columbia where 88,000 borrowers have met face-to-face with our trained counselors. On top of these efforts, we have also launched a national outreach tour of the nine cities where our customers need the most help. Events on the tour last 4 to 5 days and are staffed over the weekend, 12 hours a day, where we can help borrowers find solutions to the full range of challenges they face with their mortgages. The customer response to these events has been very positive. In total, nearly half of our entire staff at Chase are dedicated to helping homeowners. 7,600 of them are loan counselors who deal only with loan modifications for borrowers in financial difficulty. There are several challenges in implementing HAMP. The biggest challenge is that HAMP was designed to help a specific population of borrowers. As illustrated in the Department of Treasury's recent report, only one-third of borrowers who are 60 days or more past due are expected to be eligible for HAMP. Now that income and other documentation are required up front and we are no longer relying on stated income, we expect the conversion rate from trial to permanent mod to increase substantially. Going forward, failure to make its required payment should be the primary reason that someone does not convert from a trial plan to a permanent modification. Another challenge has been HAMP's continuing evolution. There are good reasons for the number of changes, but nonetheless, we have had to adjust our systems and retrain our people as the program evolves. The evolution of the program has expanded the opportunities to keep people in their homes. We do not want to miss an opportunity to help a borrower stay in their home, so we individually review each case and will extend the trial period in cases where we think the borrower is likely to qualify for a permanent modification. It is also important to note that where borrowers are making their payments in HAMP trial modifications, but may not ultimately qualify for a permanent HAMP modification, we believe we are able to qualify those borrowers for other modification programs. Let me touch on fair lending. Similar to our loan origination business, Chase is committed to full compliance with the letter and spirit of all fair lending laws and seeks to make available foreclosure prevention solutions to all borrowers, regardless of race, national origin, religion, age, gender, or any other prohibitive bias. We are pleased to have this opportunity to share our progress with you. We look forward to continuing to work with Members of Congress, the administration, our banking regulators, and our community leaders in implementing these initiatives to help families and to stabilize neighborhoods and the U.S. economy. Thank you. [The prepared statement of Mr. Lowman follows:] [GRAPHIC] [TIFF OMITTED] T3041.046 [GRAPHIC] [TIFF OMITTED] T3041.047 [GRAPHIC] [TIFF OMITTED] T3041.048 [GRAPHIC] [TIFF OMITTED] T3041.049 [GRAPHIC] [TIFF OMITTED] T3041.050 [GRAPHIC] [TIFF OMITTED] T3041.051 [GRAPHIC] [TIFF OMITTED] T3041.052 [GRAPHIC] [TIFF OMITTED] T3041.053 [GRAPHIC] [TIFF OMITTED] T3041.054 Chairman Towns. Thank you very much, Mr. Lowman. Mr. Pinto. STATEMENT OF EDWARD J. PINTO Mr. Pinto. Chairman Towns and Ranking Member Issa, thank you for the opportunity to testify today. In discussing HAMP, it is useful to recall its original goals. Those were to help as many as 3 to 4 million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term. Second, to provide clear, consistent loan modification guidelines. Third, to determine a borrower's eligibility up front. Last February, I testified before the Domestic Policy Subcommittee of this committee and advised that rather than avoiding 3 to 4 million foreclosures, HAMP at that juncture would likely help just 250,000 homeowners stay in their homes without default. As I will explain, it appears that my estimate from February was pretty close to the mark. The success rate is so low due to government initiatives mandating looser underwriting standards dating back to the early 1990's. It is this legacy of government mandates for weak loans that makes it so difficult to achieve successful modifications. A high default rate also works to keep HAMP's total successful modifications low. I expect that 40 percent of permanent modifications will redefault. Treasury promised clear and consistent loan modification guidelines. There are only two words to describe HAMP's guidelines, ``numbing complexity.'' At last count, HAMP had 800 requirements, and servicers are expected to certify compliance. Treasury also promised that a borrower's eligibility would be determined up front. As was recently observed in the Wall Street Journal, ``Eager for results, the Obama administration last year prodded banks to start people on trials without first obtaining documents proving they were eligible. That has led to many crushed hopes.'' Instead of a quick yes or no, homeowners were placed in trial modification limbo. Back in February, I indicated that HAMP's January pipeline would likely yield only 250,000 homeowners who would ultimately avoid foreclosure under HAMP, only about 6 to 8 percent of the announced goal. HAMP activity has slowed markedly in the last few months, with the number of new trial modifications declining by two-thirds between December 2009 and May 2010. The number of new permanent modifications last months was 30 percent below April's. As of May 31, 2010, there were 340,000 active permanent modifications. Assuming a 40 percent default rate, only 200,000 of these permanent modifications will likely be successful over the long term. There are another 468,000 active trial modifications. Of these, perhaps only 75,000 will become successful long-term permanent modifications. Discounting all the spin, the current HAMP pipeline will yield about 275,000 successful long-term permanent modifications, with perhaps another 100,000 successes resulting from future trial modifications. Treasury's many missteps with HAMP has had other repercussions. It encouraged strategic defaults, homeowners who are willing to default when the value of their mortgage exceeds the value of their home, even if they can afford to pay off their mortgage. Researchers at the University of Chicago and Northwestern University found that the percentage of foreclosures that were perceived to be strategic was 31 percent in March 2010, and that is up dramatically from the 22 percent in March 2009 when HAMP started. With more and more borrowers believing that lenders are failing to pursue those who default on their mortgages, there is a risk that a growing number of borrowers will walk away from their homes, even if they can afford the monthly payment. HAMP has slowed down the foreclosure process, pushing the period of heightened foreclosure activity out to 2013 or 2014 and likely extending the time until the market corrects. But perhaps HAMP's greatest shortcoming is that it derailed burgeoning efforts of the private sector to effectively modify loans. The facts are in the Office of Comptroller of the Currency Mortgage Metrics Report that is produced quarterly. There are three charts. Chart one demonstrates that the private sector had been rapidly ramping up its modification efforts in 2008 and 2009, and it was when HAMP started that those efforts were derailed. Chart two indicates that the private sector was having greater and greater success in reducing the redefault rate on loans that were being done outside the HAMP program. Chart three demonstrates the slowdown and effective wind- down of the HAMP program as new trial modifications have fallen off precipitously, and now the number of permanent mods has also started dropping. The committee should ask the Treasury Department, where are the modifications that, but for HAMP, the private sector was on track to produce? This committee and the American people deserve an honest assessment as to HAMP's future. Thank you, and I would be happy to answer questions at the appropriate time. [The prepared statement of Mr. Pinto follows:] [GRAPHIC] [TIFF OMITTED] T3041.055 [GRAPHIC] [TIFF OMITTED] T3041.056 [GRAPHIC] [TIFF OMITTED] T3041.057 [GRAPHIC] [TIFF OMITTED] T3041.058 [GRAPHIC] [TIFF OMITTED] T3041.059 [GRAPHIC] [TIFF OMITTED] T3041.060 [GRAPHIC] [TIFF OMITTED] T3041.061 [GRAPHIC] [TIFF OMITTED] T3041.062 [GRAPHIC] [TIFF OMITTED] T3041.063 Chairman Towns. Thank you very much. Let me begin by thanking all of you for your testimony. I guess the question is, why haven't there been more permanent mortgage modifications? What is the problem? Just quickly right down the line, start with you, Mr. Das. Why do you think there hasn't been more? Is it a lack of money? What is the problem? Mr. Das. Chairman Towns, as we all collectively mentioned, we have put an enormous amount of resources to make sure that we opened this up to as many trial modifications as possible based on stated income, as opposed to verified income. So we really opened the door to as many people as we could. We---- Chairman Towns. How long should it take for the trial modification? Mr. Das. I'm sorry? Chairman Towns. How long should that take? Trial modification, how long should it take? Mr. Das. It takes Citi about 4 months, which happens to be amongst the fastest in the industry. But I don't believe--we have three trial payments, and then that converts to a modification, a permanent modification, after that. But to answer your question, Chairman, I believe that the reason the permanent mods are not as high as we would expect them to be is because, in many cases, the documents that actually come in don't match with what was stated at the time of the trial modification, and many borrowers were not able to make the trial payments. Those have been, I would say, the two principal reasons for the fallout. Chairman Towns. Ms. Desoer. Ms. Desoer. Under the HAMP program, the primary reason is 40 percent of the borrowers who have been in a trial modification have failed to make a payment. And I think that is reflective of the ongoing stress of the economy on those borrowers. And I think it is important to look at the number of permanent modifications holistically. And when you look at our number, HAMP is a small number of a much larger total of the 630,000 modifications, to understand that it's one of many tools that we use for borrowers. Chairman Towns. Mr. Friedman, same question to you. Mr. Friedman. In our particular situation, we service a lot of loans that just don't qualify under the HAMP guidelines, such as a conforming loan or nonconforming loans. We may have certain restrictions under servicer guidelines. But the vast majority of the real issue is really that we are still limited under this 31 percent debt-to-income test and the fact that, in our particular book of business, the borrower must occupy the property as their principal place of residence. And then, also, the documentation issue. Now, we initially up front had done always verification and requested documents up front. So once we've got a borrower into a plan, we have a very high conversion rate. But, again, a lot of this is on the borrower side, as well, or the complexities of the program itself. Mr. Heid. What I would like to add is, I think context is important here. When you think about the half a million mods Wells Fargo has done, about 80 percent of those are outside of the HAMP program, and the vast majority of those are permanent mods already or on their way to becoming permanent mods. Inside the HAMP program, inside the 20 percent, the primary factors in terms of converting from trial to permanent are the same Treasury quoted in their report: lack of documentation because of the stated income programs of last summer. That has since changed. Once documents are received, customers are not eligible for the program and, therefore, go through a cancellation phase, and you typically get a modification outside of the HAMP program. And then, finally, customers that just don't make the three trial payments within the HAMP program itself are the three primary HAMP factors. But I would encourage you to continue to keep focus on the fact that the vast majority of mods getting done are happening outside of the HAMP program itself. Chairman Towns. Mr. Lowman, real quick. Mr. Lowman. Just echoing the same thing that my compatriots here have spoken about. Missed payments and no documents returned from borrowers are the major reasons why modifications don't get completed. About a third of those that do give us documents and do, in fact, make the payments, a third of the total population ultimately end up in a mod. Chairman Towns. When you say you don't get the documents, I mean, is it a lack of communication? Because a person---- Mr. Lowman. We've made extensive refinements in our process, including communicating with borrowers and, you know, writing letters and knocking on doors and what have you. That process, obviously, has evolved over time. I would say at the beginning of the program that may have been the case, but I would say now we are equipped to adequately communicate with borrowers. Chairman Towns. Is communication a problem here? Just very quickly, yea, nay, could you sort of tell me? Mr. Das. Mr. Chairman, I