    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

                        PROTECTING HOMEOWNERS DURING THE
                        PANDEMIC: OVERSIGHT OF MORTGAGE
                           SERVICERS' IMPLEMENTATION.
                                OF THE CARES ACT

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

                                VIRTUAL HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON OVERSIGHT
                               AND INVESTIGATIONS

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 16, 2020

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 116-104

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    43-341 PDF                  WASHINGTON : 2021

    --------------------------------------------------------------------------------------

                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                     MAXINE WATERS, California, Chairwoman

    CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina,
    NYDIA M. VELAZQUEZ, New York             Ranking Member
    BRAD SHERMAN, California             ANN WAGNER, Missouri
    GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
    WM. LACY CLAY, Missouri              BILL POSEY, Florida
    DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
    AL GREEN, Texas                      BILL HUIZENGA, Michigan
    EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
    ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
    JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
    BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
    JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
    DENNY HECK, Washington               TOM EMMER, Minnesota
    JUAN VARGAS, California              LEE M. ZELDIN, New York
    JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
    VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
    AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
    MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
    RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
    KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
    CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
    SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
    AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
    BEN McADAMS, Utah                    LANCE GOODEN, Texas
    ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
    JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
    STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
    TULSI GABBARD, Hawaii
    ALMA ADAMS, North Carolina
    MADELEINE DEAN, Pennsylvania
    JESUS ``CHUY'' GARCIA, Illinois
    SYLVIA GARCIA, Texas
    DEAN PHILLIPS, Minnesota

                       Charla Ouertatani, Staff Director
                  Subcommittee on Oversight and Investigations

                            AL GREEN, Texas Chairman

    JOYCE BEATTY, Ohio                   ANDY BARR, Kentucky, Ranking
    STEPHEN F. LYNCH, Massachusetts          Member
    NYDIA M. VELAZQUEZ, New York         LEE M. ZELDIN, New York, Vice
    ED PERLMUTTER, Colorado                  Ranking Member
    RASHIDA TLAIB, Michigan              BARRY LOUDERMILK, Georgia
    SEAN CASTEN, Illinois                WARREN DAVIDSON, Ohio
    MADELEINE DEAN, Pennsylvania         JOHN ROSE, Tennessee
    SYLVIA GARCIA, Texas                 WILLIAM TIMMONS, South Carolina
    DEAN PHILLIPS, Minnesota             VAN TAYLOR, Texas

                               C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        July 16, 2020................................................     1
    Appendix:
        July 16, 2020................................................    33

                                   WITNESSES
                            Thursday, July 16, 2020

    Cohen, Alys, Staff Attorney, National Consumer Law Center (NCLC).     5
    DeMarco, Edward J., President, Housing Policy Council (HPC)......    10
    Griffin, Marcia, Founder and President, HomeFree-USA.............     7
    Williams, Donnell, President, National Association of Real Estate
      Brokers (NAREB)................................................     8

                                    APPENDIX

    Prepared statements:
        Cohen, Alys..................................................    34
        DeMarco, Edward J............................................    64
        Griffin, Marcia..............................................    72
        Williams, Donnell............................................    81

                  Additional Material Submitted for the Record

    Green, Hon. Al:
        Temporary Hardship Forbearance Plan Agreement................    84
        Written statement of the Mortgage Bankers Association........    85

                        PROTECTING HOMEOWNERS DURING THE
                        PANDEMIC: OVERSIGHT OF MORTGAGE
                           SERVICERS' IMPLEMENTATION
                                OF THE CARES ACT

