[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                      AN EXAMINATION OF POTENTIAL

                      PRIVATE SECTOR SOLUTIONS TO

                    MITIGATE FORECLOSURES IN NEVADA

=======================================================================


                             FIELD HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

                          AND CONSUMER CREDIT

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 15, 2012

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 112-107





                  U.S. GOVERNMENT PRINTING OFFICE
75-079                    WASHINGTON : 2012
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                   SPENCER BACHUS, Alabama, Chairman

JEB HENSARLING, Texas, Vice          BARNEY FRANK, Massachusetts, 
    Chairman                             Ranking Member
PETER T. KING, New York              MAXINE WATERS, California
EDWARD R. ROYCE, California          CAROLYN B. MALONEY, New York
FRANK D. LUCAS, Oklahoma             LUIS V. GUTIERREZ, Illinois
RON PAUL, Texas                      NYDIA M. VELAZQUEZ, New York
DONALD A. MANZULLO, Illinois         MELVIN L. WATT, North Carolina
WALTER B. JONES, North Carolina      GARY L. ACKERMAN, New York
JUDY BIGGERT, Illinois               BRAD SHERMAN, California
GARY G. MILLER, California           GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas              WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
JOHN CAMPBELL, California            JOE BACA, California
MICHELE BACHMANN, Minnesota          STEPHEN F. LYNCH, Massachusetts
THADDEUS G. McCOTTER, Michigan       BRAD MILLER, North Carolina
KEVIN McCARTHY, California           DAVID SCOTT, Georgia
STEVAN PEARCE, New Mexico            AL GREEN, Texas
BILL POSEY, Florida                  EMANUEL CLEAVER, Missouri
MICHAEL G. FITZPATRICK,              GWEN MOORE, Wisconsin
    Pennsylvania                     KEITH ELLISON, Minnesota
LYNN A. WESTMORELAND, Georgia        ED PERLMUTTER, Colorado
BLAINE LUETKEMEYER, Missouri         JOE DONNELLY, Indiana
BILL HUIZENGA, Michigan              ANDRE CARSON, Indiana
SEAN P. DUFFY, Wisconsin             JAMES A. HIMES, Connecticut
NAN A. S. HAYWORTH, New York         GARY C. PETERS, Michigan
JAMES B. RENACCI, Ohio               JOHN C. CARNEY, Jr., Delaware
ROBERT HURT, Virginia
ROBERT J. DOLD, Illinois
DAVID SCHWEIKERT, Arizona
MICHAEL G. GRIMM, New York
FRANCISCO ``QUICO'' CANSECO, Texas
STEVE STIVERS, Ohio
STEPHEN LEE FINCHER, Tennessee

           James H. Clinger, Staff Director and Chief Counsel
       Subcommittee on Financial Institutions and Consumer Credit

             SHELLEY MOORE CAPITO, West Virginia, Chairman

JAMES B. RENACCI, Ohio, Vice         CAROLYN B. MALONEY, New York, 
    Chairman                             Ranking Member
EDWARD R. ROYCE, California          LUIS V. GUTIERREZ, Illinois
DONALD A. MANZULLO, Illinois         MELVIN L. WATT, North Carolina
WALTER B. JONES, North Carolina      GARY L. ACKERMAN, New York
JEB HENSARLING, Texas                RUBEN HINOJOSA, Texas
PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
THADDEUS G. McCOTTER, Michigan       JOE BACA, California
KEVIN McCARTHY, California           BRAD MILLER, North Carolina
STEVAN PEARCE, New Mexico            DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia        NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         GREGORY W. MEEKS, New York
BILL HUIZENGA, Michigan              STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin             JOHN C. CARNEY, Jr., Delaware
FRANCISCO ``QUICO'' CANSECO, Texas
MICHAEL G. GRIMM, New York
STEPHEN LEE FINCHER, Tennessee


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 15, 2012...............................................     1
Appendix:
    March 15, 2012...............................................    31

                               WITNESSES
                        Thursday, March 15, 2012

Campbell, Verise, Deputy Director, the State of Nevada 
  Foreclosure Mediation Program..................................     6
Chide, Leonard, President/Executive Director, Neighborhood 
  Housing Services of Southern Nevada, Inc. (NHSSN)..............    10
Grady, Janis, past President and current Treasurer and Director, 
  Nevada Association of Mortgage Professionals...................    13
Longson, Susanne B., Vice President, Business Development and 
  Community Relations, SCE Federal Credit Union, and former 
  President, SONEPCO Federal Credit Union........................    15
Lynam, Keith, REALTOR and Sales Associate, Windermere Prestige 
  Properties, on behalf of the Nevada Association of REALTORS...    17

                                APPENDIX

Prepared statements:
    Campbell, Verise.............................................    32
    Chide, Leonard...............................................    39
    Grady, Janis.................................................    48
    Longson, Susanne B...........................................    51
    Lynam, Keith.................................................    60

              Additional Material Submitted for the Record

Heck, Hon. Joseph:
    Written statement of Senator Dean Heller.....................    63
    Additional information provided for the record by Janis Grady    64