believe that the issue is actually, as you sort of analyzed the contact rates, it seems to us that at late a stage of delinquency a lot of customers have a very low contact rate, primarily because they may have checked out from the process. So this means early intervention is really critical. Chairman Towns. Yeah. Is there anything that we need to do? Because, you know, people are losing their homes, and I just can't see, if a person is losing his or her house, that they are not going to cooperate in terms of documentation. Because, I mean, they are asking for help. And that is the part I don't quite understand. Mr. Heid. Maybe a couple of examples might help. I think there is a lot going on when a customer is in fear of losing their home. And we are doing everything we possibly can to make sure that doesn't happen. A couple of the documents that are troublesome is that the HAMP program does require a tax return. I think that conjures up fears, you know, will that trigger an IRS audit? Those kinds of things are very real in people's minds. The HAMP modification agreement itself is a very intimidating-looking piece of paper. It's five pages, single- spaced, very intimidating, very scary kind of process, that I think people are reluctant or fearful to--you know, what else might happen here? So I don't think it's the communication between servicer and homeowner that is at issue here. I don't think there are additional things that you should and can do. I think this is really now a matter of working very diligently and very hard with every single customer to make sure that foreclosure does not happen. Chairman Towns. I now yield 5 minutes to the gentleman from Ohio, Mr. Jordan. Mr. Jordan. Thank you, Mr. Chairman. HAMP, I think, has not only failed to help people, it has actually harmed families, I think in two ways. One is the comments that the Wall Street Journal had and I related to in my opening statement: the false hope it gave people who were in the temporary or trial modification program, were never qualified, and the financial implications of going through that process or part of that process. I also think, second, the point Mr. Pinto raised; I think his quote was, ``It derailed private-sector efforts to help.'' So I think in two ways it's been, not just a failure to help, but also potentially cause harm to the very families who were trying to get the help and who we are trying to provide help to. The numbers you all gave, I have 900,000 for Citi; 600,000 for Bank of America; 135,000 for Home Mortgage Service, Inc.; 500,000 for Wells Fargo; and 846,000 for JPMorgan. Of those numbers, I'm going to go down the list, 900,000 modifications you have made. What number of those are HAMP modifications? I took that as being all, the big number. Mr. Das. Yes. Since 2007, we have helped 900,000 homeowners---- Mr. Jordan. Right. What percentage have been HAMP, or what's the number for HAMP? Mr. Das. Well, recently, we offered HAMP mods to 150,000 customers, and, out of that, about 30-odd-thousand have taken HAMP. Mr. Jordan. Thirty-eight? Mr. Das. 30,000, 35,000. Mr. Jordan. Small percentage. Mr. Das. Yes. Mr. Jordan. Go to Bank of America. Ms. Desoer. 630,000 in permanent modifications since 2008; 70,000 of them are HAMP. Mr. Friedman. We have reported out about 8,800, and we have about 16,000 currently in trial periods. Mr. Jordan. And permanent? Mr. Friedman. For permanent--the 88 is reported out as permanent, 8,800. Mr. Jordan. 8,000 out of 135,000 modifications. Wells Fargo? Mr. Heid. We've got 500,000 mods, trials and permanents. Twenty percent of them are inside of HAMP. And inside of HAMP, there are probably 45,000 in trial yet, probably 40,000, 45,000 or so in permanent, so a total of about---- Mr. Jordan. Less than 10 percent; 10 percent has kind of been the norm. Go ahead. Mr. Lowman. 257,000 in HAMP, of our 846,000. Mr. Jordan. How many are permanent? Mr. Lowman. Permanent, 47,000. Mr. Jordan. So, again, very small number. We're talking less than 10 percent. Here is the question. I think we'll just cut to the chase. The people who qualified for HAMP went through this cumbersome process, 800 different rules, 15 sets of guidelines, all this stuff they had to go through. Mr. Heid just described the intimidating process they had to go through. Of the folks in the HAMP, the 47,000, the small number that you--how many of those--or let's ask it this way. The people who qualified for HAMP, were any of those not qualified for your own modification program? Mr. Das. Let's put it this way. For the people that fell out of HAMP, we were able to save about 15 percent more. Mr. Jordan. So the ones who wouldn't qualify for HAMP you were able to help? Mr. Das. Yes. Mr. Jordan. And it's working. Mr. Das. And it's working. Mr. Jordan. All right. Ms. Desoer. I can't tell an exact number, but the potential does exist because of the Treasury incentives, that it enabled it to make more sense for the investor to be a HAMP modification. But I think many of them would have qualified. Mr. Jordan. Many? Ms. Desoer. Many. But I don't know the exact number. Mr. Jordan. Mr. Friedman. Mr. Friedman. About two-thirds would qualify for proprietary mod. Mr. Jordan. Two-thirds of the permanent--I mean, what's the number. Mr. Friedman. The question, I believe, was, of the HAMP participants, how many would have qualified under a proprietary modification program? And about two-thirds of those would have. Mr. Jordan. Let me ask it more specifically. Of those in HAMP who got into permanent status in HAMP, would any of those not have gotten into permanent status with one of your programs. Mr. Friedman. Only those who would be limited by certain investor concerns under our pooling and servicing agreement. So it would be a small amount. Mr. Heid. I think a timestamp on this is important. If the issue is right now, I think right now, with all the programs available, the majority of customers that get a HAMP would probably get a non-HAMP. I don't have an exact number. To the other point about customers that are canceling out of HAMP, Treasury provided some statistics on that earlier in the week. In Wells Fargo's case, somewhere between 70 and 80 percent of the HAMP cancelations are resulting in some other form of saving the home or avoiding foreclosure. Mr. Jordan. Mr. Lowman. Mr. Lowman. Most would qualify for the proprietary program. Mr. Jordan. So, I mean, here we are. We got a program that has promised $75 billion, 3 to 4 million folks it was going to help. It has helped 346,000, to date, to get into permanent. And yet, the vast majority of those who made it into the permanent would have made it in one of your own modification programs without putting taxpayer money--without this big government hassle and mess. And then those who got kicked out, we are also finding out the majority of them you could have helped. Mr. Pinto, I know you want to weight in on this. We've got 30 seconds. Go ahead. Mr. Pinto. I will just add one fact. About 60 percent of all HAMP mods are Fannie/Freddie. So this issue of--yes, there are some investors outside of that, but Fannie and Freddie is the majority of it. And, of course, they don't need to be paid an incentive to do what they need to do. Mr. Jordan. Great point. Mr. Chairman, I think this points out--well, I think it is obvious what it points out. I yield back. Mr. Cummings [presiding]. The gentleman's time has expired. Let me just go to--Ms. Speier, when she was here, she said something that I agree with. You know, HAMP is fine, but my constituents want to have some kind of relief. And so, whatever it takes to accomplish that, that is what we are trying to do. In my district, we hold what we call foreclosure prevention conferences. We have done 15 of them--four of them so far. We just did one about a week ago. And as I listened to your testimony, I understand better now why we are able to save at least two-thirds of people's houses. And a lot of it goes to, when you talk about documents, what we found in our office is that, a lot of times, it is an intimidating process with regard to these applications. And we have two people on our staff and basically what they do almost full-time is help people with foreclosure because it is a difficult--it is not the easiest of processes. So I want to go to you all and just ask the question--you say that one of the reasons why it's so difficult and people stay in the temporary phase is because they are not getting the proper documents in and they are not turning in the way they are supposed to. Well, what we have found is that, be it HAMP or anything else, that a lot of times the mortgage companies are understaffed. I mean, and I can tell you that for a fact. Now, it has gotten better. And so, when people would call in, first of all, they couldn't get anybody on the phone. Then, if they got somebody on the phone, they got the runaround. And then, if they got somebody and was able to avoid the runaround, then the paperwork got all mixed up. And I have seen instances where paperwork has been sent to the mortgage company four or five times, and then the mortgage companies, some of the same companies sitting here now, have said to my people--and I know this for a fact--that they never got it. And we have actually sent paperwork from our office. So I want to know what you all have done with regard to staffing--that is, training staff. It's one thing to have staff; it's another thing to have staff that is properly trained. And what have you done with regard--it seems like you're saying that, in order for people to move from a temporary to a permanent, it seems like paperwork is one of the main things that is holding them up. And I heard, I think you, Ms. Desoer, say that some of these people are not making payments during the temporary stage. I think was it you who said 40 percent? See, we don't find that to be the case. We find people that want to make the payments. And we have actually found a lot of people who have made payments and then the mortgage company told them they didn't make payments. And, literally, my staff would have the copy of the check or the money order in their hand. So, you know, there is a disconnect here. So the question is--I'll start with you, Mr. Heid, since I'm kind of familiar with Wells Fargo. Why don't you tell us what you all are doing with regard to that staffing? And have you found that to be something of significance? And if you did staff up, how did it affect the operation and your results? Mr. Heid. Sure. I think your criticism is very fair a year ago. We were not where we should have been a year ago. We have made a lot of progress in the course of the last year. We have attended your events, we have created our own events as ways to gather the documents. And I think, most importantly, what we have implemented-- and by the end of the month, we will be done--is our one-to-one approach, where every single customer will know exactly who they are working with and everybody on our side knows exactly which customers they are accountable for in a one-to-one way. In order to get there, we have added more than 10,000 people over the course of the last year. Mr. Cummings. It's kind of expensive, huh? Mr. Heid. I'm sorry? Mr. Cummings. Kind of expensive. Mr. Heid. Yes, it is. Mr. Cummings. Would you all rather see somebody stay in a house than be foreclosed upon? Mr. Heid. Absolutely. Mr. Cummings. And why is that? Mr. Heid. I mean, foreclosure is the absolute last resort. I mean, a lot of reasons. I mean, one, it's the right thing to do. Beyond the right thing to do, economically, it is always in the investors' interest, our shareholders' interest, the community interest, customer interest, to do everything you possibly can to keep the customer in the home or find an alternative to foreclosure. I think every one of us sitting at the table would completely say to you, foreclosure is absolutely the last resort. Mr. Cummings. Chairman Towns and I sit on the conference committee for Wall Street reform, and there was an amendment yesterday to make sure that there was a revolving loan fund for $3 billion to help people who may have lost their jobs. Every single Republican voted against it--every single one of them. And I heard some of them say a little bit earlier that they were concerned that not enough was being done by Congress. Fortunately, it passed on the House side in the conference. But I see my time is up, and perhaps I can get some answers to whether you all believe such a thing is very important later. Mr. Turner. Mr. Turner. Thank you, Mr. Chairman. Thank you for all being here, and thank you for being so helpful in your answers. Because, as you know, we are all struggling and trying to figure this out. And, as we are trying to figure it out, you have specific expertise, not just in your view of the government program, but in the issue of what is happening in the market, what is happening with homeowners, and what needs to be done. So I appreciate that you have been so forthcoming. As I said in my opening, you know, Treasury Secretary Geithner yesterday, when appearing before the congressional oversight panel, said about HAMP, ``This program was not designed to prevent foreclosures. It