                                  ----------

                            Thursday, July 16, 2020

                 U.S. House of Representatives,
                              Subcommittee on Oversight
                                    and Investigations,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The subcommittee met, pursuant to notice, at 12:02 p.m.,
    via Webex, Hon. Al Green [chairman of the subcommittee]
    presiding.
        Members present: Representatives Green, Beatty, Lynch,
    Velazquez, Perlmutter, Tlaib, Casten, Dean, Garcia of Texas;
    Barr, Zeldin, Rose, Timmons, and Taylor.
        Ex officio present: Representative Waters.
        Chairman Green. Thank you very much everyone. I am Al
    Green, the Chair of the Subcommittee on Oversight and
    Investigations. I would like to call the hearing to order at
    this time, and I would like to, if I may, give just a brief
    overview of what you can expect. We have called the hearing to
    order. There will be an opening statement of the Chair; an
    opening statement of the ranking member; an opening statement
    from the Chair of the full Financial Services Committee,
    Chairwoman Waters; witnesses will be introduced; witnesses will
    give their opening statements; and then we will have Q&A of
    witnesses, followed by adjournment.
        The title of today's hearing is, ``Protecting Homeowners
    During the Pandemic: Oversight of Mortgage Servicers'
    Implementation of the CARES Act.''
        Without objection, the Chair is authorized to declare a
    recess of the subcommittee at any time. Also, without
    objection, members of the full Financial Services Committee who
    are not members of this subcommittee may participate in today's
    hearing for the purposes of making an opening statement and
    questioning the witnesses.
        Members are reminded to keep their video function on at all
    times, even when they are not being recognized by the Chair.
    Members are also reminded that they are responsible for muting
    and unmuting themselves. I think this is something that is
    worthy of repeating, because I have made the mistake of not
    honoring this responsibility. I hope that I don't make that
    mistake today. Members are also reminded that they are
    responsible for muting and unmuting themselves, and to mute
    themselves after they have finished speaking.
        Consistent with the regulations accompanying H. Res. 965,
    staff will mute Members and witnesses, as appropriate, only
    when they are not being recognized by the Chair, to avoid
    inadvertent background noise. Members are reminded that all
    House rules relating to order and decorum apply to this remote
    hearing.
        The Chair now recognizes himself for 4 minutes for an
    opening statement.
        Let me start by thanking the Chair of the full Financial
    Services Committee, Chairwoman Waters. It is always an honor to
    serve under your leadership, Madam Chairwoman. I would also
    like to thank the ranking member for the participation that he
    has brought to this hearing, and I would like to also thank the
    staff for the hard work that you have done in obtaining some
    4,000 pages of servicer documents, including policies,
    procedures, and data on the largest 11 servicers, and their
    findings that include the fact that over 2 million forbearance
    requests have been approved by these 11 servicers between March
    27th and June 30th of 2020.
        But we have also found some other things that are causing a
    bit of consternation. Often, servicers fail to provide the
    borrowers with the 180-day forbearance that has been set in the
    Coronavirus Aid, Relief, and Economic Security (CARES) Act. Too
    often, borrowers were given but 90 days. I have some evidence
    of this failure to comply that I shall share with you. This
    evidence is something that emanates from a request by a
    constituent. One of my constituents has brought to the
    attention of our office, this document that is titled,
    ``Temporary Hardship Forbearance Plan Agreement.''
        I won't go through it in its entirety, but the important
    points are these, that this borrower faced a hardship and has
    had payments deferred for three of the payments that are due,
    three payments. And the amount due is going to be in the final
    analysis at the end of the deferment period, the amount due for
    all payments within that deferment period and any late fees
    that may have accrued from other sources of payments not being
    made timely. The point is this, as it reads in this document,
    the amount due on the next payment due date, which was 3 months
    away from the date that the deferment period started, includes
    the amount of payments being deferred under the plan. Well,
    this is 90 days of deferments, not the anticipated 180 days
    that the CARES Act affords borrowers. In fact, many of the