                      AN EXAMINATION OF POTENTIAL


                      PRIVATE SECTOR SOLUTIONS TO


                    MITIGATE FORECLOSURES IN NEVADA

                              ----------                              


                        Thursday, March 15, 2012

             U.S. House of Representatives,
             Subcommittee on Financial Institutions
                               and Consumer Credit,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 9:30 a.m., at 
the Clark County Commission Chambers, Clark County Government 
Center, 500 South Grand Central Parkway, Las Vegas, Nevada, 
Hon. Shelley Moore Capito [chairwoman of the subcommittee] 
presiding.
    Members present: Representatives Capito, Heck, and Berkley.
    Chairwoman Capito. This hearing will come to order.
    I would first like to thank Representative Heck for 
inviting us and for hosting the subcommittee this morning. I 
would also like to thank Representative Berkley for coming 
today. We joke between one another because we are the two 
``Shelley's'' in the House of Representatives, and we're both 
``Shelley'' with an ``E-Y.'' So we have a lot in common.
    What I'll do basically is sort of walk you through the 
process. This is a field hearing of the Financial Services 
Committee's Subcommittee on Financial Institutions and Consumer 
Credit, of which I am the chairman, and so we're coming out 
really to hear what's going on across the country.
    We had a hearing yesterday in San Antonio, Texas. We 
focused that on financial institutions and bank examination 
procedures and today, knowing of, and hearing quite frequently 
of, your issues with foreclosures, certainly in the Financial 
Services Committee we have had numerous programs before us and 
numerous testimony on how woefully short these Federal programs 
have been falling, in terms of the foreclosure issues.
    So what we will do is I will recognize each of us for 5 
minutes for an opening statement, and then I will recognize the 
witnesses for 5 minutes for a summary statement. After that, we 
will have several rounds of questioning.
    As I said, the topic of this morning's hearing is critical 
to the community of Las Vegas, which is one of the hardest-hit 
communities in the aftermath of the financial crisis. There 
have been numerous Federal programs taxed with addressing the 
challenges in the housing market and reducing the number of 
foreclosures across the Nation.
    By and large, these programs have really failed to meet the 
expectations or stem the growing tide of foreclosures.
    The purpose of this morning's hearing is to better 
understand what has worked and what has not. Members of the 
subcommittee are especially interested in learning more about 
private sector solutions to mitigate foreclosures.
    Too often, I believe, the Federal Government programs 
designed to help people struggling to stay in their homes fail 
to help those who are truly in need. Part of the reason for the 
deficiencies in these programs is because they're relying on 
Washington-based solutions. The real estate market is highly 
regional, therefore, solutions to the problems in this market 
may be region-based, and I think we are going to learn about 
that today.
    Today's hearing will allow Members to learn more about 
creative ideas tested at the local level, and I look forward to 
that.
    I would like to thank each of you. I would like to thank 
the Clark County Commission for their help in putting this 
together and for letting us use their chambers. It's a 
beautiful city and a beautiful chamber here, and I want to 
thank the staffs of both Members here for helping. I would like 
to thank my own staff as well for their help.
    I know these settings can sometimes--the witnesses might be 
intimidated. But the purpose of this is a dialogue and 
conversation.
    Field hearings, I think, are really important for us to 
learn more about the unique challenges. I'm from West Virginia 
and we have not--we don't suffer the highs, so we haven't 
suffered the lows, although we are playing at 12:00 today. So, 
everybody watch your brackets there.
    But seriously, our real estate market has not suffered the 
kind of demolition that yours has. We have sort of stayed in 
the middle all the time, and so we're still in the middle, and 
gratefully so, in the bad times. We're here to listen and 
learn.
    I would now like to recognize Ms. Berkley for the purpose 
of making an opening statement.
    Ms. Berkley. Thank you, Madam Chairwoman, and I'm 
absolutely delighted to welcome you to my congressional 
district and my hometown. And Mr. Heck, it's always a pleasure 
to share the stage with you and I'm delighted that we are here 
to talk about an issue that is so very important to the people 
that I represent. Also, I want to welcome the witnesses.
    I'm looking around and I know that we have the best that 
there is and people who are working in the trenches and know 
exactly what's going on in the State of Nevada and will be able 
to share it with the committee.
    As we all know, our State faces the highest unemployment 
rate in the Nation, and we have the highest mortgage 
foreclosure rate. People come over to me all the time. They 
say, ``Congresswoman, I have never missed a day of work. I have 
never missed a mortgage payment. I lost my job. I lost my home. 
What am I going to do?''
    They are losing their homes through no fault of their own, 
and there are tens of thousands of my fellow Nevadans who are 
struggling. In February, 1 in every 274 housing units in our 
State had a foreclosure filing. That's more than twice the 
national average.
    One in 16 properties in the State has been foreclosed on, 
the highest in the country. Freddie Mac and Fannie Mae own 
179,000 mortgages in Nevada, and nearly 14 percent of the 1.2 
million homes owned by the State, 61 percent--I should say that 
since 2007, more than 130,000 homes have been foreclosed on in 
Southern Nevada alone--of Nevada homes are underwater, or 343 
properties across the State.
    Our State continues to lead the Nation for the percentage 
of homes underwater. The average home, the last time I checked, 
was 145 percent underwater, loan to value, which is a negative 
cash equity of $14.1 billion. We only had 3,800 new home sales 
in February, which is the lowest in the Nation.
    We need to be focused like a laser on the serious 
challenges that Nevadans are facing today, and our foreclosure 
crisis is a prime example of one of those serious challenges. 
We must be examining all options for solutions to our housing 
crisis. We should leave no stone unturned, no option 
unconsidered.
    I understand that today's hearing is titled, ``An 
Examination of Potential Private Sector Solutions to Mitigate 
Foreclosures in Nevada.'' We have seen how powerful private 
sector partnerships can be. The hardest-hit model relies on 
cooperation between the government and private sector banks to 
bring down the principal of underwater loans.
    We should be looking for more ways that we can work 
together across private and public sectors to address this 
crisis. However, I think it's very important to know that after 
the collapse of the housing market, when Congress and the White 
House took important steps to keep homeowners in their homes 
and reduce the negative equity, these programs have not always 
been successful, and are hampered by the refusal of Freddie and 
Fannie and private banks to participate in mortgage write-downs 
and modifications.
    Yet, as a matter of fact, let me emphasize that a bit. 
Freddie and Fannie own 179,000 mortgages in Nevada, as of 
September 30, 2011. That's more, as I said, than 10 percent of 
the homes in the State. However, to date, for the most part 
they have been unwilling to refinance or write down mortgages 
because of the impact on their bottom line. I think that's very 
bad, and fully 10 percent of the homes in Nevada that are 
Freddie- and Fannie-owned have absolutely no relief whatsoever.
    Yet, there are some out there who think that our Nation's 
leaders should do nothing, do nothing for the people who are 
struggling. I don't think they get it. And they certainly don't 
understand what's happening here in the State of Nevada.
    That we should let Nevadans, or our fellow Americans hit 
bottom and just let the market work is anathema to everything 
that this Nation stands for. Nevadans know this is 
unacceptable. Nevadans know many of them have not yet hit 
bottom.
    We need leaders who will fight to keep people in their 
homes, to keep a roof over their heads. I'm focused every day 
on how we can get our State back to work and how we can help 
Nevadans stay in their homes. We have taken some steps, but 
it's not nearly enough.
    We need to find real solutions that write down the 
principal of properties that are underwater. We need to focus 
every day on how to keep people in their homes, improve their 
neighborhoods, and get people back to work.
    We cannot succumb to those who want our housing market to 
hit bottom while leaders in Washington provide little or no 
relief whatsoever. Where do we go from here, and I want to 
share a very quick story, Madam Chairwoman. I had a constituent 
call me up several months ago. I won't mention his name because 
he hasn't authorized me it do that. He called up and told me 
that he had never missed his mortgage payment in his life, he 
paid his mortgage of $800,000. His house is now worth $400,000. 
He went to his bank and asked for a mortgage modification. They 
told him that he had to be in foreclosure. That's not true. 
That's what they told him.
    He told me the hardest thing he ever did was to not pay his 
mortgage. He had never missed a payment in his life, but in 
consultation with the bank, he did exactly what they told him, 
and he went in foreclosure, and then he started mortgage 
modification negotiations with the bank. This went on for 10 
months, where they lost his paperwork on numerous occasions, 
and they kept changing people who were supposed to be working 
and helping him out.
    At the end of 10 months, he received a notice from the bank 
that they had sold his home. This is absolutely outrageous, and 
when I tell you that is not the first and only situation like 
that, you can take that to the bank.
    So where do we go? Moving forward, we must continue all of 
our efforts, public and private, to provide homeowners with the 
assistance they need to get out from underwater on their 
mortgages, avoid foreclosure, and stay in their homes.
    At the end of the day, these programs will not work unless 
the banks and Freddie and Fannie are willing to participate. To 
that end, we should continue to pursue government options to 
encourage banks to refinance and modify mortgages, explore 
public/private partnerships like HOPE NOW to engage the private 
sector in these efforts, and to encourage the banks, Freddie 
and Fannie, and other lenders to work with the homeowners.
    What we cannot do is do nothing. And with that, I thank you 
very much, Madam Chairwoman, and I'm anxious to hear what our 
witnesses have to say and the solutions that they can provide. 
Thank you, and thank you for having this hearing in my 
congressional district, which has been hit so hard by the 
current crisis.
    Chairwoman Capito. Thank you. Next, we'll have Mr. Heck's 
opening statement. He has been very active on this issue, as 
many of you know, and he has also has introduced a bill I'm 
certain he will talk about, H.R. 4172.
    Mr. Heck?
    Mr. Heck. Thank you, Chairwoman Capito, and thank you for 
driving out here to Las Vegas to hold this field hearing today, 
``An Examination of Potential Private Sector Solutions to 
Mitigate Foreclosures in Nevada.''
    Now with Nevada's ongoing foreclosure crisis, and having 
experienced the highest foreclosure rate in the country, this 
hearing is long overdue. I also want to thank my colleague, 
Congresswoman Berkeley, for participating today, as well as all 
the witnesses for taking the time to be here and give us your 
perspective of what's going on at ground zero for the 
foreclosure crisis.
    I often compare the State of Nevada to the marines, and 
that is the first in and the last out. We were the first State 
into the economic recession and because of our economy's 
reliance on tourism, unfortunately, we'll probably be the last 
out.
    So, the numbers have already been stated, but we have had 
hundreds of thousands of people affected by foreclosure, and 
hundreds of thousands more who are still underwater. 
Approximately 42,000 individuals with Fannie and Freddie Mac 
have been able to avert foreclosures through modifications or 
short sales and deeds in lieu.
    Additionally, about 43,000 individuals have received Fannie 
or Freddie refinances, with 10,000 of those refinances carried 
out through the Home Affordable Refinance Program, or HARP, and 
while I applaud the Administration's efforts in providing 
programs to individuals to help them stay in their homes, based 
on the numbers I just stated, this has simply not been enough.
    It's very obvious that more needs to be done to help not 
only Nevadans, but Americans across the country who are 
struggling to stay in their homes. More needs to be done on the 
front end to help individuals avoid foreclosure and stay in 
their homes, and more needs to be done on the back end to help 
give individuals who suffer foreclosure a second chance at 
homeownership.
    Earlier this month, as the chairwoman mentioned, I 
introduced H.R. 4172, the Second Chance at Homeownership Act, a 
process that actually began 8 months ago, based on the 
constituents who were coming to our office, asking for help 
with their housing issues, and talking to my housing case 
worker, there were certain programs available for different 
categories of people, but the one thing she said is we have 
nothing to offer for somebody who has already lost their home, 
and now could afford a home, if they could only get the loan. 
But they can't, because of that foreclosure or short sale on 
their credit report.
    So this legislation establishes a program within the FHA, 
the Federal Housing Administration, to provide a guaranteed 
home loan to individuals who were previously foreclosed on. 
Specifically, H.R. 4172 provides a guaranteed, 30-year fixed-
rate mortgage to individuals who have not been delinquent on 
their rent payments for the previous 12 months, have not been 
convicted of fraud or have not strategically defaulted on their 
previous mortgage, and do not have a net worth greater than a 
million dollars.
    Additionally, this legislation goes a step further in that 
it helps to ensure that an individual will stay in his or her 
home and avoid future foreclosures by establishing certain 
requirements on the mortgage itself. These requirements include 
establishing a maximum loan limit, and capping monthly mortgage 
payments at no more than what the individual had paid each of 
the previous 12 months in rent.
    If enacted, this legislation, paired with the numerous 
other foreclosure mitigation programs out there, will provide a 
solid foundation of resources for individuals, no matter where 
they may be in the homeownership process.
    To help establish this foundation of resources for 
individuals, today we will hear from witnesses who represent 
the private sector and see what these entities have been doing 
to mitigate foreclosures in Nevada. Hopefully, there will be 
some lessons learned that we can take back to Washington. I'm 
sure that we'll find the testimony both interesting and 
innovative.
    Again, thank you, Chairwoman Capito, for holding this field 
hearing today, as well as Representative Berkley for attending 
and listening to today's testimony.
    I did speak with Senator Heller prior to the hearing as 
well. Unfortunately, he was unable to attend due to his Senate 
schedule, but he forwarded me his statement to enter into the 
record.
    Chairwoman Capito. Without objection, it is so ordered.
    Mr. Heck. One thing I would like to highlight in Senator 
Heller's testimony is his comment that Congress needs to 
develop policies that not only promote responsible 
homeownership, but also job creation, in order to ensure that 
Nevada and our Nation will experience economic growth that 
promises optimism and prosperity. Senator Heller is definitely 
correct in his statement. Job creation and homeownership go 
hand-in-hand.
    In addition to finding ways of promoting responsible 
homeownership, we also need to develop and strengthen our job 
creation efforts so that millions of Americans out there will 
be able to achieve homeownership.
    With that, I look forward to everyone's testimony today, 
and I yield back the balance of my time.
    Chairwoman Capito. Great. That concludes our opening 
statements, and I will recognize each witness individually 
before you give your statements.
    I do have a little timer here. We're not so great at 
keeping our time. But it is useful, so I'll put it up here and 
you can see it sort of blinking, once we get to 5 minutes, and 
then we can get to the question part.
    Our first witness is Verise Campbell, deputy director, the 
State of Nevada Foreclosure Mediation Program. Welcome.