was not designed to sustain homeownership at a level that would be unacceptable, imprudent to try and do.'' He was then asked about the homeownership rate level, what would it be, what would be a market-efficient number. Someone offered 65 percent, and he tended to agree that was an objective. Reuters relates his statement as, ``Geithner said he agreed with the assessment that housing will only stabilize as more homeowners become renters again.'' Do you guys agree with that? Do you agree with our Treasury Secretary that our market will only stabilize as more homeowners become renters? Because that seems contrary to what our whole goal was here, in trying to stabilize homeowners in their home. Mr. Das, I will start with you. Mr. Das. Congressman, I'm not qualified to answer the Treasury Secretary's response. But I will say that, when we focused on HAMP as an industry, we wanted to create a great uniform baseline across the country. There was no baseline modification. There were all kinds of proprietary programs. So, in the last year, HAMP has done--we have done a great deal with respect to HAMP to get to a uniform baseline. However, there will be fallouts and there will be re- defaults. And I believe that the issue needs to move--the focus needs to move beyond modifications to foreclosure prevention. And I believe that short sales and deeds in lieus are the programs that we should really focus on. And I believe that is where---- Mr. Turner. Ms. Desoer, do you believe more people need to be renters? Ms. Desoer. The HAMP program and other modification programs are primarily built to ensure that the payment is affordable. And what HAMP has done is set a new standard for the industry at that 31 percent debt-to-income ratio of the mortgage, taxes, insurance, homeowners association, to income. And in that spirit, there are a large number of people who would not qualify. And I agree that, at some point, if they can't afford to sustain a mortgage payment at a level commensurate with their income, then they do need to move on to alternative kinds of housing. And that is what short sales and deed in lieu and other programs are attempting. And we are working hard to ensure that there is a dignified transition as an alternative to---- Mr. Turner. The comment the Treasury Secretary made, which is why I'm asking the question--and I disagree with the Treasury Secretary--is that, it is not that he is talking about the individual decision of a homeowner as a borrower who finds himself in an untenable debt position and then must make the choice of leaving the home, surrendering it, going through, then, the process of becoming a renter. He is actually saying that, for housing prices to stabilize, that he personally believes that more homeowners should become renters, according to Reuters. And that seems contrary to this program. And, of course, he characterizes it here as, ``This program was not designed to prevent foreclosures,'' which I could have sworn that's what President Obama said it was supposed to do. Mr. Friedman, what do you think about more people becoming renters? Mr. Friedman. Well, again, you know, I wasn't around the Secretary when he made the comment, but, I mean, I do believe it is a fact that not all homeowners can afford their mortgage payment. And, as a result, like many of us, if you spend too much money on something, you have to cut something else out. And I think, you know, that could very well be what he meant. I think, as a general policy, I think homeownership is a great thing if people don't get greedy and they can then pay their mortgage and can afford all those things that go along with homeownership. Mr. Turner. Well, one other thing I want to add, because my time is expiring, is that, in listening to all of your testimonies about how you have been approaching homeowners, I can tell you that the anecdotal stories that we hear from realtors, from nonprofits that are trying to assist homeowners, is that the loan servicers are not responsive; that, in fact, it is an incredibly difficult process even when you have a social worker that is sitting, guiding someone through the process; that, in fact, you are making decisions that don't follow the market; that, when there are short sales that are offered, that, in fact, you allow the loans to go to foreclosure. And I wanted to say, Mr. Chairman, I think one thing that would be really helpful is to have, not a panel of loan servicers, but have loan servicers on one side of the room and have realtors and nonprofits that are helping people on one side of the room, and let these two people go at it. Because we are hearing a different story than you're telling us today. Mr. Cummings. The gentleman's time has expired. Mr. Kucinich. Mr. Kucinich. Thank you very much, Mr. Chairman. To the gentlemen and gentlelady at the table, each of you represents lenders or agents of lenders who would not exist in their current form but for the beneficence of the U.S. taxpayer. And I remind each of you that, without the continued support of the American taxpayer, there would be virtually zero residential housing market activity. The issue before us today is, why in the world aren't you giving loan modifications to more eligible borrowers? Why are you denying loan modifications to my constituents, in spite of the fact that we have a Federal program which pays you, the mortgage holders, an incentive to modify the terms of the mortgages and compensates you for many of your costs? I would like to hear some justification. Mr. Lowman, do you want to respond? Mr. Lowman. Yeah. We are helping all the people that come to us and that we contact. We have made extensive investments in people, systems, infrastructure. The folks that don't get a modification, it's generally for two reasons: Either they failed to pay us during the trial period or they don't qualify for the programs. Maybe their income isn't enough to afford a home, or they don't provide the required documents. Mr. Kucinich. OK. Well, let me just share this with you. At the end of May, my State of Ohio had 136,910 seriously delinquent loans, and only 12.95 percent of those loans have been modified. So here is Ohio, it is 42nd out of 51, including the District of Columbia, in the ratio of HAMP modifications to seriously delinquent loans. Now, in early May, I held an open meeting in my district with Treasury Assistant Secretary Allison. And in that meeting, I want you to know, Mr. Lowman, that in Cleveland, OH, I heard from numerous advocates and homeowners that your bank is the most difficult one to deal with, when it comes to loan modification. Over and over, I have heard that Chase has been especially slow to process paperwork. I have heard that Chase denies borrowers modifications without supplying a reason. I have heard that Chase leaves borrowers facing foreclosure in limbo. Now, of the four largest mortgage servicers, all of which are represented here today, why is the average length of trial modification for Chase mortgagers nearly 7\1/2\ months, Mr. Lowman? Mr. Lowman. As we have mentioned, all of us have mentioned, the resource needs for this program have outstripped our ability to have the right number of people in seats performing the functions. We have---- Mr. Kucinich. So you're saying you don't have enough people to handle the program? Mr. Lowman. We have historically not had enough people to handle the demand for the program. We were one of the first out of the box when the HAMP program was announced, and we started accepting applications---- Mr. Kucinich. Here's what I don't--excuse me, because I have limited time here. I'm sorry to interrupt you. The program has been going on for 19 months. Mr. Lowman. That's correct. And we---- Mr. Kucinich. Now, it seems to me---- Mr. Lowman [continuing]. Have hired thousands of people in those periods. Mr. Kucinich. I understand. It seems to me, you know the demand. Your performance is very weak. If you know there is a demand and you're getting incentivized anyhow from the taxpayers, see, I just wonder how hard you're really trying. That is the concern that I have. And when I get reports from my own constituents that you're denying modifications without supplying a reason and you're leaving borrowers facing foreclosure in limbo, your explanation doesn't cut it. Mr. Lowman. We have increased our staff. We have invested in our systems. We have, historically, had a backlog of loans that are in trial, and now we are literally looking at every loan that is in a trial, beyond its original trial period, looking at it loan by loan, making sure that we don't leave any stones unturned to give folks a modification. And---- Mr. Kucinich. What do I tell my constituents when they tell me Chase won't work with them? Mr. Lowman. They should call the 1-800 number. Mr. Kucinich. Should I call the 1-800 number? Is there a number I can call you, Mr. Lowman? Mr. Lowman. Absolutely, there is. Mr. Kucinich. On behalf of my constituents? Mr. Lowman. Yes. Mr. Kucinich. OK. We will chat afterwards. Mr. Lowman. Yeah, absolutely. I'd be happy to do it. Mr. Kucinich. I want to help you do more and do better. Mr. Lowman. We have a number that I can put on the record, 1-800-335-0123, for anybody who has constituent complaints. I'd be happy to personally deal with them. Mr. Kucinich. I just want to make sure, Mr. Chairman, it's not like those bumper stickers that say, ``You like my driving? Call 1-800--`` Mr. Cummings. The gentleman's time has expired. Mr. Duncan. Mr. Duncan. Well, thank you, Mr. Chairman. We have a memo that says more borrowers have been kicked out of HAMP than have received permanent modifications. Cumulatively, HAMP has now placed 346,000 borrowers in permanent mortgage modifications, but this is overshadowed by the fact that 429,000 temporary modifications and 6,300 permanent modifications have been canceled. But I'm now told also that the Fitch ratings service recently came out and said that they estimated that 75 percent of those permanent modifications will ultimately default. And then I'm also told that TARP set aside $75 billion for this program but only $30 million to $40 million has been paid out in the first year and a half. At that rate, it would take 200 years, roughly, I guess, to get all this money out, which it seems to me ridiculous that they have set aside that much money for what it now appears to be a failed or failing program. Because I just heard, in response to questions from Chairman Jordan, that only about 10 to 20 percent of your loan modifications are under HAMP in the first place. And we were told before the hearing, and my understanding is now that has been confirmed here by most of you, that almost all of these modifications under HAMP you would have tried to work out through your own private modification programs. So I don't believe I have ever heard of a program that is doing less or working in a worse way, just about. And I'm wondering if any of you would dispute what Mr. Pinto said when he estimated that HAMP will ultimately need only 6 to 8 percent of its original goal. And he used the words ``numbing complexity.'' Do any of you dispute that estimate, that very pessimistic estimate that he has presented here today? Or would any of you dispute his description of the requirements as being ``numbing complexity?'' Mr. Das. Congressman, I'm not sure that I would use that phrase to describe HAMP. I believe that we all stood behind HAMP and created it together, along with the Treasury Department. We wanted to make sure that we had one uniform program, and we really focused on scale on that program. And I think it's important for us to understand that we all collectively got behind this problem and focused on scale. Last year, it wasn't the case. More importantly, we got the GSEs to come behind the program. And all our loss mitigators now had one program that they had to deal with, as opposed to nuanced proprietary programs. So I believe that HAMP worked and worked in scale when it needed to. However, I believe there is a part B to that, which is that this problem is moving. It's moving forward. And I believe that we now need to focus on the fallout from HAMP, we need to focus on re-defaults, and we really need to focus on a targeted foreclosure-prevention program. So HAMP needs to evolve, no question, but I think that it served its purpose when it did. And I want to applaud my colleagues for having tried as hard as they did, along with ourselves, in scaling what was an important response to homeowners at the time. Mr. Duncan. Any other comments? Ms. Desoer. If I may, I'd just add one other thing. That is, before HAMP, there was--I think one of the significant advantages of HAMP has been the establishment of standards. And, in particular, the debt-to-income ratio that was used even on our proprietary programs prior to HAMP was higher than the 31 percent. And to establish that as a standard that is usual and customary, so that where we have the ability to work on behalf of investors we can do so, has enabled the results we do have with HAMP, but, equally importantly, the results that we do have in our proprietary programs, as well. So that is a significant advantage. Mr. Duncan. Of course, if it was