    borrowers are not made aware of this.
        And we find, pursuant to some of the testimony that you
    will hear today, that many of these borrowers who are accorded
    this 90-day period, as opposed to the 180 days, are borrowers
    of color. It seems that this is, like many other things, having
    a disproportionate impact on persons of color, which causes me
    a good deal of consternation, I might add.
        I would also say that this program that we established in
    Congress has been received by the persons who are charged with
    according these first agreements, these servicers--it has been
    received by them as an honor system. We never intended for this
    to be an honor system that would allow them to decide whether
    or not they would accord persons the 180 days initially, with
    the opportunity to extend for an additional 180 days. It was my
    intent that borrowers would acquire the 180 days, and then they
    could opt to have an additional 180 days. The remedy, it seems
    to be, that of having to file a lawsuit, litigation, to have to
    go out and hire a lawyer, and to have to take this to court, to
    have some period of time that might go beyond the period of
    time, quite frankly, that you anticipate having your
    forbearance.
        So, I am very much concerned about this. And my hope is
    that we can get a means by which we can deal with this honor
    system and bring this under the auspices of a situation such
    that they will have to comply as opposed to choosing whether or
    not they will comply.
        With this having been said, it is my honor now to recognize
    the ranking member of the subcommittee, Mr. Barr, for a 5-
    minute opening statement.
        Mr. Barr. Thank you, Chairman Green. It's good to see you
    and all of our colleagues. And to our witnesses, thank you
    again for joining us virtually for today's hearing. The
    coronavirus pandemic and the associated government-imposed
    shutdown of the economy disrupted the lives and livelihoods of
    citizens across our country. Businesses shut down. Unemployment
    skyrocketed. Workers who remain employed face uncertain
    prospects for their long-term stability, and families are at
    risk of losing their homes.
        As you all know, Congress passed and the President signed
    into law the CARES Act, which helped individuals and small
    businesses by creating forbearance options for struggling
    homeowners. At the peak, approximately 4.7 million families
    were in forbearance. Many more families would undoubtedly have
    lost their homes or struggled to make payments, if not for the
    swift and decisive response from Congress and the
    Administration: the implementation of the Paycheck Protection
    Program (PPP); economic impact payments; the Federal Reserve
    Lending Facilities under 13-3, which opened credit markets; and
    other assistance programs under the CARES Act, which made it
    easier for homeowners to pay their mortgages, for families to
    stay in their homes, and for small businesses to build a bridge
    to the other side of the crisis.
        Fortunately, we have seen the number of mortgages in
    forbearance decrease since the peak, declining a full 13
    percent since May. However, we are not out of the woods yet.
    There are still millions of homeowners facing hardship and
    requiring additional assistance.
        I hope to learn from our witnesses today what may be
    helpful next steps as Congress contemplates additional
    legislation. The far-reaching aid to American homeowners was a
    collaborative effort between Congress, the Administration
    regulators, and the private sector.
        It is important to note that while the CARES Act mandates
    that servicers of federally-backed mortgages offer a
    forbearance option to borrowers, that same requirement is not
    in place for loans held in portfolio or in private label
    securities. Despite the absence of this mandate, however,
    servicers of those non-federally-backed loans stepped up during
    this crisis and offered similar forbearance terms for their
    borrowers to those mandated under CARES. This shows that, in
    times of crisis, the government and the private sector can work
    together, and that the private sector has acted responsibly in
    the interest of homeowners without having government mandates
    imposed on them.
        Unfortunately, my colleagues on the other side of the aisle
    believe that a top-down mandate on all servicers would be more
    effective. The partisan Health and Economic Recovery Omnibus
    Emergency Solutions (HEROES) Act included a mandate for
    automatic forbearance for all borrowers struggling to pay their
    mortgages. Not only does this mandate appear unnecessary given
    the market dynamics we have seen to date, but it actually has
    the potential to further disadvantage borrowers by limiting