  STATEMENT OF VERISE CAMPBELL, DEPUTY DIRECTOR, THE STATE OF 
              NEVADA FORECLOSURE MEDIATION PROGRAM

    Ms. Campbell. Thank you. Madam Chairwoman, and members of 
the subcommittee, thank you for the opportunity to appear 
before you today. My name is Verise Campbell and I am the 
deputy director for the State of Nevada Foreclosure Mediation 
Program.
    Prior to joining the Nevada Administrative Offices of the 
Court, I served as the administrator for a large scale 
international development company, and as the director of 
administration for the Cosmopolitan Resort and Casino, and also 
as a deputy municipal clerk for a southern New Jersey 
municipality.
    The State of Nevada appreciates your willingness to come to 
our State and learn firsthand the nature of our foreclosure 
crisis. We hope you will come away with an appreciation for the 
hard work of many individuals who are providing assistance to 
homeowners in our State on a daily basis.
    Nevada has endured the Nation's highest foreclosure rate 
for more than 5 years. Although the root cause of the problem 
is complex, two key factors seem to remain constant: high 
unemployment; and negative equity.
    Nevada leads the Nation in the number of negative equity 
mortgages, which are those home loans that are underwater or 
upside down. More than 60 percent of Nevada homeowners are 
underwater and unable to refinance due to negative equity.
    In addition, it is estimated that Nevada has the Nation's 
largest share of outstanding subprime and adjustable rate 
mortgages. These loans continue to adjust to new rates, and 
because of negative equity, borrowers are unable to refinance.
    Nevada's unemployment rate exceeds 12 percent and continues 
to fuel uncertainty in the housing market. The prospect for 
default remains high. High unemployment and a collapse of the 
housing market has left many Nevadans underwater and many 
homeowners unable to pay their mortgages.
    All of these factors have made and continue to make finding 
solutions to the foreclosure crisis a high priority for many 
groups who are working together in Nevada to tackle the 
problem.
    Last week, the State of Nevada Foreclosure Mediation 
Program was honored to participate in the Home Means Nevada 
event hosted by our governor, Brian Sandoval. This event 
attracted more than 4,000 homeowners in Las Vegas. They were 
able to meet with their lenders and discuss loan modifications 
and alternatives to foreclosures. I actually witnessed a 
homeowner who received a permanent loan modification at that 
event. It's not in my written statement, but there were 100 
Bank of America representatives there, and there were 60 Wells 
Fargo representatives there.
    Such events are now commonplace in our State, but that was 
not always the case. In 2008, homeowners began to report 
difficulty in meeting with lenders to discuss their reasons for 
hardships that led to a default. In response to the foreclosure 
crisis, the 2009 Nevada Legislature passed A.B. 149, 
establishing the State of Nevada Foreclosure Mediation Program.
    The Nevada Supreme Court was tasked by the legislature with 
adopting rules to govern the Foreclosure Mediation Program, as 
well as designating the entity that would serve as the 
administrative entity.
    The Administrative Offices of the Court was chosen as the 
administrative entity. The primary focus of the Foreclosure 
Mediation Program is to provide a forum to bring eligible 
homeowners and lenders together to discuss alternatives to 
foreclosure in accordance with the governing foreclosure 
mediation statutes and rules.
    The law creating the program specifically directed the 
Foreclosure Mediation Program to provide an opportunity for 
homeowners and lenders to meet and discuss foreclosure 
alternative options, be it a loan modification, an agreement to 
relinquish the home through a short sale, or other 
alternatives. A.B. 149 went into effect July 1, 2009. My first 
day on the job was July 1, 2009.
    The entire infrastructure of the State of Nevada 
Foreclosure Mediation Program had to be built, and it had to be 
built in short order. It included establishing offices, hiring 
staff, creating forms and procedures, and most importantly, we 
had to identify a pool of mediators.
    Despite the odds, our program held its first mediation 6 
weeks later. Through community, government, and public 
collaboration, much work was done in those 6 weeks to develop 
our program.
    The program initiated ongoing training opportunities for 
our mediators. We worked in partnership with the staff at the 
United States Department of Housing and Urban Development; 
Freddie Mac; and the United Trustee Association; as well as 
local agencies including the Clark County Neighborhood Justice 
Center; the Legal Aid Center of Southern Nevada; the Financial 
Guidance Center, formerly known as Consumer Credit Counseling; 
the Nevada Foreclosure Prevention Task Force; and Nevada Legal 
Services.
    These training opportunities exposed the mediators to 
current legislation, Supreme Court opinions related to the 
foreclosure mediation program, government and lender mortgage 
assistance programs, foreclosure fraud, homeowner education 
programs, and enhanced mediation skills.
    The State of Nevada Foreclosure Mediation Program has 
worked with private lenders, Fannie Mae, and HUD-approved 
counseling agencies as well to develop our curriculum. The 
program enlists on a regular basis feedback and suggestions 
from organizations such as those mentioned on a regular basis 
because that's the only way we can stay progressive. That's the 
only way we can attack this problem, we can attack this issue 
in short order.
    Since September 2009, the program has held nearly 16,000 
mediations--we are only less than 3 years old--with more than 
11,000 of that 16,000 not resulting in foreclosure.
    As a non-judicial State, Nevada foreclosure filings begin 
with a filing of a Notice of Default at the County Recorder's 
Office, and it concludes with a trustee sale. Once a Notice of 
Default is filed, a homeowner of an owner-occupied residential 
property can choose to participate in the program, which 
essentially gives the homeowner an opportunity to actively 
participate in meaningful dialogue with their respective 
lenders. Foreclosure mediation is cost-effective and it's 
efficient.
    To participate in our State, eligible homeowners must 
submit their election form with their $200 fee and they also 
must indicate on the form whether or not they would like to 
participate. They can relinquish their right on that same form, 
if they are not interested in participating in the program.
    The success of our program is tied directly to our 
governing legislation. Certain requirements are placed on the 
lender once a homeowner requests mediation. These requirements 
dictate if a beneficiary will be allowed to proceed with 
foreclosure.
    The law requires that the beneficiary attend the mediation 
and bring each document required. Those documents include the 
original or certified copy of the deed of trust, the mortgage 
note and each assignment and endorsement, as well as a current 
appraisal or brokers price opinion, and a confidential 
proposal. They must also participate in good faith and 
demonstrate the authority to modify the loan.
    If the documents are not produced, then the program will 
not allow the beneficiary to proceed to the trustee sale.
    In the first 6 months of our current fiscal year, between 
July 2011 and December 2011, beneficiaries were unable to 
produce the proper documentation 36 percent of the time. The 
requirement to produce the proper documentation took on added 
significance as the revelation of document robo-signing by a 
number of banks demonstrated a breakdown in the document 
process.
    Our requirement to produce original certified documents 
ensures accountability on behalf of the lender. Failure to 
comply with these requirements can result in the beneficiary 
being sanctioned. A District Court can impose a fine and, 
ultimately, the beneficiary is unable to foreclose on the home. 
This was recently reaffirmed in 2011 in two Nevada Supreme 
Court rulings: Passillas v. HSBC Bank USA, and Leyva v. 
National Default Service Corp.
    In both of these cases, the Nevada Supreme Court 
unanimously held that lenders must strictly comply with the 
Foreclosure Mediation Program's production of documents 
provisions, as well as other statutory requirements. Failure to 
do so is sanctionable by the District Courts. Failure by 
beneficiaries to comply with the statutory requirements will 
prohibit the beneficiaries from concluding the foreclosure 
process.
    Ironically, the requirement for proper documents has nearly 
halted the filings of notices of defaults in Nevada. In October 
2011, a new law, A.B. 284, went into effect requiring 
beneficiaries to file a copy of the deed of trust, the mortgage 
note, and each assignment and endorsement when they file the 
Notice of Default.
    Last month, the Mortgage Bankers Association reported 
Nevada showed a large uptick in 90-day delinquencies. For the 
past few months, banks have indicated that the requirements of 
A.B. 284 are too difficult with which to comply. Consequently, 
Nevada's foreclosure problem is masked as homeowners go into 
default, yet a Notice of Default is not filed by the bank. In 
September 2011, nearly 5,000 Notices of Default were filed in 
the State. The following month, that number dropped to 40.
    Foreclosure mediation fosters meaningful dialogue. Bank and 
beneficiary representatives have indicated in recent weeks they 
will soon begin filing Notices of Default again in Nevada after 
a review of their documentation and the announcement of the 
Federal agencies and State attorneys general historical 
mortgage servicing settlement in February 2012. Although 
Nevada's Notices of Default have climbed from a record low of 
40 filings reported in October 2011, they are still relatively 
low, fewer than 400 for the month of February 2012.
    This is important for many homeowners in Nevada because the 
foreclosure mediation election form is included in the Notice 
of Default packet. In most instances, the foreclosure mediation 
program offers the first and only opportunity for homeowners to 
meet face-to-face with a lender. Without the filing of a Notice 
of Default, it is up to the beneficiary to reach out and help 
homeowners regarding their default status.
    If this is not done, homeowners are left with the worry and 
frustration of not being able to meet their obligations, 
discuss possible solutions to stay in their home, or a way to 
gracefully exit from their obligations.
    Most homeowners want to resolve a default. Homeowners want 
alternatives to foreclosures and they want banks to consider 
loan modification through the various government and lending 
programs available to them. While the major lending 
institutions have instituted programs to assist homeowners, I 
often wonder if there is a unified plan throughout these vast 
and multi-layered organizations to reformulate policies and 
procedures to create systems that will assist the organizations 
with compliance with Nevada's foreclosure laws and other 
related legislation across the Nation.
    The problem of communication between lender and homeowner 
remains, due to the overwhelming number of homeowners in 
default or in danger of default.
    Our program is identified as a model for four other 
foreclosure mediation programs throughout the country: 
Washington, D.C.; Hawaii; Washington State; and just this week, 
we learned, Oregon.
    These programs have modeled their foreclosure mediation 
program legislation after the Nevada law. We did not invent 
foreclosure mediation. In fact, we borrowed from other 
programs, including those in Ohio, Connecticut and 
Philadelphia.
    We recognize that this is an ongoing process of learning 
and sharing, and as we work together towards a common goal of 
reducing the number of foreclosures in Nevada and nationwide, 
we continue with the dialogue with these other States as well.
    In closing, participation by homeowners and lenders in 
mediation programs has proven to be a successful method in 
bringing homeowners and lenders together to discuss 
alternatives to foreclosure and to keep homeowners in their 
homes where possible. Our program, however, is part of the 
foundation of what is required to rebuild the American dream of 
homeownership. We as a community, as a State, and as a Nation, 
must keep the focus on strengthening foreclosure mediation 
program efforts around the country.
    We must also keep the focus on improving communication and 
restoration of faith by the American people in mortgage and 
lending institutions. And as was mentioned earlier, we must 
also keep the focus on dramatically decreasing unemployment, 
and stabilizing the housing market, to truly make the necessary 
strides to turn this crisis into a triumph. Albeit difficult, 
it is not impossible if we remember that in this crisis, we are 
together as one. We are working hard together to build new 
American dreams that still include homeownership.
    Thank you for allowing me to address this committee.
    [The prepared statement of Ms. Campbell can be found on 
page 32 of the appendix.]
    Chairwoman Capito. Thank you. Our next witness is Leonard 
Chide, president and executive director, Neighborhood Housing 
Services of Southern Nevada. Welcome.