working the way it should, your companies would stand to make a lot of money out of it and become government contractors, at least to the extent for this program. Thanks very much. Mr. Issa. Would the gentleman yield? Mr. Duncan. Yes, yes, I'd yield. Mr. Issa. Following up on that, ma'am, if you, in fact, had the higher debt-to-income ratio, in other words, if Treasury had effectively set it at 45, 55, wouldn't you have more loans going out today? I will ask on my own time. I'm sorry. Go ahead. Mr. Cummings. The gentleman's time has expired. Mr. Lynch. Mr. Lynch. Thank you, Mr. Chairman. I want to thank the witnesses for their willingness to come and help us. I have to ask, in my State we have seen the number of foreclosures double this past month, month of May 2010, compared to the month of May 2009. It has actually gone up 120 percent. And, unlike when this housing crisis first struck and we saw a lot of subprime mortgages out there and poor product and maybe people who were in homes that they couldn't afford, now we see the greatest correlation is unemployment with people not being able to stay in their homes. And I'm wondering if this tool that we initially came up with, the HAMP program, is the right tool to deal with that type of problem. Because if someone is out of work and there is not the stream of income to support a mortgage, it doesn't matter how you design it or how you modify it, if there is no income to support that mortgage, it's going to end up in foreclosure. And so, I'm fearful--I see how this is all working out. I see all the attempts you're making. I also see about 440,000 people who were kicked out of the HAMP program, the trial program, because you could not verify income. So what I'm afraid of was happening here, under TARP, which created the HAMP program, which I voted against because I did not approve of the bailout for the Wall Street banks, under this program, you're being paid an awful lot of money to process these attempted modifications, these trials. But after you do all this work, which you're being paid for by taxpayer money, I see 434,000 people kicked out of the program. So their foreclosures were delayed for a little bit. And it allowed you to be paid for that attempt. But, at the end of the day, the taxpayer money is spent by your firms because 50 percent of the second-mortgage market is sitting at that table right there, 50 percent of the national second liens. So I just think this is, sort of, insult to injury. We are spending all this money on the program. It is accruing to your benefit in a significant way. The taxpayer is being hurt, and the homeowners are not being helped in a significant way. And I understand the dynamic that is out there now, it is just different, because we have all these people who are unemployed. And, in some cases, you can't modify that because there is nothing to support it, no income stream. But let me ask you straight up, do you think this program should be continued beyond October? We only have a few months left here. There have been very few people helped by this program. But, as the folks that are administering this and seeing how many people are being helped and how much money is being spent here, do you think this program should be extended come October, given the fact that we still have streams and streams of foreclosures coming down the pike? Mr. Das. Mr. Das. Yes, sir, I believe that the short answer is that I believe that this program should be continued. As I have said before, this program provided a great baseline and a uniform baseline. If we didn't have all of the GSEs and all of the banks participating in this program in a uniform way, there could be a lot of consumer confusion, as we saw in the beginning of last year. I would, however, submit that this program needs to be enhanced. As you rightly pointed out, Congressman, unemployment is a big issue. And not being able to have a sustainable income stream to make the payment will cost---- Mr. Lynch. Mr. Das, I only have a little bit of time, and I just wanted to find out if you wanted the program to be continued. Mr. Das. Yes, sir. Mr. Lynch. Ms. Desoer. Ms. Desoer. If I could, just one clarification: We are only paid as a servicer at the time of the permanent modification, not during the trial period. And I do believe the program should be extended to allow the new components of the program, the second lien program, the Home Affordable Foreclosure Alternative short sale program, as well as the unemployment and principal forgiveness components of it, should be allowed to play out to determine if that can help more borrowers stay in their homes. Mr. Lynch. Thank you. Mr. Friedman. Mr. Friedman. Yeah, I think it should be continued now, especially in light that the program--now you're verifying items up front. So I think that will actually help see much more positive results out of the program. Mr. Lynch. Mr. Heid. Mr. Heid. And I would add, for the 80 percent of the mods that are happening outside the program, there is no government payment of any kind. As far as your question on the program itself, I would continue it. I would finish the enhancements already made. I would not expand it. Mr. Lynch. OK. Mr. Lowman. Mr. Lowman. Yes, it should continue. Mr. Lynch. Mr. Pinto. Mr. Pinto. I would not. And if you do continue it, I would ask Treasury to provide very clear information, which they promised many, many months ago, about re-default rates. They have published virtually no information about re-defaults. There is a benchmark for that, and I mentioned it in my testimony, the Mortgage Metrics Report. You need to know how this program is doing compared to the way OCC has been tracking, for 18 months, modifications. Mr. Lynch. Thank you, sir. Mr. Chairman, I yield back. Thank you. Chairman Towns [presiding]. I thank the gentleman. I now yield 5 minutes to the gentleman from California, the ranking member, Congressman Issa. Mr. Issa. Thank you, Mr. Chairman. And before I begin, I think we have both heard enough to know that we need to have Treasury back here well before the October end, to talk about lessons learned and, if there is to be any modification extension, to get to us sooner rather than later. Wouldn't you agree? Chairman Towns. Well, you know, we have had Treasury in here. I mean, so it's not something that we have not done. You know, I think there are a lot of questions that should be raised even with people that are involved in terms of with the servicers. Because, you know, let's give you the classic example, and then I am going to let you regain your time. I will take this off of my time in some kind of way. You have people that were put into mortgages, I mean, by folks that are no longer, probably, working for the bank now. They are gone somewhere else. And then now they are coming in. You know, what happens to them? There are a lot of things that, you know--I think we need to spend time now talking with the servicers and people who have experienced these things. People probably got fired because they put people into mortgages that they knew that they shouldn't have gone into. I think these are some of the questions that we need to get answered before we even deal with anybody else. On that note, I want you to know I did not take it off of your time. Mr. Issa. I thank the gentleman. Thank you, Mr. Chairman. Thank you for giving us this opportunity today. Ms. Desoer, I had previously asked you about the fact that a new level of income to debt had been established. Prior to that time, well, certainly with stated income, often called ``liar loans'' and so on, somebody could have 100 percent actual income to debt, but certainly many people, in your experience, had much higher ratios, 45, 50 percent, relying on two incomes at their highest level. Isn't that true? Ms. Desoer. That's correct. There were higher incomes in the origination side of the---- Mr. Issa. So when we look at failures, and backward- looking, an artificially high ability to make a loan, often to flip it to government programs, Freddie and Fannie and so on, but allowing a much higher ratio was part of the situation. Because if there was any hiccup in the income or if it didn't appreciate and they weren't able to pull money out, ultimately there was a problem we were heading toward, now that you have the opportunity to look back at what happened starting in, in the case of Mr. Kucinich's district, in 2006, but in the case of other districts, a little later. Isn't that right? Ms. Desoer. Yes. The programs are intended when there is a hardship, which means that income has been disrupted, to then revamp the mortgage payments to be more affordable tied to that income. Mr. Issa. Right. So at 31 percent, is this the right number, going forward? When I was a kid, it was lower. Twenty- five percent would have been a stretch, in many cases. What would you say the right number is in order to have enough cushion for normal ups and downs of income and so on and still be able to stay in your home and meet your mortgage? Ms. Desoer. I believe the 31 percent ratio is appropriate but not for everyone. And, in particular, when you look at a low-income household, 31 percent probably is still high. So we have been recommending to Treasury that they consider lowering that for certain categories of borrowers. And, on a proprietary basis, we are looking at the same thing. Mr. Issa. OK. Well, I think that's certainly good judgment and something that I don't think is partisan here. Let me ask one question to all of you. If we had known 10 years ago what we know now and if the borrowers had known 10 years ago what they know now, wouldn't you assume that many of them would have bought less house than they are currently in, that you're trying to keep them in? What I'm really saying is, you're trying to keep people in homes that are right on the edge of their affording, even after you do modifications. Wouldn't it be true that, if they had chosen or were able to think again 10 years back and buy a home in a different price range, that they might be very good homeowners, while in many cases you have a hard time keeping them in the home they have? I will just go down the line, and as close to a ``yes'' or ``no'' as you can. Mr. Das. Mr. Das. Based on what we know now, absolutely, Congressman. And it's one of the reasons why we stayed away from option ARMs to start with. Mr. Issa. Yes, ma'am? Ms. Desoer. Yes. It's the reason Bank of America exited the subprime business in the year 2000. Mr. Issa. Mr. Friedman. Mr. Friedman. I would like to comment. One other thing is I think, back to the debt-to-income ratio, it's our strong opinion that you really need to look at the whole totality of the borrower's situation. The debt-to-income ratio under HAMP only deals with the housing piece; it doesn't deal with the debtor's overall situation. Other than that, I would say also yes. Mr. Issa. Mr. Heid. Mr. Heid. You know, I think hindsight is a wonderful thing. I think the key is, we are here now. And the key right now is achieving affordability for homeowners that want to and have the willingness to stay in their home. Mr. Lowman. Yes. Mr. Issa. Mr. Pinto, I know you would say that we suckered people into too expensive a home. Mr. Pinto. Yes. And I would also add that the back ratio that was just referred to, the total debt ratio, is running 64 percent. And it has actually been going up. And that means that's before food, clothing, anything. Mr. Issa. Right. So, my followup on this is, knowing what we know now from 10 years ago, whether it's HAMP or some of the loan modifications, in many, many, many cases, isn't our real goal to keep people in a house often keeping them in a house that is bigger and more expensive, even after reductions, than it would have been right-sized for them to begin with? And, as such, if the Federal Government is going to be trying to find affordable housing for people on the edge income-wise, and if we are lucky enough to have the Treasury back up here, and if they are looking at extending this program, isn't there a component missing from HAMP, and that is that it keeps people in the house they're in, rather than evaluating whether, in fact, there is a completely affordable non-renter situation that is eclipsed by the fact that they are in this house right now? And, you know, I know that is beyond your purview. You're not realtors, and you're not able to say, ``Look, get out of this house and get in this house,'' in most cases. But isn't that something that, as we are bringing Treasury up, if there is going to be an extension--and some of you did look at some continuation of this program between October--isn't that a component that is fundamentally missing, which is affordable housing starts not with the house you picked but with the house that was affordable? Mr. Das. Mr. Das. Congressman, I believe that you raise a very, very important and a very interesting point, and I would concur with you. Mr. Issa. Ms. Desoer. Ms. Desoer. Yes. Mr. Friedman. Yes. Mr. Heid. You know, I think the key to HAMP and the key to any mod program is to make sure it's affordable now, that the consumer can afford the home they are in with the payment they have right