    their options.
        On May 4th, Chairwoman Waters and Chairman Green sent
    letters to some of the largest mortgage servicers requesting
    information about their interaction with customers following
    the passage of the CARES Act. The implication of the letter was
    that mortgage servicers skirted their responsibilities under
    the CARES Act or somehow profited by steering their customers
    into forbearances that were not in the best interest of the
    borrower.
        The data that the Majority received in response to their
    letter told a very different story, and demonstrated that
    servicers are working well with borrowers in their times of
    greatest need. This is a hearing in search of a problem. Now,
    that is not to say that there weren't some hiccups along the
    way. There were understandable growing pains and bumps in the
    road as servicers staffed up call centers, updated websites,
    and implemented the necessary technology to help their
    customers.
        However, given the scope and scale of the forbearance
    request and the short timeframe to implement new processes, the
    servicers overall should be commended on their treatment of
    borrowers in a time of crisis. And I think the creditors, the
    mortgage creditors and the servicers have learned from
    experience that the expense of foreclosure and repossessing
    these properties is not in anyone's best interest. Keeping
    homeowners in their homes is in the best interest of all
    involved, particularly those struggling Americans who need
    help.
        I look forward to further exploring how servicers work with
    their customers, the efficacy of the CARES Act provisions in
    keeping families in their homes, and what additional actions
    may be required by Congress in potential areas of improvement
    in the servicer-borrower relationship. And, again, I thank all
    of you for being here today, and I thank Chairman Green and
    Chairwoman Waters for holding this hearing. I yield back.
        Chairman Green. Mr. Barr yields back. The Chair now
    recognizes the Chair of the full Financial Services Committee,
    the gentlewoman from California, the Honorable Chairwoman
    Waters, for 1 minute.
        Chairwoman Waters. Thank you.
        Mr. Chairman, I am so appreciative of you for holding this
    hearing this morning. As I took my seat, I heard you read
    something where there appeared to be a demand from a servicer,
    from an institution that was a demand for what would be
    considered a full payment for the months that have been missed.
    I just wanted to make sure that what I heard you saying was
    that someone had been demanded to pay the full amount of the
    missed payments that was about 4 months' past due. Is that
    correct?
        Chairman Green. Three months of forbearance, yes, ma'am,
    and it would be payable upon the end of the 3-month period.
        Chairwoman Waters. Thank you very much. I wanted to make
    sure that I had the information correct.
        Mr. Chairman and members, this is precisely what we want to
    avoid. As a matter of fact, I have to say to Mr. Barr, the
    experience that we had started in 2004 with the foreclosures
    that took place, with the exotic products that were placed on
    the market, with all of what caused us to experience disaster
    in our communities because of these unprecedented foreclosures
    leads us to understand what we must do to avoid homeowners
    losing their homes.
        I understand that my time is up. But Mr. Chairman, I want
    to thank you for the hearing. And I am absolutely committed to
    the proposition that this will not happen, that we are going to
    have a credible forbearance situation for our homeowners that
    will not cause them to lose their homes. I yield back the
    balance of my time.
        Chairman Green. The chairwoman yields back. At this time, I
    would like to introduce our witnesses and thank them for coming
    and being a part of this hearing.
        We have with us today: Alys Cohen, a staff attorney for the
    National Consumer Law Center; Marcia Griffin, founder and
    president of HomeFree-USA; Donnell Williams, president of the
    National Association of Real Estate Brokers; and Ed DeMarco,
    president of the Housing Policy Council.
        Welcome, again. Thank you for being with us virtually. You
    will each be recognized for 5 minutes to give an oral
    presentation of your written testimony. A chime will go off at
    the end of your time, and I would ask that you respect the
    members' and other witnesses' time by wrapping up your oral
    testimony. And without objection, your written statements will
    be made a part of the record.
        Once the witnesses finish their testimony, each member will
    have 5 minutes to ask questions.
        With that, Ms. Cohen, you are now recognized for 5 minutes.