   STATEMENT OF LEONARD CHIDE, PRESIDENT/EXECUTIVE DIRECTOR, 
 NEIGHBORHOOD HOUSING SERVICES OF SOUTHERN NEVADA, INC. (NHSSN)

    Mr. Chide. Thank you. Madam Chairwoman and subcommittee 
members, first, thank you for inviting us as a nonprofit to 
come down here to speak with you today. To give you a little 
bit of a timeline, back in 2008, when the crisis was really 
ramping up here in Las Vegas, we, like many nonprofits, found 
ourselves scrambling to ramp up our staff, to train our staff 
on the various programs that the government had come out with, 
as well as the internal programs that the bank had. And those 
are constantly changing. So we are constantly trying to catch 
up to understand exactly what was needed so that we could 
advocate on behalf of the homeowners who were potentially going 
to lose their homes.
    I can speak about it personally because I actually fell 
into that trap. One of them was, as you said earlier, the bank 
that I had my loan with--I owned a construction company prior 
to becoming involved with this nonprofit.
    Construction in July of 2007, long before anybody says 
anything was happening as far as the recession and everything 
else, we got our first call that said you need to renegotiate 
your contract, you need to redo everything, and oh, by the way, 
I don't know that we're going to pay you anymore because the 
project is going belly up. Hence, loss of construction company.
    Thankfully, I was the one of the ones, though--I actually 
had over 2 years of savings and a 401(k) and other things to 
continue to take care of my household. Many folks didn't have 
that many years of funds available. I talked to my bank, which 
was Wells Fargo, explained to them that I lost the company in 
2008. Here it was 2010, trying to get them to mediate with me, 
and the answer was, ``No. You are not delinquent. You don't 
qualify for the HAMP program.'' The HAMP program was minimal 90 
days delinquent. I did this for almost 6 months.
    Finally, I bit the bullet and went delinquent. What has 
that done for me today? My credit is shot. I can't get 
refinanced now. I can't even get loans of any nature. Yet, the 
only reason I ever went there is because that was the only way 
I could get them to help me. It took another 10 months after 
that to get them to finally come to the table, and even then, 
it was only because of my recommendation that we go from--I had 
23 years left on my mortgage, let's extend it back out to 30 
years.
    Can you cut my interest rate? Nope. You have been 
delinquent. You are kidding me. I went delinquent because it 
was what you, as the bank, instructed me to do. Unofficially, 
by the way. They would not go on record with that piece of it.
    Long story short, I finally got it. No principal reduction, 
no reduced interest rate, and every time you speak to them the 
sense is well, you were delinquent, therefore no, you don't 
qualify.
    Jump to 2009, we had our staff itself ramped up, we have 
had our staff trained. Most of the government programs just 
were not working for most folks though. Stipulations and stuff 
did not make it work for them.
    The biggest issue we are running into really isn't so much 
that people didn't want to pay for the homes or pay for the 
mortgages; they were unemployed. People that we were able to 
assist in getting modifications in 2008 and 2009, find a job, 
get the modification, and lo and behold, they would get 
unemployed again. Therefore, they were back needing 
modification, thanks. We're not happy about that.
    Right now one of them--I'm going to jump all the way up to 
2011. It was a very strange year in that there were ups and 
downs when it comes to the number of clientele that we helped. 
We saw one quarter where literally we saw 50 percent of our 
cases go away. Why? People had given up.
    We have seen that today most individuals have no desire to 
even proceed in the modification process unless they can get a 
principal reduction. Put yourselves in the banks' shoes, and 
this is what I try to explain to the clients. Realistically, if 
I came to you and asked you to loan me $10,000, and you did, 
through no fault of yours, and no fault of mine, that 
investment went south. Would you expect me to just walk up to 
you then and say you know what, forgive me $5,000 of it.
    That's how the bank makes its money. That's what they are 
there for. Do I agree that their bottom lines are there? Yes, I 
could say that they probably could afford it. But I can't say 
that I blame the banks for not being willing to give principal 
reductions.
    In the last 3 months since A.B. 284 came out, we have seen 
something that to me has probably been one of the best ways to 
look at it, and that is we're finally getting banks, that while 
they are still not doing principal reductions, what they are 
doing--I included it in your packet--they are actually going in 
and do a confirmed loan.
    Like you, Ms. Berkley, we had a lady--ironically she is in 
the mortgage end of it, for one of the major banks. It was one 
of the vice presidents--purchased a house for $780,000. Her 
house today is worth about $320,000.
    She works in that industry. She loans the money, but she 
didn't--and actually it was a different bank than she has the 
mortgage through. They ended up going and deferring about 
$350,000 of her note, extended it out for 40 years, reduced her 
interest rate. But at least now, she can afford to stay in that 
house.
    The win/win there is that she can stay in her house, her 
mortgage payments are now reasonable, and from the bank's 
standpoint, they actually have a chance now of getting all of 
their money back.
    Because one of the things that you find, when you talk to 
many of the residents, is they want principal reduction and 
principal reduction only. Otherwise, they don't accept what 
they have been offered. The problem with that is the banks 
don't want it because they are guaranteeing themselves losing 
the money.
    One of the questions that has always been asked is if we 
reduce it $50,000 today, and your house goes up in the next 5 
years to where it's now recouped that $50,000, are you going to 
give it back to the bank? And every homeowner says the same 
thing: No.
    Once again, I can't blame the banks, if the homeowner is 
not willing to take the reduction and then give it back later 
when the house goes up because you just gave them $50,000 on 
its face. That's one reason why I think this program has been, 
in my mind, a win/win. The bank still has a chance to collect 
all of its money, it's deferred, zero percent interest on the 
amount that they have deferred to the back end of it. 
Basically, it's like a balloon payment at the end of the 40 
years, or should they decide to resell or rebuy their house 
somewhere in that next 40 years, at that time, the $80,000 or 
$50,000 or whatever is deferred would then be paid to the bank.
    So it does give everybody that hope and that chance that 
now they can stay in their home, as well as they are not paying 
the full ride, at least here in the beginning.
    That's really all I have. Thank you very much.
    [The prepared statement of Mr. Chide can be found on page 
39 of the appendix.]
    Chairwoman Capito. Okay, thank you very much.
    Our next witness is Janis Grady, treasurer and director, 
Nevada Association of Mortgage Professionals. Welcome.

STATEMENT OF JANIS GRADY, PAST PRESIDENT AND CURRENT TREASURER 
   AND DIRECTOR, NEVADA ASSOCIATION OF MORTGAGE PROFESSIONALS

    Ms. Grady. Thank you very much for having me here. I was 
the president of the Nevada Association of Mortgage 
Professionals for 2 years, and recently turned that over. So I 
have been very involved with a lot of the mortgage brokers and 
bankers in this industry. I have seen us go down with a lot of 
problems.
    Some of the situations, we do have lost jobs, which have 
also decreased income, where people are just now getting by. We 
have property values that are underwater, some up to the amount 
of 200 percent.
    We had temporary bank modifications that have provided a 
short time of relief, but now some of those are coming due and 
the payments are going to increase again.
    Mortgage qualifications for loans have tightened up to the 
point that many no longer qualify, for one reason or another.
    In the mortgage industry alone, in the State of Nevada 
during the peak, we had 2,200 mortgage brokers in this State. 
We now have 161, and 80 mortgage bankers. So that's basically a 
loss of 2,000 small businesses that were renting spaces, paying 
utilities, hiring staff, using courier businesses, title 
companies, escrows, the restaurant, the sound shop next door--
2,000 just from one industry alone.
    Also, the people in the market, we had 20,000 mortgage 
originators. We now have about 2,000. So we have lost 18,000 
jobs there in this industry.
    I have a solution on that is when we come up with all these 
different programs, including Congressman Heck's second chance 
program, if we can utilize the local brokers and bankers to 
execute these programs on the ground.
    Another situation we have is concerning appraisals. With 
the implementation of the Home Valuation Code of Conduct, HVCC 
is what it's referred to, it mandates that an appraisal be 
ordered through appraisal management companies.
    Now what this has done is created a problem of increased 
fees because now you have a middleman there, and the appraisers 
are now making less money, sometimes a third of what they used 
to make, and so the consumer has to pay more and the appraiser 
is making less, just to support a middleman that is mostly 
owned by the banks. And it was originally set up to avoid this 
type of situation, that they own the mortgage management 
companies, appraisal management companies.
    Part of my solution is, along with these local programs, if 
we can use the local appraisers and knock out going through the 
management companies, and that way we'll get our local 
appraisers back to work, and if we use the system like the VA 
has, where they do a rotation, so it's not one appraiser who is 
getting all the work, but it rotates through every licensed 
appraiser in the State.
    As for home evaluations, we have a problem there, where 
appraisals are comparing dollar for dollar, they're comparing 
houses with upgrades against houses with cement in the toilet 
and holes in the walls, that have been destroyed by previous 
tenants who are upset with the banks.
    So you might have a house that is on 3 acres, everything is 
upgraded, and it is being compared and given the same value as 
one that has been totally destroyed. That is not fair and it 
keeps pulling down our values in this State and keeping them 
down.
    I can't do anything about the laws federally, but we can do 
something here locally and make it a requirement that the 
appraisers have to include upgrades in their appraisals and 
take that into account, and if someone did $100,000 worth of 
upgrades, then that should be taken into account to give a 
proper value on that house.
    In regards to in-State originators and out-of-State 
originators, per the mortgage lending division, they are--at 
the time of renewal in December, there were 1,930 mortgage 
agents licensed, so 1,930 mortgage agents licensed in the State 
of Nevada.
    Of these, 756 are loan officers who are out-of-State. 
That's 40 percent of our loan officers licensed to do loans in 
Nevada are from out-of-State. So, we only have 60 percent 
working here.
    What I suggest on that is that out-of-State loan officers 
who are licensed here are required to come into the State to do 
their continued education on Nevada law. And that does--it 
doesn't put a lot of money into the State, but that's 756 
people coming into the State for a weekend to do their 
continued education to get licensed and they have to come back 
every year in order to renew that license. So that helps a 
little bit.
    Now, I'm going on to primary residences--50 percent of the 
monthly purchases right now are cash purchases. So if there are 
3,000 purchases closed, there are probably 1,400 or 1,500 that 
are financed, using the 2,000 loan officers. So right there, it 
wipes out a lot of our business for the mortgage industry.
    Right now, Fannie Mae does have in place a 30-day waiver 
where on their properties investors cannot put bids in on those 
properties for 30 days, giving the chance for primary 
residents, locals to look at the properties and put in a bid.
    There is a situation where there are locals looking for a 
home, they put in their bid, they had to get financing, but a 
cash investor comes along and that home is taken away from them 
right there.
    So to prevent that happening, I'm proposing that on any 
sales on MLS, on the REO and the foreclosures, that those be 
given a chance, opened up for owner-occupied bids before going 
to investors for 30 days. That way, we'll also help prevent the 
State from becoming a rental state. Because we want to get our 
people in homes.
    On the downpayment assistance programs, there are over six 
downpayment assistance programs, but there are a lot of loan 
officers who don't know about those programs. So I'm suggesting 
that we put it in as a requirement on the continued education, 
while we are trying to pull out of this mess, and require all 
loan officers, including those out-of-State have to find out 
and take a class on downpayment assistance programs so that 
they know how to help get these people into homes.
    Then in regards to strategic foreclosures, we do have the 
HARP program, HARP 2 coming out, which will definitely help, 
and that's something I have been campaigning for 3 years, 
trying to get 30-years streamlined to help lower people's 
interest rates. But there are attorneys who are on TV pushing 
strategic foreclosures, and to me that forwards and continues 
defrauding the lender, which is not okay, and the bar needs to 
do something about it.
    Thank you very much.
    [The prepared statement of Ms. Grady can be found on page 
48 of the appendix.]
    Chairwoman Capito. Thank you very much.
    Our next witness is Sue Longson, vice president, SCE 
Federal Credit Union. Welcome.