now. Mr. Issa. Mr. Lowman. Mr. Lowman. Yes. Mr. Pinto. Yes. Mr. Issa. OK, I'll settle for a yes. I can take it for an answer. Thank you, Mr. Chairman. I yield back. Chairman Towns. Thank you very much. I now yield to Mr. Connolly of Virginia, 5 minutes. Mr. Connolly. Thank you, Mr. Chairman. Mr. Lowman, you said that, despite some reports to the contrary, HAMP modification performance has been strong, helping hundreds of thousands of homeowners. Could you explain how HAMP augments your other mortgage modification programs? Mr. Lowman. Yeah, well, we offer--HAMP is top of the waterfall, so that is the first program that we offer. And, you know, it is the primary, you know, first point of defense in providing the modification. If a person for whatever reason doesn't qualify for HAMP, either it's a jumbo loan or it's a loan that was done past the date of the effective date of HAMP or for some reason it has fallen out of HAMP, then we use our proprietary program. Mr. Connolly. So one augments the other or complements the other? Mr. Lowman. Yes. Mr. Connolly. Mr. Heid, you stated that HAMP has facilitated the industry's ability to deliver more streamlined solutions than ever before. Could you elaborate on how HAMP has strengthened mortgage assistance beyond the programs offered by the private sector? Mr. Heid. I think what I meant by that and what I think is important is a timestamp. When you think about how and when HAMP was first created, it was the beginning of 2009. At that time, most of the loan modification programs that existed required an individual handling, an individual approval, from an investor. With the creation of HAMP, a more systematic program was created. I think HAMP did serve as a catalyst to get other programs going. I think it did serve as a bit of a mobilizing event to push servicers to take broader actions at a more rapid pace. I think it pushed other investors, including Fannie and Freddie, to move in a direction of programmatic home and loan modifications. That's what I meant by the fact that there was a broader effect from it. Mr. Connolly. So it actually leveraged other programs, private-sector programs. But for HAMP, maybe they wouldn't have--they would have been slower, smaller, maybe nonexistent? Mr. Heid. At the time. I mean, again, this was 2009. I think it certainly sped things along. We are at a different point in time right now. Mr. Connolly. Any estimate of what the number might be, in terms of what falls in the category of additional refinances or modifications that were leveraged because of HAMP? Mr. Heid. You know, I don't have a number for you. I think what I would say is that there were definitely loan modifications attempts being made throughout. It is not as though customers weren't getting assistance. Mr. Connolly. Right. Mr. Heid. I think what happened is, the idea of HAMP was a national systematic program. And I think national standards, national programs are always useful. Mr. Connolly. Thank you. Ms. Desoer, Mr. Pinto seemed to imply that HAMP is just displacing private-sector mortgage modification programs, which seems to contradict your testimony and that of others on the panel that said HAMP complements the proprietary loan modification programs Bank of America and others have developed. Could you elaborate? Ms. Desoer. Yes. And it gets back to the point of which loans and which customers are eligible for HAMP. And, again, as I said, out of our 1.4 million customers who are delinquent 60 days or more, there are about 478,000 that are eligible for HAMP. We lead with HAMP in the waterfall for those of options. And if they fail to meet the HAMP requirements, then we can offer other alternatives. For the rest of the customers in the portfolio, we are doing modifications, but, again, the advantages that HAMP provided that floor or that standard in terms of the debt-to- income ratio and capability that we can leverage in those programs for customers who are not explicitly eligible for HAMP by its definition. Mr. Connolly. If I understand your testimony and that of Mr. Heid and Mr. Lowman, far from displacing the private sector, it actually provides a certain framework for you to buildupon and expand. Ms. Desoer. That's correct. Mr. Connolly. Thank you. Mr. Chairman, I yield back. Chairman Towns. I thank the gentleman for yielding. I now yield 5 minutes to the Congresswoman from California, Ms. Speier. Ms. Speier. Thank you, Mr. Chairman. While I was not in the room, I was listening to the testimony. And I'm somewhat struck by the questioning that was offered by Mr. Lynch when he asked if you wanted to see the program continue and virtually every one of you said yes, although my colleagues on the other side of the aisle very much want to see the program disappear. So it would be helpful to us if you can, in a narrative, provide to the committee precisely why you think the program should continue. Now, Mr. Lowman, I think Congressman Kucinich said that he had great difficulties with your particular company. And I would like to just echo those. I have a number of cases here that are truly disturbing that are loans by Chase. This couple, retired school teacher, retired husband, Chase has lost four sets of applications. And this is a story we hear over and over again, where documentation is sent, documentation is lost. When a consumer sends it in four times, has documentation they send in four times, and you can't find it, that is your problem. And it reminds me a little bit of the issue with the Minerals Management Services, where, basically, if they didn't permit the Horizon Deepwater rig within 30 days, it was automatically considered approved. Now, in that particular situation, clearly, that shouldn't have been the case. But we might argue that, here, at some point, the lender has to take responsibility for not having the documentation, when it has been sent over and over again. Now, I have two people dedicated to doing only foreclosures and modifications in my office. That is a lot of staff. And I would bet that every Member on this panel would say the same thing. I would ask you to create a legislative liaison individual within each of your companies that we can call. And I would like for you to contemplate that. If you are going to do it, I would like for you to identify who that is and present it to the committee. If you're not going to do it, I want you to explain to the committee why you won't do it. If we are really going to get to the bottom of this and keep people in their homes, we've got to have more accountability everywhere. And I guess, Mr. Chairman, I really don't have a question. I just had a series of statements I wanted to make. Thank you. Chairman Towns. And it should not be an 800 number, right? Ms. Speier. No. No, it should not be an 800 number. Chairman Towns. Thank you. I now yield to the gentleman from Ohio--I'm sorry, just a moment. My staff is saying it's Mr. Davis. I apologize. Mr. Davis. Thank you very much, Mr. Chairman. And I will try to be brief so my colleague gets a chance to get his question in. Studies have demonstrated and suggested that minority communities, minority homeowners have been disproportionately affected by the crisis. And I think many people agree with that. Second, they suggest that some of the reasons have been targeting of subprime loans in these communities and neighborhoods and, of course, higher rates of unemployment. Are your companies doing anything, as you try and do loan modifications, to take those factors into account so that these individuals can experience modifications? Mr. Das. Yes, sir. At Citi, we have a program and individuals that are dedicated to working with communities on the ground. And we have the Office of Homeowner Protection. We actually send people to the sites, to work with communities and help people with the documentation process. And, as I said in my testimony, we also work very closely with HOPE NOW to make sure that we are on the ground working with the community. We are very, very closely aligned with the communities. I personally go down and---- Mr. Davis. Anyone else? Ms. Desoer. This is Barbara Desoer, Bank of America. We take a similar approach, where we have dedicated teams. As I mentioned in my testimony, we did 360 community events. Those events tend to take the place in the communities where the need is the greatest, highest disruptions to income and that sort of thing. So we intentionally supplement our outreach reach via letters, via telephone calls, versus one on one, people we send out to homeowners, with community events that we participate in and nonprofits that we help fund to host those events. Mr. Davis. Mr. Chairman, could I just ask that each one of the witnesses would respond to that question in writing? And I will yield back my time so that there might be enough time for---- Chairman Towns. I thank the gentleman. And, also, let me just add that, also, I would like for you to respond to Ms. Speier's question, too, in writing. I would like you to respond to both. And we will keep the record open, you know, for an additional 7 days to be able to ascertain that information. The gentleman from Ohio? [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T3041.064 [GRAPHIC] [TIFF OMITTED] T3041.065 [GRAPHIC] [TIFF OMITTED] T3041.066 [GRAPHIC] [TIFF OMITTED] T3041.067 [GRAPHIC] [TIFF OMITTED] T3041.068 [GRAPHIC] [TIFF OMITTED] T3041.069 [GRAPHIC] [TIFF OMITTED] T3041.070 I'm sorry that my colleagues from the other side have left, because I wanted to refresh the memory especially of Mr. Jordan from Ohio because we served in the State legislature in Ohio together, and we did know about the problems 8 years ago because we did a very extensive study on subprime lending in the State of Ohio. And the Democrats pushed hard for legislation that would have cracked down on subprime lending. It was predatory lending legislation. And it was my Republican colleagues that held that up. And they held it up for years. And the same thing was happening in this very Congress. Stephanie Tubbs Jones, who has since passed away, in 2001 introduced predatory lending legislation. It was done year after year after year after year. And I think the voters have to understand that the reason we are here today talking about loan modifications is because, not just of the economy today and the foreclosures, as Mr. Lynch described, due to unemployment, but because of all the poor underwriting and the securitization of the loans in the subprime market that could have been prevented had we addressed predatory lending legislation in this Congress, that could have been prevented had we passed predatory lending legislation in the States. But the Republicans repeatedly stood in the way of that. And now today, as the conference is meeting in Financial Services that might address the underlying problems of the lack of regulation in mortgage-backed securities and credit default swaps, my Republican colleagues are again standing in the way and trying to prevent any systemic changes to the system that got us here in the first place. So I think it's sad that we are here today talking about all of these loan modifications because I don't think many of these loans should have happened in the first place, because so many of them were in the subprime market. And while I appreciate that some of the financial institutions quit writing in the subprime market years ago, Ms. Desoer, I will remind you that Countrywide was very, very active in the subprime market and led to thousands of foreclosures in the State of Ohio. My question to you is this. I have gotten a lot of complaints back home, as we look at people who are trying to seek modifications, that the modifications, although the discussions have started--and these haven't been finalized, these modifications--the banks continue to proceed with foreclosure proceedings. This is sending mixed messages. And while I realize Treasury has sent out some directives on this recently, I'm very concerned that we are sending mixed messages to homeowners who are trying to seek modifications but, at the same time, hearing from the bank that they are foreclosing on their property. I would like to know what each of your financial institutions does in that case and whether or not we should stop the practice of proceeding on foreclosures if we are in negotiations on loan modifications, so that it doesn't lead to the homeowners backing out because they fear their house is going into foreclosure anyway. Mr. Das, we'll start with you. Mr. Das. Congressman, let me be very clear that foreclosure is absolutely the last and least preferred alternative for Citi. When we offer somebody a HAMP modification, if they fall out of HAMP, we immediately offer them a whole range of Citi supplemental modifications. In fact, we were able to double the number of modifications we offer as a result of our proprietary programs. If they fail that, we offer them short sales and deed in lieu programs aggressively so they can---- Mr. Driehaus. If I can interrupt you, because we do have a vote, what I am trying to find out is when you begin the discussion with a homeowner on a loan modification, do you stop the foreclosure process, or do you allow it to continue