    STATEMENT OF ALYS COHEN, STAFF ATTORNEY, NATIONAL CONSUMER LAW
                             CENTER (NCLC)

        Ms. Cohen. Thank you very much, Chairman Green, Ranking
    Member Barr, and members of the subcommittee. Thank you for the
    opportunity to testify today. I am testifying on behalf of the
    low-income clients of the National Consumer Law Center, as well
    as 20 other consumer legal services and civil rights
    organizations. The unprecedented coronavirus pandemic has
    brought illness, death, unemployment, and greater economic
    insecurity to people across the country.
        Communities of color, particularly Black and Latinx people,
    have been especially hard hit. Preexisting inequalities are
    exacerbated by the current crisis, and Black and Latinx
    homeownership is imperiled.
        To mitigate some of the harm wrought by the pandemic,
    Congress must continue its vigilance in protecting homeowners,
    improve transparency for housing relief programs, increase its
    efforts to regulate and reform the mortgage servicing industry,
    and center relief for Black and Latinx homeowners. The Federal
    regulators must act as well, to prevent avoidable foreclosures
    and promote sustainable homeownership. Congress must pursue
    dedicated efforts to protect and expand Black and Latinx
    homeownership and pass additional measures, including
    collection of loan level borrower, loan performance, and lost
    mitigation data with free public reporting. Representative
    Porter's bill, H.R. 6835, is a good start on this. Expansion of
    CARES Act protections must include standardized forbearance for
    all mortgages, automatic forbearance for borrowers who have
    missed two payments or more, affordable repayment options for
    borrowers exiting forbearance plans who are seeking to resolve
    delinquencies that are available prior to foreclosure, written
    notice and in-language information for limited English
    proficient borrowers, a moratorium on negative credit
    reporting, targeted support for the hardest-hit communities,
    including funding for legal services, housing counseling, and
    cash assistance for delinquent borrowers, and measures to
    prevent neighborhood blight.
        Moreover, Federal regulators must increase oversight,
    ensure mortgage assistance meets the needs of diverse
    communities of homeowners, improve regulations, including
    recent CFPB rules that leave homeowners at risk, and consider
    future reforms in the mortgage servicing industry, aligning
    servicer incentives with those of homeowners and investors. We
    commend the regulatory extension of the foreclosure moratoria,
    FHA's recent announcement to expand lost mitigation options,
    and GSE expansion of post-forbearance options, but more is
    needed.
        Black and Latinx homeowners are more likely now than White
    homeowners to struggle paying their mortgage, seek assistance
    from their servicer, and miss payments instead of receiving
    forbearance. While all homeowners are more likely to report
    missing payments rather than deferring payments with their
    servicer, in the Census Bureau's Household Poll Survey at the
    end of June, 4 times as many Black homeowners recorded missing
    payments as compared to deferring payments. Among Hispanic or
    Latinx homeowners, and homeowners who identified as other or
    reported two or more races, there were 2 times as many
    homeowners reporting that they had missed payments as compared
    to deferring. Only about 1.4 times as many White homeowners
    report missing rather than deferring payments.
        How can we help homeowners who have not yet received
    assistance? And what can we do for the disproportionately large
    group of borrowers of color facing this challenge?
        While we focus today on efforts to contain the fallout from
    the pandemic, we should not lose sight of the fact that for
    many distressed borrowers, the mortgage servicing industry
    remains fundamentally broken. Our ability to prevent another
    great loss of homeownership for Black and Latinx families
    depends on our ability to have servicers see that performing
    default servicing well is in their interest as well as the
    interest of financially distressed homeowners and their
    communities and the economy.
        Our nation is facing unprecedented challenges that present
    us with a real chance to look at our priorities and assumptions
    and make material progress in how we measure success and
    inclusion. Thank you.
        [The prepared statement of Ms. Cohen can be found on page
    34 of the appendix.]
        Chairman Green. Thank you for your testimony, Ms. Cohen.
        Ms. Griffin, you are now recognized for 5 minutes.