   STATEMENT OF SUSANNE B. LONGSON, VICE PRESIDENT, BUSINESS 
DEVELOPMENT AND COMMUNITY RELATIONS, SCE FEDERAL CREDIT UNION, 
       AND FORMER PRESIDENT, SONEPCO FEDERAL CREDIT UNION

    Ms. Longson. Thank you very much. Chairwoman Capito, 
Representative Heck, Representative Berkeley, and distinguished 
subcommittee members, thank you for inviting me to testify at 
this very important field hearing.
    As you are aware, Nevada, and more specifically the greater 
Las Vegas area, has been ground zero for the unemployment and 
housing crisis that has plagued our Nation for the past few 
years. Even today, as many other States are beginning to see 
signs of recovery, Nevada is still deep in troubled times.
    My name is Susanne Longson. I am the vice president of 
business development and community relations for SCE Federal 
Credit Union, a $560 million credit union located Irwindale, 
California.
    Until recently, I was president of SONEPCO Federal Credit 
Union, a $55 million credit union located in Las Vegas, which 
was organized to serve the employees of NV Energy and their 
family members. I served as president and CEO for over 16 
years, until the credit union merged with SCE Federal Credit 
Union at the end of 2011.
    I am proud to be third generation credit union person 
working in the credit union movement. My grandfather organized 
the first credit union in Nevada in the late 1930s, and over 
400 in the western United States. My parents also worked in the 
credit union movement.
    I am pleased to come before the committee on behalf of 
credit unions that provide financial services to over half a 
million consumers here in Nevada and nearly 94 million in the 
United States. The recession and the housing crisis have left 
credit unions battered and bruised, especially those here in 
the Silver State. Credit unions are not-for-profit financial 
cooperatives, owned by our members who democratically elect our 
volunteer board of directors.
    We do not have stock, are not publicly traded, and return 
all profits to our members in various forms. The credit union 
model of operations is different from others in financial 
services, as we focus on what is best for our members.
    To date, no credit union has taken a dime of taxpayer 
money, nor received a government bailout.
    Prior to this crisis, credit unions rarely used the terms 
we frequently hear today. Most credit unions had never 
processed a foreclosure, short sale, or loan modification. As I 
speak about it in my written testimony, SONEPCO has never 
foreclosed on a member during this financial crisis.
    Credit unions are about people helping people, and here in 
Nevada, we live up to this mantra. In SONEPCO's first 52 years 
of operation, our total loan losses were $1.3 million. In the 
last 4 years, our loan losses were $4.8 million, more in the 
last 4 years than in the previous 52 years.
    For a $55 million credit union, that is significant. At 
credit unions, losses are taken directly from capital, which 
means if we aren't breaking even, our capital is depleted. This 
is an alarming problem that will require congressional action 
to fix. My written testimony goes into further details about 
this issue.
    Credit unions were not responsible for the types of loans 
that brought on the housing crisis. Our loans were and continue 
to be strongly underwritten, and our loan products are designed 
to best serve our members' needs. In fact, during the period 
leading up to the crisis, several credit unions were rejecting 
member requests for exotic mortgage products. We simply said 
no, and were largely able to avoid the housing bubble.
    However, as property values rapidly declined and 
unemployment skyrocketed, credit unions suffered losses through 
no fault of our own. In the past 4 years, at least 6 credit 
unions were either liquidated or merged with out-of-State 
credit unions, and SONEPCO was one of those. Thankfully, 
however, SCE Federal Credit Union retained all of the local 
branches and employees.
    That is another problem for the 2.7 million residents of 
Nevada, a drain of locally-owned financial institutions. As of 
today, only 21 credit unions remain in Nevada.
    If this committee is in search of solutions to address the 
ongoing problems here in Nevada, I highly recommend you do 
everything possible to empower local financial institutions. 
While large Wall Street banks have the liquidity to lend, 
taxpayer or otherwise, they have not.
    Credit unions, on the other hand, are working with our 
members and because we are here on the ground and can address 
problems head-on. My written statement shows how loan 
modifications and pursuing alternative options have kept 
SONEPCO members in their homes. While our regulators opposed 
these options, we stuck to our mantra and found ways and 
solutions that benefited our members.
    Finally, in my recommendations I state that there are 
several legislative remedies before Congress that will help 
credit unions continue to do the right thing. From addressing 
credit union examinations--and thank you, Chairwoman Capito for 
that--to passing legislation allowing credit unions to make a 
new small business loan, everything we support supports the 
credit union member, our community, and our State.
    I look forward to our dialogue today, and I hope you can 
provide insight for solutions to this crisis. Thank you.
    [The prepared statement of Ms. Longson can be found on page 
51 of the appendix.]
    Chairwoman Capito. Thank you very much.
    And our final witness is Mr. Keith Lynam, a REALTOR with 
Windermere Prestige Properties, on behalf of the Nevada 
Association of REALTORS. Welcome.

    STATEMENT OF KEITH LYNAM, REALTOR AND SALES ASSOCIATE, 
    WINDERMERE PRESTIGE PROPERTIES, ON BEHALF OF THE NEVADA 
                    ASSOCIATION OF REALTORS