until that modification is finalized? Mr. Das. We stop the process. In fact, in our trial modification process, we reached out to people who are in foreclosure and offered them trial modification. Mr. Driehaus. So as soon as trial modification is offered, you stop the foreclosure process? Mr. Das. Yes. Mr. Driehaus. Ms. Desoer. Ms. Desoer. We continue the process in parallel, but we are in compliance with the Treasury directives about how that should be handled, and we have significantly enhanced the communications to try to mitigate the concern of the borrower with the promise that we will not take that home to foreclosure sale while they are in the process of being considered for a modification. Mr. Driehaus. And I have a concern, because it sounds as if you are reaching out to the consumer, trying to work on a modification, but at the same time that hand is reaching out, you are about to slap it with a foreclosure, so mixed messages are, in fact, being sent. Wouldn't it be better for us to back off on the foreclosure, since we have all said that the foreclosure is the last thing in the world that you want anyway, allow the modification time to work, and if it doesn't work, then go ahead and proceed with the foreclosure process? But the fact we are on this dual track is very much sending mixed messages. Ms. Desoer. Again, what we are trying to balance is the interests of all the constituents, including that of the investor in the party, and if that does not go through, in some places to restart the foreclosure process is a very lengthy period of time. So we are trying to preserve that timeline. But, again, we have significantly enhanced communication, and we are in compliance with the Treasury's guidance. Mr. Driehaus. Mr. Friedman. Mr. Friedman. Our process is much the same as Bank of America's. Mr. Heid. I believe for the customer working with us, I believe we stop the foreclosure process. The other procedure we have in place is before a customer's loan goes to completion of foreclosure, we make sure to take a second look to make sure every opportunity has been exhausted. Mr. Lowman. We have a similar process. We do two quality checks, one before we commence the foreclosure, and then one right before sale, to make sure that we don't foreclose on someone that is in the process. Mr. Driehaus. Again, Madam Chair, I would remind the committee that there seems to be a broad differentiation between the financial institutions and the servicers in this case, and it really is a problem for borrowers who are getting mixed messages from the services, who are genuinely working and trying to save their homes, but fear that the bank is going to move forward anyway, and because they are hell-bent on having a foreclosure. So while we are all saying foreclosure is the last thing in the world we want to do, I think we are sending a very mixed message when we are proceeding with foreclosure actions while at the same time attempting to work on a modification. So I would leave it at that and yield back the balance of my time. Ms. Norton. The gentleman's time has expired. I am going to ask a question in the absence of the chairman. This program, HAMP, has been such a disappointment. Perhaps we had our hopes too high. But to the credit of the administration, it keeps trying. And here is a question about what would perhaps be the most difficult aspect of the program, where Treasury announced the Home Affordable Unemployment Program that provides 3 to 6 months forbearance to unemployed homeowners while they seek employment. We understand that some companies have provided such forbearance to unemployed borrowers before. I am sure that in the normal course of downturns, for example, that was not unusual. Let me ask all of you, have any of you, and tell me the extent to which any of you have participated in the forbearance program, beginning with you, Mr. Das? Mr. Das. We launched the program--we launched an unemployment assist program in March 2009, when unemployment was rising and there wasn't a denominator to calculate debt-to- income ratios. But we kept it very simple. We support the Treasury's program, but we believe that the paperwork may have been a little more nuanced than one would have wanted. All we asked for in our program was an unemployment document of proof of unemployment, and if it was an owner-occupier, we just made it a simple payment of $500 a month for 3 months. We would have liked to extend it to 6 months. What it did was it paused the whole foreclosure process and the whole people missing payments process, and it enabled people to get into HAMP, which was a very, very powerful outcome for that program. Ms. Norton. Was this on your own? Mr. Das. This was on our own. Ms. Norton. Are you continuing it with this 3- to 6-months forbearance? Mr. Das. Absolutely. We are extending it to the new Treasury program. But we didn't wait for that. We started it on our own. I am delighted to see that the Treasury program is actually based on some of the attributes of what we did. Ms. Norton. Ms. Desoer. Ms. Desoer. Yes, we have been doing forbearances for unemployed, and we will actively participate in the government's program, and we are looking at our own proprietary program that could potentially extend beyond the 6 months under certain circumstances, just because of the length of unemployment for some of our customers. Ms. Norton. Mr. Friedman. Mr. Friedman. We have always had a forbearance for that particular reason prior to HAMP and post-HAMP as well for 3 months. I know that you are considering a longer situation. That becomes very expensive for us as a servicer going forward, because whether the borrower in our situation makes payments or not, we, the servicer, have to make those payments on behalf of the borrower to the investor. So anything longer than the 3- month period becomes very expensive for us. Ms. Norton. Mr. Heid. Mr. Heid. We have done about 100,000 such customer cases before the HAMP modification was changed. The Treasury program is very similar to the one we were offering before. So we are in the process of converting over, and we will continue to help customers that don't qualify for HAMP as well. Ms. Norton. Mr. Lowman. Mr. Lowman. We have always offered forbearance to unemployed borrowers and will participate in the Treasury program. Ms. Norton. Mr. Pinto. Mr. Pinto. I have nothing to add. Ms. Norton. Could I ask that all of you provide to the chairman the number of homeowners starting with the beginning of this year to whom you have given forbearance? I understand that this, of course, is something that might have been routinely done before; you had a customer, it was the appropriate thing to do under the circumstances. Of course, these circumstances are very different because there are high levels of unemployment. So I would be interested in your candid view of how successful forbearance has been in avoiding foreclosure. Does it just spread the time out, or what is your view based on your own experience of whether this delay in foreclosure for an unemployed homeowner--what is your view of its success or its effect? Mr. Das. Mr. Das. Madam Congressman, I believe that the idea of delay is not as bad as it is made out to be. Sometimes, oftentimes, borrowers need a pause so that they can focus on getting the employment as opposed to also keeping their home at the same time. As I said to you before, the fact that Unemployment Assist has allowed people to get into an alternative program like HAMP was a very powerful outcome, and I believe that needs to be noted. Ms. Desoer. I believe it is very dependent on the situation of the customer and the length of unemployment. Ms. Norton. We recognize that. We recognize that there is a vastly different universe out there. But I am asking you a general question. Ms. Desoer. Certainly I would believe that temporary relief from the obligations that a customer has would enable them to more successfully bridge the economic hardship that they are experiencing, yes. Mr. Friedman. I would concur with her assessment as well. Mr. Heid. I agree. I think the design of the program where there is some amount of cash-flow every month is actually better for the customer so there is not such a great shock 3 or 4 or 5 months down the line when income is restored. Mr. Lowman. I concur also. Mr. Pinto. If you are looking for quantitative information, you may want to again go to the OCC/OTS Mortgage Metrics and see if they have data that actually tracks the question you have asked. I have not seen any. I don't recall any. Ms. Norton. This is rather much of a perfect storm we have, where unemployment meets mortgage crisis. Normally unemployment doesn't meet that kind of crisis, exacerbating the situation of people who have all along kept up their mortgage payments. I recognize you all want to do the right thing, and to some extent you have been doing it. Would you care to offer suggestions as to this relatively new program, as to its structure and what might be done? For example, one of you, I am not sure if it was you, Mr. Friedman, indicated that--or maybe it was you, Mr. Heid-- indicated beyond 3 months. I am not sure any of you do it beyond 3 months, but it created issues beyond 3 months. Mr. Friedman. It was I that said since we are not part of a bank or have a deposit base, as the other folks around the table, other than maybe Mr. Pinto, unless he is wealthier than we all think, we--because we do a lot of securitizations, we don't own the loan outright. We have to make payments to the investors, month in, month out, whether the borrower makes payments to us. Ms. Norton. That is not the case for anybody else sitting at the table? Mr. Heid. No. The same requirements apply to everybody. But I think the idea of the 3 months allows multiple 3-month check- ins, where the purpose for that is to make sure you can stay current with what is going on with the customer's life, what are the prospects for them to be able to get back to a level of employment where the home is affordable. That is kind of where the extensions of 3 months at a time comes into play. Ms. Norton. Ms. Desoer. Ms. Desoer. I would concur with that. Ms. Norton. The chair has asked me to recess the hearing for about a half-hour because there was at least one Member who did not get an opportunity to ask questions. So don't go anywhere. This hearing is recessed. [Recess.] Mr. Clay [presiding]. The committee will come to order. We will resume the 5-minute questioning. Let me begin with Mr. Heid. Mr. Heid, according to the research done by the National Community Reinvestment Fund, minority borrowers are less likely than other borrowers to receive trial and permanent modifications. Do you believe that this is an accurate assessment? Mr. Heid. It is hard to answer that question. On the surface, I would say only if the home is not affordable would that be the case. There is nothing in the modification process that would cause a difference between ethnic backgrounds or anything of the sort. Mr. Clay. Well, Mr. Heid, I asked the question because we know that prior to the modification phase, that African American borrowers with comparable income and other considerations were steered into subprime and predatory loans. They were disproportionately impacted by those policies. Instead of them getting a conventional mortgage, they were steered, and there is plenty of data to show that. So since they were disproportionately affected by being steered into these high-cost loans, I am just curious as to what is happening to these minority borrowers now who are in trouble, who are trying to get their loans modified? Do you think maybe they are disproportionately being affected still? Mr. Heid. Well, Congressman, as far as the statement on steering, I disagree. As far as the loan modification process and how that works---- Mr. Clay. Oh, you disagree. Mr. Heid. We have the same process---- Mr. Clay. What do you disagree about as far as steering? What do you find disagreeable about what I said? Mr. Heid. You are quoting a particular study typically, and I believe that study in particular does a comparison with partial information on public data---- Mr. Clay. But the numbers speak volumes. The numbers speak volumes about how middle-income, upper-income African American families were steered into subprime and predatory loans. Now, you can sit here and deny that if you want, but it has happened. Let me say something else about Wells Fargo. You know, quite a few of my constituents have been impacted negatively by this whole mortgage meltdown. We have gone to Wells Fargo, my staff back in my district, asking for you to modify some of these loans, and we have heard every excuse, like, oh, we have taken TARP money, so it would be inappropriate to try to help these people. Now, what do you have to say about that? Have you used that excuse, that because you are a recipient of TARP, that you cannot help these average Americans trying to stay in their homes? Mr. Heid. No. Absolutely not. That is an absurd statement. Anyone in our shop that would have made a statement like that, that is absurd. What we are doing is this. Our data kind of speaks for the efforts we are putting forth. When you