     STATEMENT OF MARCIA GRIFFIN, FOUNDER AND PRESIDENT, HOMEFREE-
                                  USA

        Ms. Griffin. Thank you very much. My name is Marcia
    Griffin, and I am president and founder of HomeFree-USA, a
    nationwide HUD-approved housing counseling organization. I
    appreciate this opportunity to appear before you to provide
    firsthand insight surrounding the plight of homeowners in this
    pandemic.
        Allow me to emphasize the importance of housing counseling
    organizations, which I like to call nonprofit homeownership
    providers. Court-approved housing counseling organizations like
    HomeFree-USA are mission-based entities created to provide
    everyday people with the tools they need to achieve and sustain
    their housing and homeownership goals. We help renters to
    become sustainable homeowners and help existing homeowners
    avoid mortgage delinquency and foreclosure. We are somewhat
    like marriage counselors--when a homeowner has unanswered
    questions, needs credit help, doesn't know what to do, doesn't
    understand the servicer's jargon, we bring them together with
    lenders and servicers to ensure that everyone is on the same
    page with the goal, of course, of finding a mortgage solution
    that works for both parties.
        According to the U.S. Congress Joint Economic Committee,
    the average foreclosure costs everyone $77,934. Lenders lose an
    average of between 12 and 19 percent of the home's value at
    foreclosure, and they spend about $50,000 in the process. If
    counselors are able to prevent foreclosure, the value to
    lenders, investors, and the country is enormous.
        So, what have we seen in the market today? Calls come in
    daily from homeowners who are exhausted, paralyzed by fear,
    COVID-sick, and have lost their jobs. Everyone is concerned
    that they will lose their home.
        First, in my work at HomeFree-USA, and with my colleagues
    at the National Housing Resource Center, we do believe that
    servicers have improved since the start of the pandemic. But
    many still need better-trained customer-facing employees. Some
    call center employees read scripts that they are not familiar
    with, don't have time to answer questions, and are just not
    familiar enough with the process or procedures to assist
    consumers.
        Second, counselors assist homeowners who are probably
    denied a forbearance. We have seen a troubling concentration of
    this issue with veterans' loans. We are seeing homeowners who
    may have recently completed a loan application, who have been
    denied, or borrowers who have just missed a payment in March or
    February,and they have also been denied.
        Furthermore, we help homeowners who have requested a
    forbearance but still have questions about whether it has been
    approved and how to plan ahead for repayment. There is a
    frustratingly large number of homeowners who are unemployed but
    are still being told that lump sum payments are due at the end
    of the forbearance. Other occurring issues are highlighted in
    my written testimony.
        Whether right or wrong, too many of our clients are
    unfamiliar with the terms in the servicer scripts. This only
    compounds the existing sense of distrust and fear of the
    banking industry. People of color are particularly vulnerable
    to this sense of distrust of lenders and servicers as a result
    of their most recent experience in the last housing crisis.
    People of color rely heavily on organizations like HomeFree-USA
    to advocate for them. What can be done? First, servicers do not
    have the capacity to handle individualized support of
    vulnerable homeowners. It is essential that housing counselors
    are supported so that we do not have to turn away a single
    consumer, thus freeing up servicers because we can handle the
    most challenging cases.
        Second, we feel that the Consumer Financial Protection
    Bureau (CFPB), the Federal Housing Finance Agency (FHFA), and
    HUD should be more solution-focused and proactive in their
    monitoring of repayment issues. We feel the Federal agencies
    should coordinate and should identify real-time solutions and
    actively update policies and procedures.
        Third, we need a streamlined loss mitigation loan procedure
    like we had with the Home Affordable Modification Program
    (HAMP). The biggest problem we have will be homeowners who
    return to work but have significantly reduced incomes. There
    will be a need for aggressive and affordable loan modifications
    for these borrowers. Housing counselors are capable of helping
    homeowners and servicers through these complicated processes.
        Last, more outreach is needed. Consumer awareness of
    options and processes need to be better distributed.
        I very much appreciate this opportunity to illuminate our
    concerns about COVID-related mortgage servicing, the importance
    of housing counseling intervention, and to sound the alarm that
    the worst is yet to home. HUD-approved counseling organizations
    can play a huge role in--
        Chairman Green. You will have to wrap up her testimony,
    please. You have exceeded your time.
        Ms. Griffin. Okay. Thank you.
        [The prepared statement of Ms. Griffin can be found on page
    72 of the appendix.]
        Chairman Green. Thank you for your testimony.
        Mr. Williams, you are now recognized for 5 minutes.