    Mr. Lynam. Good morning, Madam Chairwoman, and members of 
the subcommittee. My name is Keith Lynam. I am a REALTOR with 
Windermere Prestige Properties and a member of the Nevada 
Association of REALTORS, and we thank you for recognizing the 
unique situation we are experiencing in Nevada by having the 
subcommittee field hearing in Las Vegas today.
    As you know, Nevada is the hardest-hit State for 
foreclosures and has been leading the Nation in foreclosures 
for 5 straight years, according to RealtyTrac, a company that 
tracks foreclosure data across the country.
    People in Nevada are frustrated. They are angry, and most 
are underwater. Numbers released for the fourth quarter of 2011 
by the research firm CoreLogic indicates that 61 percent of 
homeowners in Nevada with mortgages are underwater. That 
compares to 22.8 percent nationwide. We are almost 3 times more 
likely to be underwater here in Nevada than anywhere else in 
the country.
    The next two States with the highest proportion of 
underwater homeowners are Arizona, with 48 percent, and Florida 
with 41 percent. You are 50 percent more likely to be 
underwater here than even in the second and third most hard-hit 
States.
    Clearly, the magnitude of the problem in Nevada is unique 
and very serious, and even though the hearing is entitled, ``An 
Examination of Potential Private Sector Solutions to Mitigate 
Foreclosures in Nevada,'' I was stumped, and I'm quite 
confident that's not what you wanted to hear, and probably not 
what you expected to hear.
    So I did what all great minds do in today's world, I went 
to Facebook. And to Twitter. And asked: ``What should we do? 
What is the private sector solution to what we are faced 
with.''
    Shane Kovacs of Arizona, one of my friends, said: ``I think 
we need to find a way to help those who are simply just 
underwater. Most of the programs are for those who are already 
in big trouble financially. The institutions need to open up 
fairer loan programs for those of us who have good credit and 
sufficient income. We are simply trying to improve our 
financial situation. If we can, we can also buy and further 
stimulate the economy. There has to be a better way.''
    Robin Yates, the broker and owner of Windermere Prestige 
Properties here in Las Vegas, stated: ``We need to reward those 
who have continued to make those payments, but are simply 
upside down, by refinancing at a lower interest rate for those 
loans not backed by Freddie and Fannie Mae. Ramp up the 
cooperative short-sale or deed-in-lieu programs for those who 
cannot stay in their home any longer, and I will talk about 
short sales and there's a solution that I think might be 
something that we can talk about further.''
    I was at the Nevada Hardest Hit program last week as well, 
and the anger and frustration, while there were some great 
stories that come of it, but the anger and the frustration 
overall was palpable. You could see the people who were there 
that were just simply asking for help from their banks.
    They were asking for someone, other than the 25-year-old 
person who answered the phone, who just took the job 3 months 
ago and was reading from a script, could do for them. They 
wanted help. They don't want to not make their payments. They 
don't want to not know what's going to happen.
    In my mentions to them, and the reason why I am so stumped 
is because the big business, the big government lines have 
become so blurred that they are unrecognizable today. I think 
people are as afraid of big business, more so than they ever 
have been afraid of big government. They don't know where to 
go. They don't know how to get to the bottom of what their 
solution is, and why they're afraid every day as they live. And 
it's frustrating. And so it does have us stumped.
    What can we do? Where are we going? I want to leave you 
with this, and hopefully you never have to experience this, and 
I would encourage you to spend a day with one of your local 
REALTORS because this is something that we have to face every 
day. But I hope you have never had to work with a huge 
financial institution, try to weave through the switchboards of 
madness, have to live with the daily mind-boggling frustration 
of trying to get someone to answer a simple question. For 
example, ``How could you lose the same facts 43 times? What 
difference does it make if a hardship letter is dated 32 days 
ago, and you declined the file and eliminate it from your 
system, what difference does it make?''
    These are mind-boggling real experiences that we have to go 
through every day, but specifically going through this process 
and finally getting the relief, the great sense of relief, that 
your loan has finally been modified with payments that make 
sense for the bank and the homeowner, and the relief that goes 
with that, only to have a knock on the door by a representative 
who wants to tell you that your home has been foreclosed on 
after you have been approved for a modification.
    The foreclosure hasn't been just a day ago, it hasn't been 
a week ago. It had been over 2 months ago when you finally get 
the knock. A real live situation, the very next day you get 
another knock on the door and it is the Fed Ex guy and he hands 
you the approved modification paperwork on your now foreclosed-
upon home.
    Well, I have. That is my story. And the unbelievable 
experience of having to go to your now 7-year-old daughter and 
explain to her what had just happened. How do you explain it?
    So my final thought is I guess I'm not stumped at all. 
Madam Chairwoman and members of the subcommittee, with all your 
power and all your goodwill, it may not be popular to say, but 
you are the only ones who can remove that kind of arrogance. 
You are the only ones.
    So we look back to you for the answers that I know that are 
out there, and you are the only ones who can help us today. So 
I thank you for having us come in.
    [The prepared statement of Mr. Lynam can be found on page 
60 of the appendix.]
    Chairwoman Capito. Thank you very much.
    Great testimony in all cases, and what we are going to do 
now is move to the question portion, and I am going to stick to 
the 5 minutes. I will question for 5 minutes, and then 
Congresswoman Berkeley for 5 minutes, and then Congressman 
Heck, and then we'll go back around, if we need additional 
questions.
    I really don't know where to start on my questions. I 
would, Mr. Lynam, like to ask you, some of the government 
programs were supposed to have forestalled foreclosure if you 
are in a loan modification, and you are telling me that's not 
in reality what has happened in your case, and probably a lot 
of others. Is that a fair statement?
    Mr. Lynam. That is a fair statement and I grant you, this 
was in 2008 when this happened, but it happens today. It 
happens today, and part of it is the Freddie and Fannie Mae 
guidelines where they will tell you that we are not going to 
put off a trustee sale, no matter what.
    We have short sales in front of them that we are waiting 
for approval letters, that we get foreclosed on, and it just 
happened to me on a listing of mine a month ago.
    Chairwoman Capito. Let me ask you just quickly, where are 
the real estate values now? Are they still dropping?
    Mr. Lynam. I think we're, we call it the bump--
    Chairwoman Capito. Bumping along.
    Mr. Lynam. Bumping along the bottom. We were up to 9 
percent last month, in large part because they can't foreclose 
on properties, in their minds, any longer.
    Chairwoman Capito. Let me ask you, Ms. Campbell, on the--I 
think this is a repeating theme in all of your, with the 
exception maybe of the credit union, is the lack of 
communication or the difficulty in communication. You are 
talking about trying to meet with a large financial 
institution.
    I know in my district office in West Virginia, we try to 
mediate some of this. We don't have the volume, so we can 
actually do this. But we can see the frustrations from our 
office. There have been proposals before Congress to try to 
eliminate that barrier, the communications barrier.
    What else can we do here? Do you have any suggestions on 
that, on the communication aspect?
    Ms. Campbell. Madam Chairwoman, just to speak to what my 
colleague was saying regarding this experience, I can 
emphatically tell you that it is still continuing today, where 
there is dual tracking by the lenders where they will do a 
modification effort, as well as go forward with the foreclosure 
process.
    What else can we do? It has been determined through studies 
that foreclosure mediation programs that have a mandatory opt-
out, right now we are an opt-in program. The homeowner must 
elect in. A lot of homeowners, because they have become jaded 
with their lender will not open up their paperwork, so they 
won't see the form.
    But if we had an opt-out program where it was mandatory 
that they are in the program, then I think we would see more 
participation, and it would help more homeowners. We receive 
calls from homeowners, unfortunately, who have not opted into 
the program and our program can't help them after that.
    Chairwoman Capito. I would imagine those people, once they 
see themselves starting to decline, they are already declined 
to a point, you try to forestall it, you try not to face the 
reality as quickly--it comes on you a lot quicker than probably 
you actually say to yourself, I'm in deep trouble here, and 
then you lose your job or somebody gets ill or you have a 
personal tragedy.
    In your--let's see, who is doing refinancing? In your 
mediations, you are putting them together in the refinancing, 
are you finding that people are refinancing into FHA? Or are 
you seeing it, because it's taking a larger piece of the pie 
and it's causing concern in Washington because it's putting a 
strain on that. Does anybody have any comments on FHA lending?
    Ms. Grady. From my knowledge, yes, a lot of people are 
refinancing into FHA because the guidelines are lighter. But 
with the HARP 2.0 Program coming out, that should help give 
some relief to the FHA program because that will allow a lot of 
people to streamline, just lower their interest rates, rather 
than anything else.
    But as to what she was saying on the mediation and going 
through foreclosures, still coming about, I would like to 
comment on that. Because I went through trying to short sale 
one of my investment properties and I had a cash buyer for 
$188,000, and we were 3 days away from recording when the bank 
foreclosed, and sold it for $155,000 in auction. So they lost 
out on $30,000.
    But for programs like this, for short sales, mediation, 
modifications, if they put in filing with the title companies 
that they are under mediation, or short sale, and that way when 
escrow goes to look at the title, they can see something is 
going on, and not allow the foreclosure to happen.
    Chairwoman Capito. My 5 minutes has expired. Congresswoman 
Berkley?
    Ms. Berkley. Thank you, Madam Chairwoman. May I say, and I 
don't mean to say this in a condescending way, I'm very proud 
of all of you. One, for the work that you do to help keep my 
constituents in their homes; and two, for the remarkable 
presentations that you have all made so that we can punctuate 
to somebody that could be of tremendous help to us.
    I am amazed, after all of these years of standing on the 
Floor of the House, explaining what is happening in my State 
and in my congressional district, how it's still met with 
skepticism and disbelief that people are suffering in the way 
they are in this community, and refusing to give the relief 
that we need.
    The idea that we should just allow everybody to hit bottom 
and not do anything about it is such an anathema to my way of 
thinking, and it just makes me realize how people in pivotal 
positions in our Nation's Capital fully do not appreciate what 
is happening out in the real world. And you are bringing home 
what is happening in the real world.
    When I was a kid, I grew up in Las Vegas. When we bought a 
home for the first time, I remember my parents getting dressed 
up because they were going to the bank to see if they could get 
a loan for the house. The house cost $33,000. That was our 
first house. It was a party home over by Valley High School.
    They were so proud and overwhelmed when they were able to 
take their family to our first home ever. We became part of the 
community. We had an ownership interest. We had roots here. It 
made a difference and it changed the direction of my family. We 
were somebody, and we owned something for the first time.
    For me, dealing with the volume of constituents who contact 
my office who I am sure felt the same way about their homes as 
my family thought about ours--and it was just one of those 
cinderblock party homes that we lived in--it is horrible to me 
that we haven't been able to do more.
    I first discovered that we were moving towards a crisis 
when I was meeting with the REALTORS, and they started--I 
thought--we all thought that the town was hot as a pistol. 
People were buying and flipping and selling and living and we 
never thought that gravy train would end. It was the REALTORS 
who saw it among the first, and probably the construction 
companies as well.
    But once we knew we were in crisis, my office did a series 
of consumer meetings with people who had been foreclosed on and 
we brought the home loan bank representatives from San 
Francisco in to help counsel my constituents on how they can 
stay in their homes.
    Don't ignore the foreclosure envelope. Open it up, and the 
advice that they were given at the first few mortgage 
foreclosure seminars that we conducted was: Contact your 
lender. They don't want an empty house. They want to work with 
you so they can stay in their home. They don't want empty 
homes. They don't want empty neighborhoods.
    It wasn't until a few days later when we started getting 
phone calls back from my constituents, the advice they were 