look at every customer, irrespective of ethnic background, every customer that has missed two or more payments in their mortgage status, two-thirds of the time we are finding a solution other than foreclosure. The loan modification process we have put forth, the people that are doing the work, most of them over the phone, have no ethnic information on the screens they are looking at, with the one exception of the HAMP program requires volunteer submission of ethnic information. But even in HAMP, every single customer going through a modification process has a very prescribed series of steps that one goes through to gather income information and get them into a loan modification they are able to afford. That is the way the HAMP program works. The non-HAMP programs are set up in a very similar way so that every customer goes through a similar process for loan modifications. Mr. Clay. I really find it incredulous that you don't think that African American borrowers were steered into these high- price loans. I mean, I find it incredible. Let me ask the rest of the panel, do they agree with Mr. Heid, or do you think that these people are disproportionately impacted by racist policies? Let me start with you, Mr. Das. Have you seen any evidence that the people are disproportionately impacted based on their race? Mr. Das. Congressman Clay, I believe that you raise a very important point, and I believe that in economic downturns, that the hardship can be disproportionate in minority communities. And here is what I would say. We don't do anything actually that would distinguish between race, origin, sex or any of those factors. But here is what I would say: I think that HAMP needs to be enhanced for low- to moderate-income communities in a very different way to the way it has been established today. I believe some of my colleagues have taken a similar position. Mr. Clay. Thank you for that response. Ms. Desoer. Ms. Desoer. Thank you, Congressman Clay. Bank of America did not--we exited the subprime business in the year 2000. We acquired Countrywide in 2008. Shortly after the acquisition we entered into a settlement that we are executing with 44 States, which is our proprietary national home retention program, which was intentionally targeted at pay option ARMs, subprime hybrid ARMS, products that might have created the most stress in these economic times for borrowers. And we follow a very deliberate process, much of which is automated, treating equally the attempts to outreach to all of our customers as well as our response to customers who are calling us because they are under financial stress. Then intentionally we participated in 360 community events last year. Again, we have stepped up that number even more this year. We have invested in the Alliance for Stabilizing Communities, where disproportionately we go to and participate in events where the communities are the hardest hit so we can provide face-to-face counseling and acceptance of applications and modifications as well. Mr. Clay. And so you do--Bank of America has admitted that they are--that there has been steering, that you see disproportionate effects to that. You know, I believe in the adage that figures don't lie, but liars sure can figure, and this is a good example of that; that this segment of the population was disproportionately impacted because of the actions of the banking community, because you do have a human factor involved here. You do have loan officers that look at customers differently based on their skin color. That is all I am saying. But for people to come here and deny that I think is wrong, and the American people can see through that. Mr. Friedman. Mr. Friedman. Fortunately, we didn't originate any loans, so personally I am a little out of touch on that particular subject. But I do believe we, like Bank of America and others, do go to a lot of outreach programs. I think a good help for the community would possibly be to bring down the debt-to-income test to even lower than 31 percent under HAMP, which maybe, you know, if there was some type of injustice done, maybe it could help that many more people. That is just as a suggestion. Mr. Clay. Have any of your institutions created programs that target particularly at-risk groups like racial minorities and the unemployed, who have been adversely impacted? Mr. Friedman. I don't know why you couldn't do such a program. Mr. Clay. Voluntarily. Mr. Friedman. We don't originate, so I can't really comment on that. Mr. Clay. Mr. Lowman, any comments? Mr. Lowman. I would just add that at Chase we have a culture of fair lending and have always had that culture of fair lending. We have done our own analysis based on the report that you referred to, the NCRC study, and our findings are not congruent with their findings. We have done over 700 outreach events throughout the country. We have 51 homeownership centers throughout the country in the most troubled of neighborhoods where we continue to do outreach and I think really are able to serve the underserved. Mr. Clay. OK. So, look, the facts speak for themselves. You go to a predominantly African American neighborhood where every third house is foreclosed on, I mean, doesn't that stand out and say something to you, that perhaps those communities had been targeted? Mr. Lowman. I can't speak to the facts. I can't speak to it. Mr. Clay. Mr. Pinto, anything to add? Mr. Pinto. Not being a lender, I really have no information to add. Mr. Clay. Just as an observer. Mr. Pinto. As an observer, and I think this blame is placed on both sides of the aisle here, so let me start with that. Lenders and Fannie and Freddie back in 1991 had very sound underwriting principles. Those underwriting principles were complained about by community groups. They went to Congress in 1991 and petitioned Congress to change that. What they asked-- what they said was that lenders respond to the most conservative standards unless Fannie and Freddie become aggressive and convincing in their efforts to expand historically narrow underwriting, change their underwriting. That was before the U.S. Senate Banking, Housing and Urban Affairs Committee in 1991. In 1992, the Federal Housing Enterprises Safety and Soundness Act made that request into the law of the land, and from that point on, the underwriting standards of this country changed step by step by step. Eventually we went from having down payments on loans to having no down payments on loans. It was the result of a policy that Congress put in place, bipartisan policy that Congress put in place. That is where it started, and that is my view. Mr. Clay. But that wasn't totally the reasoning for this housing collapse. I mean, just Fannie and Freddie are to blame, not the people at every step of the way that made money off of these loans and these high-cost loans? We don't just stop with Fannie and Freddie, do we? Mr. Pinto. Remember what they were asking for. We want to break the lenders' view of having conservative underwriting, and the only way to do that was to get Fannie and Freddie to start having flexible underwriting, which they did starting in 1993. And it just progressed, and it was a progression that occurred over 15 years. Mr. Clay. Like you say, there is enough blame to go around. I guess we probably should look at what the appraisers did, too, shouldn't we? Mr. Pinto. Don't get me started on appraisers. Mr. Clay. I thank you all for your responses. At this point, that concludes this hearing. Without objection, the record shall be left open for 7 days so that Members may submit information for the record. Finally, without objection, I will enter this binder of hearing documents and statements submitted by interested parties for the committee record. The committee stands adjourned. [Whereupon, at 12:58 p.m., the committee was adjourned.] [The prepared statements of Hon. Darrell E. Issa and Hon. Gerald E. Connolly and additional information submitted for the hearing record follow:] [GRAPHIC] [TIFF OMITTED] T3041.071 [GRAPHIC] [TIFF OMITTED] T3041.072 [GRAPHIC] [TIFF OMITTED] T3041.073 [GRAPHIC] [TIFF OMITTED] T3041.074 [GRAPHIC] [TIFF OMITTED] T3041.075 [GRAPHIC] [TIFF OMITTED] T3041.076 [GRAPHIC] [TIFF OMITTED] T3041.077 [GRAPHIC] [TIFF OMITTED] T3041.078 [GRAPHIC] [TIFF OMITTED] T3041.079 [GRAPHIC] [TIFF OMITTED] T3041.080 [GRAPHIC] [TIFF OMITTED] T3041.081 [GRAPHIC] [TIFF OMITTED] T3041.082 [GRAPHIC] [TIFF OMITTED] T3041.083 [GRAPHIC] [TIFF OMITTED] T3041.084 [GRAPHIC] [TIFF OMITTED] T3041.085 [GRAPHIC] [TIFF OMITTED] T3041.086 [GRAPHIC] [TIFF OMITTED] T3041.087 [GRAPHIC] [TIFF OMITTED] T3041.088 [GRAPHIC] [TIFF OMITTED] T3041.089 [GRAPHIC] [TIFF OMITTED] T3041.090 [GRAPHIC] [TIFF OMITTED] T3041.091 [GRAPHIC] [TIFF OMITTED] T3041.092 [GRAPHIC] [TIFF OMITTED] T3041.093 [GRAPHIC] [TIFF OMITTED] T3041.094 [GRAPHIC] [TIFF OMITTED] T3041.095 [GRAPHIC] [TIFF OMITTED] T3041.096 [GRAPHIC] [TIFF OMITTED] T3041.097 [GRAPHIC] [TIFF OMITTED] T3041.098 [GRAPHIC] [TIFF OMITTED] T3041.099 [GRAPHIC] [TIFF OMITTED] T3041.100 [GRAPHIC] [TIFF OMITTED] T3041.101 [GRAPHIC] [TIFF OMITTED] T3041.102 [GRAPHIC] [TIFF OMITTED] T3041.103 [GRAPHIC] [TIFF OMITTED] T3041.104 [GRAPHIC] [TIFF OMITTED] T3041.105 [GRAPHIC] [TIFF OMITTED] T3041.106 [GRAPHIC] [TIFF OMITTED] T3041.107 [GRAPHIC] [TIFF OMITTED] T3041.108 [GRAPHIC] [TIFF OMITTED] T3041.109 [GRAPHIC] [TIFF OMITTED] T3041.110 [GRAPHIC] [TIFF OMITTED] T3041.111 [GRAPHIC] [TIFF OMITTED] T3041.112 [GRAPHIC] [TIFF OMITTED] T3041.113 [GRAPHIC] [TIFF OMITTED] T3041.114 [GRAPHIC] [TIFF OMITTED] T3041.115 [GRAPHIC] [TIFF OMITTED] T3041.116 [GRAPHIC] [TIFF OMITTED] T3041.117 [GRAPHIC] [TIFF OMITTED] T3041.118 [GRAPHIC] [TIFF OMITTED] T3041.119 [GRAPHIC] [TIFF OMITTED] T3041.120 [GRAPHIC] [TIFF OMITTED] T3041.121 [GRAPHIC] [TIFF OMITTED] T3041.122 [GRAPHIC] [TIFF OMITTED] T3041.123 [GRAPHIC] [TIFF OMITTED] T3041.124 [GRAPHIC] [TIFF OMITTED] T3041.125 [GRAPHIC] [TIFF OMITTED] T3041.126 [GRAPHIC] [TIFF OMITTED] T3041.127 [GRAPHIC] [TIFF OMITTED] T3041.128 [GRAPHIC] [TIFF OMITTED] T3041.129 [GRAPHIC] [TIFF OMITTED] T3041.130 [GRAPHIC] [TIFF OMITTED] T3041.131 [GRAPHIC] [TIFF OMITTED] T3041.132 [GRAPHIC] [TIFF OMITTED] T3041.133 [GRAPHIC] [TIFF OMITTED] T3041.134 [GRAPHIC] [TIFF OMITTED] T3041.135 [GRAPHIC] [TIFF OMITTED] T3041.136 [GRAPHIC] [TIFF OMITTED] T3041.137 [GRAPHIC] [TIFF OMITTED] T3041.138 [GRAPHIC] [TIFF OMITTED] T3041.139 [GRAPHIC] [TIFF OMITTED] T3041.140 [GRAPHIC] [TIFF OMITTED] T3041.141 [GRAPHIC] [TIFF OMITTED] T3041.142 [GRAPHIC] [TIFF OMITTED] T3041.143 [GRAPHIC] [TIFF OMITTED] T3041.144 [GRAPHIC] [TIFF OMITTED] T3041.145 [GRAPHIC] [TIFF OMITTED] T3041.146 [GRAPHIC] [TIFF OMITTED] T3041.147 [GRAPHIC] [TIFF OMITTED] T3041.148 [GRAPHIC] [TIFF OMITTED] T3041.149 [GRAPHIC] [TIFF OMITTED] T3041.150 [GRAPHIC] [TIFF OMITTED] T3041.151 [GRAPHIC] [TIFF OMITTED] T3041.152 [GRAPHIC] [TIFF OMITTED] T3041.153 [GRAPHIC] [TIFF OMITTED] T3041.154 [GRAPHIC] [TIFF OMITTED] T3041.155 [GRAPHIC] [TIFF OMITTED] T3041.156 [GRAPHIC] [TIFF OMITTED] T3041.157 [GRAPHIC] [TIFF OMITTED] T3041.158 [GRAPHIC] [TIFF OMITTED] T3041.159 [GRAPHIC] [TIFF OMITTED] T3041.160 [GRAPHIC] [TIFF OMITTED] T3041.161 [GRAPHIC] [TIFF OMITTED] T3041.162 [GRAPHIC] [TIFF OMITTED] T3041.163 [GRAPHIC] [TIFF OMITTED] T3041.164 [GRAPHIC] [TIFF OMITTED] T3041.165 [GRAPHIC] [TIFF OMITTED] T3041.166 [GRAPHIC] [TIFF OMITTED] T3041.167 [GRAPHIC] [TIFF OMITTED] T3041.168 [GRAPHIC] [TIFF OMITTED] T3041.169 [GRAPHIC] [TIFF OMITTED] T3041.170 [GRAPHIC] [TIFF OMITTED] T3041.171 [GRAPHIC] [TIFF OMITTED] T3041.172 [GRAPHIC] [TIFF OMITTED] T3041.173 [GRAPHIC] [TIFF OMITTED] T3041.174 [GRAPHIC] [TIFF OMITTED] T3041.175 [GRAPHIC] [TIFF OMITTED] T3041.176 [GRAPHIC] [TIFF OMITTED] T3041.177 [GRAPHIC] [TIFF OMITTED] T3041.178 [GRAPHIC] [TIFF OMITTED] T3041.179 [GRAPHIC] [TIFF OMITTED] T3041.180 [GRAPHIC] [TIFF OMITTED] T3041.181 [GRAPHIC] [TIFF OMITTED] T3041.182 [GRAPHIC] [TIFF OMITTED] T3041.183 [GRAPHIC] [TIFF OMITTED] T3041.184 [GRAPHIC] [TIFF OMITTED] T3041.185 [GRAPHIC] [TIFF OMITTED] T3041.186 [GRAPHIC] [TIFF OMITTED] T3041.187 [GRAPHIC] [TIFF OMITTED] T3041.188 [GRAPHIC] [TIFF OMITTED] T3041.189 [GRAPHIC] [TIFF OMITTED] T3041.190 [GRAPHIC] [TIFF OMITTED] T3041.191 [GRAPHIC] [TIFF OMITTED] T3041.192 [GRAPHIC] [TIFF OMITTED] T3041.193 [GRAPHIC] [TIFF OMITTED] T3041.194 [GRAPHIC] [TIFF OMITTED] T3041.195 [GRAPHIC] [TIFF OMITTED] T3041.196 [GRAPHIC] [TIFF OMITTED] T3041.197 [GRAPHIC] [TIFF OMITTED] T3041.198 [GRAPHIC] [TIFF OMITTED] T3041.199 [GRAPHIC] [TIFF OMITTED] T3041.200 [GRAPHIC] [TIFF OMITTED] T3041.201 [GRAPHIC] [TIFF OMITTED] T3041.202 [GRAPHIC] [TIFF OMITTED] T3041.203 [GRAPHIC] [TIFF OMITTED] T3041.204 [GRAPHIC] [TIFF OMITTED] T3041.205 [GRAPHIC] [TIFF OMITTED] T3041.206 [GRAPHIC] [TIFF OMITTED] T3041.207 [GRAPHIC] [TIFF OMITTED] T3041.208 [GRAPHIC] [TIFF OMITTED] T3041.209 [GRAPHIC] [TIFF OMITTED] T3041.210 [GRAPHIC] [TIFF OMITTED] T3041.211 [GRAPHIC] [TIFF OMITTED] T3041.212 [GRAPHIC] [TIFF OMITTED] T3041.213 [GRAPHIC] [TIFF OMITTED] T3041.214 [GRAPHIC] [TIFF OMITTED] T3041.215 [GRAPHIC] [TIFF OMITTED] T3041.216 [GRAPHIC] [TIFF OMITTED] T3041.217 [GRAPHIC] [TIFF OMITTED] T3041.218 [GRAPHIC] [TIFF OMITTED] T3041.219 [GRAPHIC] [TIFF OMITTED] T3041.220 [GRAPHIC] [TIFF OMITTED] T3041.221 [GRAPHIC] [TIFF OMITTED] T3041.222 [GRAPHIC] [TIFF OMITTED] T3041.223 [GRAPHIC] [TIFF OMITTED] T3041.224 [GRAPHIC] [TIFF OMITTED] T3041.225 [GRAPHIC] [TIFF OMITTED] T3041.226 [GRAPHIC] [TIFF OMITTED] T3041.227 [GRAPHIC] [TIFF OMITTED] T3041.228 [GRAPHIC] [TIFF OMITTED] T3041.229 [GRAPHIC] [TIFF OMITTED] T3041.230 [GRAPHIC] [TIFF OMITTED] T3041.231 [GRAPHIC] [TIFF OMITTED] T3041.232 [GRAPHIC] [TIFF OMITTED] T3041.233 [GRAPHIC] [TIFF OMITTED] T3041.234 [GRAPHIC] [TIFF OMITTED] T3041.235 [GRAPHIC] [TIFF OMITTED] T3041.236 [GRAPHIC] [TIFF OMITTED] T3041.237 [GRAPHIC] [TIFF OMITTED] T3041.238 [GRAPHIC] [TIFF OMITTED] T3041.239 [GRAPHIC] [TIFF OMITTED] T3041.240 [GRAPHIC] [TIFF OMITTED] T3041.241 [GRAPHIC] [TIFF OMITTED] T3041.242 [GRAPHIC] [TIFF OMITTED] T3041.243 [GRAPHIC] [TIFF OMITTED] T3041.244 [GRAPHIC] [TIFF OMITTED] T3041.245 [GRAPHIC] [TIFF OMITTED] T3041.246 [GRAPHIC] [TIFF OMITTED] T3041.247 [GRAPHIC] [TIFF OMITTED] T3041.248 [GRAPHIC] [TIFF OMITTED] T3041.249 [GRAPHIC] [TIFF OMITTED] T3041.250 [GRAPHIC] [TIFF OMITTED] T3041.251 [GRAPHIC] [TIFF OMITTED] T3041.252 [GRAPHIC] [TIFF OMITTED] T3041.253 [GRAPHIC] [TIFF OMITTED] T3041.254 [GRAPHIC] [TIFF OMITTED] T3041.255 [GRAPHIC] [TIFF OMITTED] T3041.256 [GRAPHIC] [TIFF OMITTED] T3041.257 [GRAPHIC] [TIFF OMITTED] T3041.258 [GRAPHIC] [TIFF OMITTED] T3041.259 [GRAPHIC] [TIFF OMITTED] T3041.260 [GRAPHIC] [TIFF OMITTED] T3041.261 [GRAPHIC] [TIFF OMITTED] T3041.262 [GRAPHIC] [TIFF OMITTED] T3041.263 [GRAPHIC] [TIFF OMITTED] T3041.264 [GRAPHIC] [TIFF OMITTED] T3041.265 [GRAPHIC] [TIFF OMITTED] T3041.266 [GRAPHIC] [TIFF OMITTED] T3041.267 [GRAPHIC] [TIFF OMITTED] T3041.268 [GRAPHIC] [TIFF OMITTED] T3041.269 [GRAPHIC] [TIFF OMITTED] T3041.270 [GRAPHIC] [TIFF OMITTED] T3041.271 [GRAPHIC] [TIFF OMITTED] T3041.272 [GRAPHIC] [TIFF OMITTED] T3041.273 [GRAPHIC] [TIFF OMITTED] T3041.274 [GRAPHIC] [TIFF OMITTED] T3041.275 [GRAPHIC] [TIFF OMITTED] T3041.276 [GRAPHIC] [TIFF OMITTED] T3041.277 [GRAPHIC] [TIFF OMITTED] T3041.278 [GRAPHIC] [TIFF OMITTED] T3041.279 [GRAPHIC] [TIFF OMITTED] T3041.280 [GRAPHIC] [TIFF OMITTED] T3041.281 [GRAPHIC] [TIFF OMITTED] T3041.282 [GRAPHIC] [TIFF OMITTED] T3041.283 [GRAPHIC] [TIFF OMITTED] T3041.284 [GRAPHIC] [TIFF OMITTED] T3041.285 [GRAPHIC] [TIFF OMITTED] T3041.286 [GRAPHIC] [TIFF OMITTED] T3041.287 [GRAPHIC] [TIFF OMITTED] T3041.288 [GRAPHIC] [TIFF OMITTED] T3041.289 [GRAPHIC] [TIFF OMITTED] T3041.290 [GRAPHIC] [TIFF OMITTED] T3041.291 [GRAPHIC] [TIFF OMITTED] T3041.292 [GRAPHIC] [TIFF OMITTED] T3041.293 [GRAPHIC] [TIFF OMITTED] T3041.294 [GRAPHIC] [TIFF OMITTED] T3041.295 [GRAPHIC] [TIFF OMITTED] T3041.296 [GRAPHIC] [TIFF OMITTED] T3041.297 [GRAPHIC] [TIFF OMITTED] T3041.298 [GRAPHIC] [TIFF OMITTED] T3041.299 [GRAPHIC] [TIFF OMITTED] T3041.300 [GRAPHIC] [TIFF OMITTED] T3041.301 [GRAPHIC] [TIFF OMITTED] T3041.302 [GRAPHIC] [TIFF OMITTED] T3041.303 [GRAPHIC] [TIFF OMITTED] T3041.304 [GRAPHIC] [TIFF OMITTED] T3041.305 [GRAPHIC] [TIFF OMITTED] T3041.306 [GRAPHIC] [TIFF OMITTED] T3041.307 [GRAPHIC] [TIFF OMITTED] T3041.308 [GRAPHIC] [TIFF OMITTED] T3041.309 [GRAPHIC] [TIFF OMITTED] T3041.310 [GRAPHIC] [TIFF OMITTED] T3041.311 [GRAPHIC] [TIFF OMITTED] T3041.312 [GRAPHIC] [TIFF OMITTED] T3041.313 [GRAPHIC] [TIFF OMITTED] T3041.314 [GRAPHIC] [TIFF OMITTED] T3041.315 [GRAPHIC] [TIFF OMITTED] T3041.316 [GRAPHIC] [TIFF OMITTED] T3041.317 [GRAPHIC] [TIFF OMITTED] T3041.318 [GRAPHIC] [TIFF OMITTED] T3041.319 [GRAPHIC] [TIFF OMITTED] T3041.320 [GRAPHIC] [TIFF OMITTED] T3041.321 [GRAPHIC] [TIFF OMITTED] T3041.322 [GRAPHIC] [TIFF OMITTED] T3041.323 [GRAPHIC] [TIFF OMITTED] T3041.324 [GRAPHIC] [TIFF OMITTED] T3041.325 [GRAPHIC] [TIFF OMITTED] T3041.326 [GRAPHIC] [TIFF OMITTED] T3041.327 [GRAPHIC] [TIFF OMITTED] T3041.328 [GRAPHIC] [TIFF OMITTED] T3041.329 [GRAPHIC] [TIFF OMITTED] T3041.330 [GRAPHIC] [TIFF OMITTED] T3041.331 [GRAPHIC] [TIFF OMITTED] T3041.332 [GRAPHIC] [TIFF OMITTED] T3041.333 [GRAPHIC] [TIFF OMITTED] T3041.334 [GRAPHIC] [TIFF OMITTED] T3041.335 [GRAPHIC] [TIFF OMITTED] T3041.336 [GRAPHIC] [TIFF OMITTED] T3041.337 [GRAPHIC] [TIFF OMITTED] T3041.338 [GRAPHIC] [TIFF OMITTED] T3041.339 [GRAPHIC] [TIFF OMITTED] T3041.340 [GRAPHIC] [TIFF OMITTED] T3041.341 [GRAPHIC] [TIFF OMITTED] T3041.342 [GRAPHIC] [TIFF OMITTED] T3041.343 [GRAPHIC] [TIFF OMITTED] T3041.344 [GRAPHIC] [TIFF OMITTED] T3041.345 [GRAPHIC] [TIFF OMITTED] T3041.346 [GRAPHIC] [TIFF OMITTED] T3041.347 [GRAPHIC] [TIFF OMITTED] T3041.348 [GRAPHIC] [TIFF OMITTED] T3041.349 [GRAPHIC] [TIFF OMITTED] T3041.350 [GRAPHIC] [TIFF OMITTED] T3041.351 [GRAPHIC] [TIFF OMITTED] T3041.352 [GRAPHIC] [TIFF OMITTED] T3041.353 [GRAPHIC] [TIFF OMITTED] T3041.354 [GRAPHIC] [TIFF OMITTED] T3041.355 [GRAPHIC] [TIFF OMITTED] T3041.356 [GRAPHIC] [TIFF OMITTED] T3041.357 [GRAPHIC] [TIFF OMITTED] T3041.358 [GRAPHIC] [TIFF OMITTED] T3041.359 [GRAPHIC] [TIFF OMITTED] T3041.360 [GRAPHIC] [TIFF OMITTED] T3041.361 [GRAPHIC] [TIFF OMITTED] T3041.362 [GRAPHIC] [TIFF OMITTED] T3041.363 [GRAPHIC] [TIFF OMITTED] T3041.364 [GRAPHIC] [TIFF OMITTED] T3041.365 [GRAPHIC] [TIFF OMITTED] T3041.366 [GRAPHIC] [TIFF OMITTED] T3041.367 [GRAPHIC] [TIFF OMITTED] T3041.368 [GRAPHIC] [TIFF OMITTED] T3041.369 [GRAPHIC] [TIFF OMITTED] T3041.370 [GRAPHIC] [TIFF OMITTED] T3041.371 [GRAPHIC] [TIFF OMITTED] T3041.372 [GRAPHIC] [TIFF OMITTED] T3041.373 [GRAPHIC] [TIFF OMITTED] T3041.374 [GRAPHIC] [TIFF OMITTED] T3041.375 [GRAPHIC] [TIFF OMITTED] T3041.376 [GRAPHIC] [TIFF OMITTED] T3041.377 [GRAPHIC] [TIFF OMITTED] T3041.378 [GRAPHIC] [TIFF OMITTED] T3041.379 [GRAPHIC] [TIFF OMITTED] T3041.380 [GRAPHIC] [TIFF OMITTED] T3041.381 [GRAPHIC] [TIFF OMITTED] T3041.382 [GRAPHIC] [TIFF OMITTED] T3041.383 [GRAPHIC] [TIFF OMITTED] T3041.384 [GRAPHIC] [TIFF OMITTED] T3041.385 [GRAPHIC] [TIFF OMITTED] T3041.386 [GRAPHIC] [TIFF OMITTED] T3041.387 [GRAPHIC] [TIFF OMITTED] T3041.388 [GRAPHIC] [TIFF OMITTED] T3041.389 [GRAPHIC] [TIFF OMITTED] T3041.390 [GRAPHIC] [TIFF OMITTED] T3041.391 [GRAPHIC] [TIFF OMITTED] T3041.392 [GRAPHIC] [TIFF OMITTED] T3041.393 [GRAPHIC] [TIFF OMITTED] T3041.394 [GRAPHIC] [TIFF OMITTED] T3041.395 [GRAPHIC] [TIFF OMITTED] T3041.396 [GRAPHIC] [TIFF OMITTED] T3041.397 [GRAPHIC] [TIFF OMITTED] T3041.398 [GRAPHIC] [TIFF OMITTED] T3041.399 [GRAPHIC] [TIFF OMITTED] T3041.400 [GRAPHIC] [TIFF OMITTED] T3041.401 [GRAPHIC] [TIFF OMITTED] T3041.402 [GRAPHIC] [TIFF OMITTED] T3041.403 [GRAPHIC] [TIFF OMITTED] T3041.404 [GRAPHIC] [TIFF OMITTED] T3041.405 [GRAPHIC] [TIFF OMITTED] T3041.406 [GRAPHIC] [TIFF OMITTED] T3041.407 [GRAPHIC] [TIFF OMITTED] T3041.408 [GRAPHIC] [TIFF OMITTED] T3041.409 [GRAPHIC] [TIFF OMITTED] T3041.410 [GRAPHIC] [TIFF OMITTED] T3041.411 [GRAPHIC] [TIFF OMITTED] T3041.412 [GRAPHIC] [TIFF OMITTED] T3041.413 [GRAPHIC] [TIFF OMITTED] T3041.414 [GRAPHIC] [TIFF OMITTED] T3041.415 [GRAPHIC] [TIFF OMITTED] T3041.416 [GRAPHIC] [TIFF OMITTED] T3041.417 [GRAPHIC] [TIFF OMITTED] T3041.418 [GRAPHIC] [TIFF OMITTED] T3041.419 [GRAPHIC] [TIFF OMITTED] T3041.420 [GRAPHIC] [TIFF OMITTED] T3041.421 [GRAPHIC] [TIFF OMITTED] T3041.422 [GRAPHIC] [TIFF OMITTED] T3041.423 [GRAPHIC] [TIFF OMITTED] T3041.424 [GRAPHIC] [TIFF OMITTED] T3041.425 [GRAPHIC] [TIFF OMITTED] T3041.426 [GRAPHIC] [TIFF OMITTED] T3041.427 [GRAPHIC] [TIFF OMITTED] T3041.428 [GRAPHIC] [TIFF OMITTED] T3041.429 [GRAPHIC] [TIFF OMITTED] T3041.430 [GRAPHIC] [TIFF OMITTED] T3041.431 [GRAPHIC] [TIFF OMITTED] T3041.432 [GRAPHIC] [TIFF OMITTED] T3041.433 [GRAPHIC] [TIFF OMITTED] T3041.434 [GRAPHIC] [TIFF OMITTED] T3041.435 [GRAPHIC] [TIFF OMITTED] T3041.436 [GRAPHIC] [TIFF OMITTED] T3041.437 [GRAPHIC] [TIFF OMITTED] T3041.438 [GRAPHIC] [TIFF OMITTED] T3041.439 [GRAPHIC] [TIFF OMITTED] T3041.440 [GRAPHIC] [TIFF OMITTED] T3041.441 [GRAPHIC] [TIFF OMITTED] T3041.442 [GRAPHIC] [TIFF OMITTED] T3041.443 [GRAPHIC] [TIFF OMITTED] T3041.444 [GRAPHIC] [TIFF OMITTED] T3041.445 [GRAPHIC] [TIFF OMITTED] T3041.446 [GRAPHIC] [TIFF OMITTED] T3041.447 [GRAPHIC] [TIFF OMITTED] T3041.448 [GRAPHIC] [TIFF OMITTED] T3041.449 [GRAPHIC] [TIFF OMITTED] T3041.450 [GRAPHIC] [TIFF OMITTED] T3041.451 [GRAPHIC] [TIFF OMITTED] T3041.452 [GRAPHIC] [TIFF OMITTED] T3041.453 [GRAPHIC] [TIFF OMITTED] T3041.454 [GRAPHIC] [TIFF OMITTED] T3041.455 [GRAPHIC] [TIFF OMITTED] T3041.456 [GRAPHIC] [TIFF OMITTED] T3041.457 [GRAPHIC] [TIFF OMITTED] T3041.458 [GRAPHIC] [TIFF OMITTED] T3041.459 [GRAPHIC] [TIFF OMITTED] T3041.460 [GRAPHIC] [TIFF OMITTED] T3041.461 [GRAPHIC] [TIFF OMITTED] T3041.462 [GRAPHIC] [TIFF OMITTED] T3041.463 [GRAPHIC] [TIFF OMITTED] T3041.464 [GRAPHIC] [TIFF OMITTED] T3041.465 [GRAPHIC] [TIFF OMITTED] T3041.466 [GRAPHIC] [TIFF OMITTED] T3041.467 [GRAPHIC] [TIFF OMITTED] T3041.468 [GRAPHIC] [TIFF OMITTED] T3041.469 [GRAPHIC] [TIFF OMITTED] T3041.470 [GRAPHIC] [TIFF OMITTED] T3041.471 [GRAPHIC] [TIFF OMITTED] T3041.472 [GRAPHIC] [TIFF OMITTED] T3041.473 [GRAPHIC] [TIFF OMITTED] T3041.474 [GRAPHIC] [TIFF OMITTED] T3041.475 [GRAPHIC] [TIFF OMITTED] T3041.476 [GRAPHIC] [TIFF OMITTED] T3041.477 [GRAPHIC] [TIFF OMITTED] T3041.478 [GRAPHIC] [TIFF OMITTED] T3041.479 [GRAPHIC] [TIFF OMITTED] T3041.480 [GRAPHIC] [TIFF OMITTED] T3041.481 [GRAPHIC] [TIFF OMITTED] T3041.482 [GRAPHIC] [TIFF OMITTED] T3041.483 [GRAPHIC] [TIFF OMITTED] T3041.484 [GRAPHIC] [TIFF OMITTED] T3041.485 [GRAPHIC] [TIFF OMITTED] T3041.486 [GRAPHIC] [TIFF OMITTED] T3041.487 [GRAPHIC] [TIFF OMITTED] T3041.488 [GRAPHIC] [TIFF OMITTED] T3041.489 [GRAPHIC] [TIFF OMITTED] T3041.490 [GRAPHIC] [TIFF OMITTED] T3041.491 [GRAPHIC] [TIFF OMITTED] T3041.492 [GRAPHIC] [TIFF OMITTED] T3041.493 [GRAPHIC] [TIFF OMITTED] T3041.494 [GRAPHIC] [TIFF OMITTED] T3041.495 [GRAPHIC] [TIFF OMITTED] T3041.496 [GRAPHIC] [TIFF OMITTED] T3041.497 [GRAPHIC] [TIFF OMITTED] T3041.498 [GRAPHIC] [TIFF OMITTED] T3041.499 [GRAPHIC] [TIFF OMITTED] T3041.500 [GRAPHIC] [TIFF OMITTED] T3041.501 [GRAPHIC] [TIFF OMITTED] T3041.502 [GRAPHIC] [TIFF OMITTED] T3041.503 [GRAPHIC] [TIFF OMITTED] T3041.504 [GRAPHIC] [TIFF OMITTED] T3041.505 [GRAPHIC] [TIFF OMITTED] T3041.506 [GRAPHIC] [TIFF OMITTED] T3041.507 [GRAPHIC] [TIFF OMITTED] T3041.508 [GRAPHIC] [TIFF OMITTED] T3041.509 [GRAPHIC] [TIFF OMITTED] T3041.510 [GRAPHIC] [TIFF OMITTED] T3041.511 [GRAPHIC] [TIFF OMITTED] T3041.512 [GRAPHIC] [TIFF OMITTED] T3041.513 [GRAPHIC] [TIFF OMITTED] T3041.514 [GRAPHIC] [TIFF OMITTED] T3041.515 [GRAPHIC] [TIFF OMITTED] T3041.516 [GRAPHIC] [TIFF OMITTED] T3041.517 [GRAPHIC] [TIFF OMITTED] T3041.518 [GRAPHIC] [TIFF OMITTED] T3041.519 [GRAPHIC] [TIFF OMITTED] T3041.520 [GRAPHIC] [TIFF OMITTED] T3041.521 [GRAPHIC] [TIFF OMITTED] T3041.522 [GRAPHIC] [TIFF OMITTED] T3041.523 [GRAPHIC] [TIFF OMITTED] T3041.524 [GRAPHIC] [TIFF OMITTED] T3041.525 [GRAPHIC] [TIFF OMITTED] T3041.526 [GRAPHIC] [TIFF OMITTED] T3041.527 [GRAPHIC] [TIFF OMITTED] T3041.528 [GRAPHIC] [TIFF OMITTED] T3041.529 [GRAPHIC] [TIFF OMITTED] T3041.530 [GRAPHIC] [TIFF OMITTED] T3041.531 [GRAPHIC] [TIFF OMITTED] T3041.532 [GRAPHIC] [TIFF OMITTED] T3041.533 [GRAPHIC] [TIFF OMITTED] T3041.534 [GRAPHIC] [TIFF OMITTED] T3041.535 [GRAPHIC] [TIFF OMITTED] T3041.536 [GRAPHIC] [TIFF OMITTED] T3041.537 [GRAPHIC] [TIFF OMITTED] T3041.538 [GRAPHIC] [TIFF OMITTED] T3041.539 [GRAPHIC] [TIFF OMITTED] T3041.540 [GRAPHIC] [TIFF OMITTED] T3041.541 [GRAPHIC] [TIFF OMITTED] T3041.542 [GRAPHIC] [TIFF OMITTED] T3041.543 [GRAPHIC] [TIFF OMITTED] T3041.544 [GRAPHIC] [TIFF OMITTED] T3041.545 [GRAPHIC] [TIFF OMITTED] T3041.546 [GRAPHIC] [TIFF OMITTED] T3041.547 [GRAPHIC] [TIFF OMITTED] T3041.548 [GRAPHIC] [TIFF OMITTED] T3041.549 [GRAPHIC] [TIFF OMITTED] T3041.550 [GRAPHIC] [TIFF OMITTED] T3041.551 [GRAPHIC] [TIFF OMITTED] T3041.552 [GRAPHIC] [TIFF OMITTED] T3041.553 [GRAPHIC] [TIFF OMITTED] T3041.554 [GRAPHIC] [TIFF OMITTED] T3041.555 [GRAPHIC] [TIFF OMITTED] T3041.556 [GRAPHIC] [TIFF OMITTED] T3041.557 [GRAPHIC] [TIFF OMITTED] T3041.558 [GRAPHIC] [TIFF OMITTED] T3041.559 [GRAPHIC] [TIFF OMITTED] T3041.560 [GRAPHIC] [TIFF OMITTED] T3041.561 [GRAPHIC] [TIFF OMITTED] T3041.562 [GRAPHIC] [TIFF OMITTED] T3041.563 [GRAPHIC] [TIFF OMITTED] T3041.564 [GRAPHIC] [TIFF OMITTED] T3041.565 [GRAPHIC] [TIFF OMITTED] T3041.566 [GRAPHIC] [TIFF OMITTED] T3041.567 [GRAPHIC] [TIFF OMITTED] T3041.568 [GRAPHIC] [TIFF OMITTED] T3041.569 [GRAPHIC] [TIFF OMITTED] T3041.570 [GRAPHIC] [TIFF OMITTED] T3041.571 [GRAPHIC] [TIFF OMITTED] T3041.572 [GRAPHIC] [TIFF OMITTED] T3041.573 [GRAPHIC] [TIFF OMITTED] T3041.574 [GRAPHIC] [TIFF OMITTED] T3041.575 [GRAPHIC] [TIFF OMITTED] T3041.576 [GRAPHIC] [TIFF OMITTED] T3041.577 [GRAPHIC] [TIFF OMITTED] T3041.578 [GRAPHIC] [TIFF OMITTED] T3041.579 [GRAPHIC] [TIFF OMITTED] T3041.580 [GRAPHIC] [TIFF OMITTED] T3041.581 [GRAPHIC] [TIFF OMITTED] T3041.582 [GRAPHIC] [TIFF OMITTED] T3041.583 [GRAPHIC] [TIFF OMITTED] T3041.584 [GRAPHIC] [TIFF OMITTED] T3041.585 [GRAPHIC] [TIFF OMITTED] T3041.586 [GRAPHIC] [TIFF OMITTED] T3041.587 [GRAPHIC] [TIFF OMITTED] T3041.588 [GRAPHIC] [TIFF OMITTED] T3041.589 [GRAPHIC] [TIFF OMITTED] T3041.590 [GRAPHIC] [TIFF OMITTED] T3041.591 [GRAPHIC] [TIFF OMITTED] T3041.592 [GRAPHIC] [TIFF OMITTED] T3041.593 [GRAPHIC] [TIFF OMITTED] T3041.594 [GRAPHIC] [TIFF OMITTED] T3041.595 [GRAPHIC] [TIFF OMITTED] T3041.596 [GRAPHIC] [TIFF OMITTED] T3041.597 [GRAPHIC] [TIFF OMITTED] T3041.598 [GRAPHIC] [TIFF OMITTED] T3041.599 [GRAPHIC] [TIFF OMITTED] T3041.600 [GRAPHIC] [TIFF OMITTED] T3041.601