    STATEMENT OF DONNELL WILLIAMS, PRESIDENT, NATIONAL ASSOCIATION
                     OF REAL ESTATE BROKERS (NAREB)

        Mr. Williams. Chairman Green, Ranking Member Barr,
    Chairwoman Waters, and distinguished members of the
    subcommittee, thank you for the opportunity to testify today to
    discuss the importance of protecting homeowners, especially
    during these difficult times. I also want to thank Chairwoman
    Maxine Waters for calling this hearing.
        My time is Donnell Williams. I serve as president of the
    National Association of Real Estate Brokers, the country's
    oldest and largest Black real estate trade association. Founded
    in 1947, our mission, democracy in housing, has guided our
    efforts to ensure fair housing practices in neighborhoods
    across the country, especially in communities of color. I am
    also the owner of Destiny Realty, a brokerage firm
    headquartered in Morristown, New Jersey.
        COVID-19 is disproportionately affecting Black homeowners.
    It is well-documented that the COVID-19 pandemic has had a
    crushing and devastating effect on Black homeowners and caused
    mass unemployment, putting a deep economic strain on many Black
    borrowers who have worked hard to achieve the American Dream of
    homeownership. As of mid-June 2020, probably 24 percent of
    Black homeowners reported some difficulty making their mortgage
    payments, compared to White homeowners. There is a 13 percent
    gap between Black homeowners and White homeowners receiving
    forbearance under Section 4022 of the CARES Act, which allows
    borrowers to apply for a forbearance period of up to 360 days.
        Solutions: In order to address the challenges facing Black
    homeowners as a result of the pandemic, it is imperative that
    Congress take action to ensure that congressional and
    governmental efforts to maintain homeownership are equitable
    and include Black homeowners. We urge Congress to take the
    following actions. One, allocate specific funds targeted to the
    preservation of Black homeownership.
        Two, provide assistance for mortgage borrowers not covered
    by the CARES Act. Private mortgage lenders must be required to
    offer government-supported forbearance to their borrowers
    comparable to the treatment of government-supported mortgage
    loans.
        Three, require FHA and all servicers to notify borrowers in
    all communications, including mail, electronic communication,
    and phone calls, of their rights to apply for forbearance.
    Require all servicers to have dedicated toll-free lines,
    staffed with representatives who are knowledgeable about their
    forbearance procedures.
        Four, create a large-scale public affairs initiative. The
    Federal Government is allocating resources to building public
    awareness around the health risks associated with COVID-19.
    Similar efforts should be made to inform borrowers of their
    rights.
        Five, ensure that FHA borrowers and GSE borrowers continue
    to have the same access to mortgage forbearance protections,
    financial relief, and assistance.
        In conclusion, the National Association of Real Estate
    Brokers, whose members are known as REALTISTs, since its
    inception has stood with democracy in housing, and we look to
    the guardians of the communities we serve. We will continue to
    advocate for the preservation and sustainability of
    homeownership for Black Americans and all Americans. The
    REALTIST organizations are the trusted advisers of our
    community and the conscience of the real estate industry. And
    we need Congress to align with NAREB'S declaration of a cease-
    and-desist on the decline of Black ownership.
        Thank you for the opportunity to testify before the
    subcommittee today, and I will be glad to answer any questions.
    Thank you.
        [The prepared statement of Mr. Williams can be found on
    page 81 of the appendix.]
        Chairman Green. Thank you very much for your testimony, Mr.
    Williams.
        Mr. DeMarco, you are now recognized for 5 minutes.