given at those seminars wasn't working and it truly was the 
wrong advice. They couldn't find out who their lenders were, 
and that was a huge issue. The telephone numbers on their 
mortgage payments were--there was nobody answering the phone. 
And if someone did answer the phone, they were not in a 
position to do anything for them. It got worse and worse and 
worse. And the number of foreclosures in this community went up 
and up and up.
    I know what we can do with all the lost paperwork, and we 
have received hundreds of calls on a monthly basis: They lost 
my paperwork again. I have to start over again. And that's from 
REALTORS and people who are trying to stay in their homes.
    We have Yucca Mountain. Rather than nuclear waste, which we 
don't want, why don't we put all the lost paperwork for these 
mortgage modifications at Yucca Mountain? I'm not sure the 
mountain can hold all of the lost paperwork that we have 
experienced. It is an outrage, and until we can get the private 
banks to work with us, and help modify these loans, or the 
deferred, I like that suggestion, and while I understand what 
you are saying about the principal write-down, I still would 
rather have half a loaf than no loaf at all.
    I want to keep these people in their homes. I want their 
children to continue to go to their neighborhood schools and I 
want them to be able to overcome this hurdle so when they get 
back to work and the family starts recovering economically, 
they are going to have a place to live, and that is their home, 
probably their biggest investment that they have or will ever 
have in their lifetime.
    So I thank you for your remarkable testimony. I thank you, 
Shelley, Congresswoman Capito, for coming here and listening to 
what we are going through. We are ground zero for mortgage 
foreclosure. We need relief and it can't only be private 
companies that are doing this. We need some response.
    We need response from Freddie and Fannie, we need help from 
the government, and we need help from the private banks, and 
until they are more responsive, we are not going to have any 
progress around here and people are going to continue to 
suffer. I don't know if the end is in sight, I truly don't, and 
I thank you all very much.
    Chairwoman Capito. Mr. Heck?
    Mr. Heck. Thank you, Madam Chairwoman, and thank you all. 
You have all brought a very interesting and different 
perspective, and I think a much needed perspective to this 
debate, certainly one that hasn't been heard well within the 
halls of Congress.
    The current CD 3, my district, is the most populous 
congressional district in the country right now, with 1.1 
million people. So multiply that by the number and the 
percentage of underwater homes, and there is nobody, nobody in 
the United States, in the U.S. House of Representatives, has 
more people suffering from this housing crisis than I do. So 
much so, certainly it's the largest area of case work that we 
do in our office, and so much so that I went and hired a 
REALTOR as my housing case worker. I needed somebody who 
understood the process.
    I can talk to a bank, but I have no idea what they are 
saying. I don't know the lingo. But I needed somebody, and I 
see as each one of you were talking about the difficulties with 
the process, I see my case workers in the audience nodding 
their heads, yes, we are experiencing that on every case.
    Mr. Lynam, first, thank you for sharing your personal 
heart-wrenching story. It is interesting to see that the fellow 
who has worked in the construction industry and doing mediation 
in a nonprofit organization is suffering this problem. Somebody 
who is a REALTOR in the industry has suffered it. No one is 
immune from this problem.
    Last month, FHA announced the beginning of a pilot program 
to convert foreclosed properties, or REO's, to rental housing. 
The initiative will allow qualified investors to purchase pools 
of foreclosed properties. The investors would then be required 
to rent the properties for a specified number of years. During 
the pilot phase, Fannie Mae will offer for sale pools of 
various types of assets, including the rental properties, with 
a focus on the hardest-hit areas.
    As a REALTOR working in the market, do you believe a 
program like that, does that type of program have the potential 
to assist areas like Las Vegas that have a large backlog of 
REO's?
    Mr. Lynam. No. Not even close. Put the houses back on the 
market. They have just admitted to part of the shadow 
foreclosure, shadow inventory that they now control. If they 
have the capability of putting it out on the market for rent, 
put it out for sale.
    In Southern Nevada, particularly today, we have an 
inventory problem. We have an extreme shortage of homes. Less 
than 6,500, for sure, and it may be even less than 6,000 single 
family homes are on the market.
    Our problem isn't that we have foreclosed homes, it's that 
the banks, these financial institutions are not selling them. 
We have renters. We have buyers. Release it and put it on 
there. And I'll answer this, just, if you want to know what the 
private sector solution to all this, is to turn off the spigot. 
Stop allowing the finance institutions to take the money, and 
not to be a contrarian, but they didn't lose $30,000 on that 
deal because you had $180,000 and they foreclosed on it for 
$150,000. They made money because of all the money that they 
have gotten in their hands. So turn off the spigot and I 
guarantee you, you will have a private sector solution 
overnight.
    Mr. Heck. Ms. Longson, you talked about how credit unions 
haven't taken bailouts or taxpayer money and that you have 
never foreclosed on a member. What are the specific methods 
that allow the credit unions to be able to be so much more, I 
guess, accommodating? We heard about the difficulty in 
communication in these two tracks. The foreclosure track is 
moving forward while the modification track is also moving 
forward in the larger institutions?
    How has the credit union industry been so successful in 
this, and is there a lesson learned that we should be able to 
bring back to the larger institutions.
    Ms. Longson. SONEPCO had never foreclosed. I do know that 
some credit unions have had to go to that, through, gone to 
foreclosure with their members.
    But what we do is by far and away, and I can speak to 
SONEPCO membership because we retain the loans. We have sold 
very few into the secondary market.
    So when we saw early on that there was going to be a 
problem, as early as late 2007, early 2008, what we started 
doing was analyzing the value of the home on a quarterly basis. 
We ran credit scores of our members every 6 months, and then so 
we looked at their home value and if their credit scores were 
declining, that spoke to that the member was having difficulty, 
and we called them.
    We said, we see that you are having problems. Can we help 
you? And yes. Yes. We went to people's homes. Members came into 
the credit union and we did whatever we could do to help a 
member stay in their home, if that is what they sincerely 
wanted to do. And I gave a few examples in my written 
testimony.
    But I wanted to share with you, I looked at the statistics 
through the end of February, SONEPCO was a very small financial 
institution, just $55 million in assets. We did $9.5 million in 
first mortgages. Over 20 percent of that is in workouts at this 
point, so over $2 million. Every single one of those is current 
and not delinquent.
    So when you deal with your members respectfully, and they 
want to stay in the home, it's possible for them to stay in the 
home.
    Now, I want to be very honest in saying that the credit 
union and the board of directors have to throw ourselves in 
front of a runaway train in the form of our regulator because 
they wanted us to foreclose. They said, you are going to lose 
on this. This person can't stay. And we said, yes, they can. 
And no, we won't lose, and we will not displace a disabled 
person.
    So it's a difficult row to hoe, but I would like to ask, if 
it's not too presumptuous of me, in all of the programs that 
have come out, credit unions are often excluded, or I should 
say not remembered. I would like to encourage Congress, when 
they are looking at programs, to include credit unions in them 
so that we can help our members.
    And speaking to principal write-down, because credit unions 
are cooperatives, there is only one place for a principal 
write-down to come from, and that is our retained earnings, our 
capital. We can't get our capital back other than through 
operational efficiencies because we do not have access to 
secondary capital. Simply put, if that were to happen, it would 
do us under. We need to have access to secondary capital, and 
that is a piece of legislation that has been introduced. So 
just those two things, remember us, and the impact of principal 
write-down on the credit unions would be severe.
    Mr. Heck. Thank you. Imagine a financial institution being 
proactive in reaching out to their clients before they are in 
trouble.
    Madam Chairwoman, I'll yield back, if we are going to go 
through a second round.
    Chairwoman Capito. I have a question, one of the themes has 
been this behemoth, Fannie and Freddie. We keep tossing the 
names around, and I would dare say the average homeowner, when 
they buy a home, have no idea who Fannie or Freddie are, or 
that their loan has been sold and packaged and sent off and 
they are getting serviced by somebody else, when their 
originator was maybe somebody else. The complications in the 
system are really a lot to grasp for an individual.
    When you say ``turn off the spigot,'' Mr. Lynam, I'm sure 
you are putting them in there because they are up to $150 
billion of taxpayer backstop. And in our committee, we have 
been trying to figure out a way to wind them down.
    There are some in the committees who want to wind them down 
dramatically, like get rid of them in 6 months. I don't fall in 
that category. I'm for the gradual wind-down to try to get the 
private sector back in because I think a precipitous wind-down, 
we don't know what kind of shock it would do to the entire 
system, and you all are ground zero, so you can imagine what 
kind of an effect that would have.
    Does anybody have any suggestions on how we can pull back 
on the involvement of Fannie and Freddie and clarify the system 
more to get that private market back in, in terms of their 
participation? Is this something--this is very complicated, I 
know, and very big. Do you have any suggestions?
    Mr. Lynam. Maybe a comment. You're right. You talk to 
people and the average homeowner, including myself, they want 
to know who this Freddie and Fannie are and why they are 
mucking up their lives. Why is their bad marriage affecting now 
my bad marriage?
    Chairwoman Capito. Right.
    Mr. Lynam. So solutions, yes. I just go back to Main Street 
lending, is what I call it, and sitting next to Main Street 
lending. This would never have happened, had we not been able 
to have more of an ability for Main Street lenders to fund 
these loans and you get away from that. But that's all 
happened. It's already done. And the credit swaps and the 
billions of dollars of profits have already occurred and 
happened.
    So how do we unwind and unring the bell? Far greater minds. 
Take it to Facebook. Maybe that's the answer. So, I don't know.
    Chairwoman Capito. Does anybody else have a comment?
    Ms. Campbell. Yes, I have a comment, regarding Freddie and 
Fannie. We are really deep in this. As you said, it is very 
complex. When we first started the program, we actually just 
told our mediators, you are going to get ready to learn a new 
lexicon. It is going to be a whole new language.
    I called it a ``black hole'' when I first started. Now, 3 
years into this, I'm somebody who is educated. I have a 
master's degree. I bought two homes and I had no clue.
    But what really surprised me is the lending institution 
industry. They should know it inside and out. Why is it left to 
the American people to unwind or unring the bell? The lending 
institutions have the wherewithal, they have the expertise, 
they have the resources.
    They need to revamp their processes to ensure that they are 
in compliance with the law. We know that they have been allowed 
to be unregulated for quite a long time, and now that they are 
being regulated, we need to hold their feet to the fire. Thank 
you.
    Ms. Grady. I would like to bring up that yes, there are 
problems with Fannie and Freddie, but also in between a broker 
and Fannie and Freddie we usually have a bank or a wholesale 
lender and from my own experiences, my deals, mine was a Fannie 
Mae, but I had to deal with Bank of America in order to 
negotiate and work things out. And it wasn't Fannie Mae's 
decision to do what happened, it was Bank of America, as the 
server. They were servicing that loan.
    I think that's part of the problem, is Fannie is using the 
different banking institutions to do the servicing and they are 
making the decisions and not looking at the whole picture.
    Ms. Berkley. Thank you, Congresswoman. There's a couple 
of--Sue, you and I work very, very closely together. The access 
to secondary capital legislation that you talk of, do you have 
a bill number on that? Could I get that?
    Ms. Longson. Yes, it is H.R. 3993. Representative King 
introduced that and our insured, the National Credit Union 
Administration, supports that and is working with the 
Congressman on that.
    Ms. Berkley. Great. Thank you for that information.
    Another aspect in this community in particular is the way 
that servicemen and women who are serving this Nation overseas, 
largely because we have Nellis Air Force Base in our community, 
and veterans when they get back, they are experiencing not only 
being far away from home, and in a very, very dangerous part of 
the world, protecting and defending our country, but they are 
also hearing from back home that their families are going 
through tremendous trauma, as their homes are getting 
foreclosed on. And I was very glad to see that there has been 
some movement in Washington to protect these people who have 
more important things right now to do than worry endlessly 
about where their families are going to be living when their 
homes have been foreclosed on.
    When we talk about, I think it's very important to hold the 
people responsible for what has transpired in this community 
and throughout the United States. There has been a fraud 
perpetrated against the American middle class and almost 
brought down the economy of the world by this reckless 
behavior, the result of which, millions of Americans and tens 
of thousands of Nevadans are finding themselves without a job 
and without a home. And if we don't hold them accountable, and 
make sure that this never happens again in this nation, then we 
have done a tremendous disservice to the American people. I 
think it's time that Congress gets serious about this, and make 
sure that we do everything we can to keep people in their homes 
through public-private partnerships, make sure that we give 
homeowners every opportunity to recover, stay in their homes, 
and move to a brighter future for their families.
    But I have attended many of those sessions and I put 
together many of those sessions and you are absolutely right, 
Keith, the frustration level in that room is extraordinary. I 
am always amazed at how polite these people are because I'm not 
sure that I would be quite that polite if my whole world had 
turned upside down.
    They are reaching out for help and it's very nice that our 
major banks, Bank of America, Wells Fargo, are sending 100 
people there. But at the end of the day, they actually have to 
accomplish something. And having a bunch of untrained people 
who are just doing this for the first time, I'm glad they have 
a job, but their job is supposed to be keeping these people in 
their homes and working with them, as the credit unions do.
    Until we ensure that they do this, and actually help 
middle-class families by and large stay in their homes, we're 
going to continue to have the trauma in this community and 
throughout the United States. We need to do better. And it's up 
to us to ensure that they do better by the American people, or 
shame on us.
    Chairwoman Capito. Joe, Mr. Heck, I have no further 
questions, so you can question on out.
    Mr. Heck. Okay. I have one for each, and I will just make 
my way down the panel. I took care of this side of the room and 
I'm going to turn my attention over to this side. So I'll start 
with Ms. Grady.
    Since HAMP's inception, concerns have been raised with the 
program not reaching the expected number of homeowners. In your 
experience, are there systemic flaws in the HAMP program that 
are preventing it from reaching the homeowners, and if so, what 
do you think would make a difference in making the program more 
available to people here in southern Nevada?
    Ms. Grady. At open level right now, we don't have all the 
guidelines out and so I can't really answer that, because I 
don't have everything. It has not been the--the regulators 
don't have it, or they are starting to put it out now. We are 
going to put together a class so people can attend to find out 
all those guidelines.
    Yes, it will help a lot of people, probably not everybody. 
But if it's like I went over with you last year, if it's like a 
30-year streamline, and you are lowering the person's interest 
rate, and saving them that payment, and they have a job, then 
yes, it should help a lot of people stay in their homes.
    Mr. Heck. Thank you. Mr. Chide, how is the demand for your 
services? How do you see the servicers' willingness to 
participate in mediation has changed during the evolution of 
this crisis, from 2008 to where we are today? Have you noticed 
any changes in the demand for your services and how the 
servicers are responding to you?
    Mr. Chide. Yes, the demand just continues. When you go back 
to 2010, we were seeing on average, and keep in mind I only 
have 2 representatives who do this, and we were seeing on 
average about 50 to 60 new cases a month. So then, we are 
always working on the additional cases that go--that you're 
carrying over--none of these are one day. They are many months 
in the making.
    The thing with these, the demand for it and how the 
servicers are getting it, when you go back to 2008, when you 
look at HAMP, the banks didn't understand it. And that was one 
of the biggest difficulties we had found is because my staff 
would have to train the bank on what it is this program was 
even about.
    So I look at that, it would, it falls on behalf of the bank 
for not making sure they had the staff adequately trained.
    The other thing that you found back then is that most of 
these individuals, it was a phone call. You weren't meeting 
anyone in person. When I listen to Ms. Longson talk about what 
the credit unions did, going back to using my own case, I 
called both of them before I went delinquent. I did try to get 
ahead of the curve. I saw what was coming.
    I called my credit union, which was Nevada Federal. They 
had me come into their office. The next day, I had a 
modification done within 3 days. They cut my payment in half, 
and did not charge me interest for 2 years. The bank, I 
couldn't even get anyone on the phone who could answer anything 
for at least 30 days.
    It wasn't until about 2010 that you started seeing some of 
the banks actually open up shops in town, whereas you had it 
with the credit unions. They were there. You could meet with 
them and you could see them face-to-face.
    It was a whole lot easier for us to help the consumer with 
that process, not to mention the smaller the institution, the 
easier and quicker it was to actually help someone get 
modified. When you started talking about the larger, especially 
here in Nevada, you have the five banks that primarily you see 
over and over again to deal with, you were calling somebody, 
you may get the same person; you may not.
    When it changed, and when we got them here locally, I got 
to know Joe Heck. So now every time I had a case that was at 
his bank, I called Joe directly and said, here's what I have, 
help me work through this, and we found that those, because 
they had a, for lack of a better way of saying it, a better 
relationship, a personal relationship with them as a counselor, 
they were then willing to say okay, I understand what you are 
trying to do and they shortened their process.
    But even today, we're still seeing about 9 months on 
average for a modification. It's ridiculous. That's because 
their representatives who are on the phones are the ones that 
you now see in person don't have the authority to really make 
the deal.
    When I look at what we went through last week, at Governor 
Sandoval's event--like everyone else, we go to almost every one 
of them. Usually on my Saturdays, which for my staff means I'm 
now paying overtime for, and everything else, and what you find 
is that most of the banks will take the paperwork and they 
don't make any--they don't really--the majority of them, as you 
saw, the majority of them are not there to really close the 
deal.
    They are there, yes, you have a face on it, most of them 
have flown in from out of town, so you have some from 
California, Arizona or somewhere else, and they are not 
familiar with our market. And so, they are not there so that 
they can really close everything. They have just added to their 
system. And that has been unfortunate because then some of 
these people get frustrated. They don't want to go to the next 
event, or they continue to go each time and yet their attitude 
gets a little more jaded, that they just don't want to go 
anymore, and hence why now they are looking for one thing, and 
one thing only, if you don't offer it to me--
    I had a gentleman in my office on Monday. They offered him 
to extend it 40 years. They extended it, they wanted to drop 
his interest rate and he looked at us and put the bank on the 
line and said, ``No way. You are not willing to give me 
anything, it's just going to benefit you because you are going 
to make more money off the interest rate at the end of the 
day.''
    So that's what we are seeing a lot of, even though yes, we 
are seeing more case load, it did slow down. After A.B. 284, it 
slowed down big time. Why? As someone has already alluded to, 
in the month of October you had less than 40 new cases that 
went out. So all of a sudden, we have seen a tremendous decline 
in these last 3 months.
    Yet, on the other side we are seeing more permanent 
modifications being suggested. Offered. I'm not going to say 
they are all accepted, but offered. And if I could real quick, 
you had asked Mr. Lynam a while ago a question on the FHFA. One 
of the things, I respectfully disagree with him slightly, only 
because what I'm finding, as a nonprofit, when you look at that 
bill, if they--they have to own it for 5 years.
    Right now, the banks are not lending to these individuals, 
so if they have to borrow the money to get into the house, it's 
not happening. So they are doing the renting. They are renting 
from a private investor, individuals somewhere else.
    One of the things that's part of that is that they will 
actually allow the private sector, the investor to partner with 
the nonprofits. We would actually then service those rentals 
for them, property manage, basically, work with them on it.
    One of the caveats, though, is they have to own it for 5 
years, unless they sell it to a nonprofit, they can do that as 
quickly as 3 years. Personally, I think it should be shortened 
even more because as people can get back up on their feet, 
especially as unemployment continues to--it is declining here 
in Las Vegas. Those individuals would be able to get back in 
those houses sooner.
    If we cap them so that they can only do that for 5 years, 
that I agree with. I don't think that's going to work. But when 
you have that caveat in there that if it's handled in certain 
ways, it could sell quicker, in this case getting a nonprofit 
involved, the day that went out, I had three different 
investors--one from China, one from Phoenix, and one from 
Florida--contact me and ask me if we would be willing to 
partner with them.
    As a nonprofit, I can't come up with $250,000 escrow to 
even look at what houses are for sale. They have it. Then, 
together what they were proposing is, look at it together, and 
then we work out some type of arrangement for, obviously I 
would have to hire individuals. Now, I'm putting people back to 
work as well to do the property management for them.
    So that's something that's where I slightly disagree. I 
don't know if 5 years is going to do it. But there are some 
ways to modify it that I think would work.
    Mr. Heck. Thank you. And finally, Ms. Campbell. First, I 
applaud what the mediation program is accomplishing, and trying 
to accomplish.
    What, if anything, should Washington do to either assist 
you or to get out of your way so you could be more successful?
    Ms. Campbell. One of the things that can happen is that 
there could be uniformity across the country regarding 
mandatory foreclosure mediation programs.
    When we started our program, there were approximately 13 or 
14. Today, there are over 35. We do know that our program has 
been designed to be a model because we saw the pains that other 
programs had gone through. So we have no problem with readily 
sharing.
    But I think uniformity, and also making it an opt-out 
program, would certainly help. One of the things we continue to 
see is that there is, there appears to be an arrogance on the 
lenders' side and a resistance to change.
    Making it more difficult for them to resist the law and not 
allowing them to manipulate, as they have done. Even here in 
our State, I feel like there's some manipulation going on with 
A.B. 284. The complaint is that they cannot comply.
    Is it that they cannot or that they will not? And the 
reason I say ``will not'' is because I'll never forget my very 
first call, after we started the program, to a lender's 
representative, telling me that they were going to be scheduled 
for one of our first mediations.
    Literally, the representative slammed the headset of the 
phone down on the desk 3 times, and screamed in the phone: 
``There will be no mediation;'' ``There will be no mediation;'' 
``There will be no mediation.''
    But on behalf of the State of Nevada, I very politely told 
him when his mediation was scheduled and they did show up.
    So we have to just hold them accountable, and I think we 
will start to see major successes. Thank you.
    Mr. Heck. Again, my personal thanks to all of you for 
participating. And again, thank you, Madam Chairwoman for 
coming out and holding this field hearing, and I yield back.
    Chairwoman Capito. Thank you.
    I think that concludes our hearing and I want to thank all 
of you. It has been illuminating for me, and I appreciate the 
passion with which you, these representatives and Mr. Heck, are 
trying to dig out of a very difficult situation.
    We have to get people back into the cycle of employment and 
the financial issues are just really, really difficult. So I 
appreciate what you are doing. And I appreciate you telling me 
about it.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for Members to submit written questions to these 
witnesses and to place their responses in the record. And I 
want to thank Congressman Heck for giving me the chance to come 
to Las Vegas. That's always a great thing.
    And with that, this hearing is adjourned.
    [Whereupon, at 11:10 a.m., the hearing was adjourned.]


                            A P P E N D I X



                             March 15, 2012

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