       STATEMENT OF EDWARD J. DEMARCO, PRESIDENT, HOUSING POLICY
                             COUNCIL (HPC)

        Mr. DeMarco. Chairman Green, Ranking Member Barr,
    Chairwoman Waters, and members of the subcommittee, thank you
    for inviting me to testify on how mortgage servicers are
    responding to the challenges facing homeowners because of the
    novel coronavirus.
        Many homeowners are in deep economic distress resulting
    directly or indirectly from the pandemic. Also, while anyone is
    vulnerable to the virus, the health and economic costs have
    disproportionately affected communities of color and lower-
    income households.
        From the outset of this emergency, Housing Policy Council
    members and other mortgage servicers have been committed to
    keeping individual borrowers and families in their homes.
        My written statement covers four topics, which I will
    briefly summarize here. First, the challenges facing homeowners
    today are not the result of poor underwriting standards or
    inappropriate business practices. This pandemic is a national
    health crisis, and the steps taken to combat it had enormous
    economic consequences.
        In response, HPC members and other mortgage servicers have
    shifted virtually all of their operations out of call centers
    and office buildings to their own homes, and trained their
    staffs remotely in modified technology and managed the enormous
    inflow of borrower inquiries. They have set up automated online
    tools for borrowers to educate themselves and request payment
    relief. They began offering homeowners forbearance options
    before the passage of the CARES Act. And they have extended
    forbearance to homeowners who do not have federally-backed
    mortgages. They have executed against an evolving series of
    programming and regulatory announcements from various Federal
    programs and agencies.
        By late May, just 2 months since enactment of the CARES
    Act, nearly 4.8 households were on a forbearance plan. That
    total has declined 13 percent since then. According to Black
    Knight Financial Services, by late May, 12.3 percent of FHA and
    VA loans were in forbearance, and 7.1 percent of GSE loans were
    in forbearance. Servicers of these loans are required by the
    CARES Act to offer forbearance to a customer who asks for it
    claiming a COVID-19 economic hardship. Yet, for non-federally-
    backed mortgages, 9.6 percent of such loans were also waived
    forbearance by late May. These include bank portfolio loans and
    loans in private label securities. This is a clear situation
    that bank portfolio lenders and other investors have also
    responded without a Federal directive, providing borrower
    payment relief at an even greater rate than we see for GSE
    loans.
        Second, I want to acknowledge the partnerships and
    information sharing that has marked the last 4 months. Not only
    has the industry been trying to work together to develop best
    practices, we have been joined in partnerships with numerous
    other organizations and stakeholders, as well as numerous
    government agencies and regulators. These partnerships
    demonstrate a level of common concern for the families whose
    financial situations have been disrupted by this national
    health emergency. I believe it is because of this communication
    and coordination that relief has been provided to so many so
    quickly.
        Transitioning from forbearance to a longer-term solution
    requires dedicated efforts from the borrower and servicer to
    ensure the best resolution. The sooner a borrower begins
    repaying their mortgage, the sooner he or she resumes the
    wealth-building opportunity that homeownership provides. When a
    borrower is ready to resume monthly payments, borrower contact
    with their servicer is critical to achieve a seamless
    transition and to ensure their certainty among all the parties
    regarding the repayment of the forborne amount. The options
    available are dependent on several factors, some unique to the
    loan program and some based on the borrower's own
    circumstances. Generally, the options include a short-term
    repayment plan, repayment at the end of the loan term, or a
    longer-term repayment by adding the outstanding payments into
    the loan balance and modifying the loan.
        With the forbearance provisions in the CARES Act, Congress
    has already taken the cornerstone action to assist borrowers
    and servicers. We recognize that the pandemic has negatively
    affected many consumers and communities and that some of the
    beneficial stimulus provided under the CARES Act is coming to
    an end. Thus, we support additional measures by the Congress to
    provide fiscal stimulus to hard-hit consumers and communities.
    Thank you for inviting me to participate today.
        [The prepared statement of Mr. DeMarco can be found on page
    64 of the appendix.]
        Chairman Green. Thank you for your testimony, Mr. DeMarco.
        I now recognize the gentlewoman from California, the Chair
    of the Full Committee, Chairwoman Waters, for 5 minutes for
    questions.
        Chairwoman Waters. Thank you very much, Chairman Green. And
    I would like to thank all of our witnesses who are here today.
    I know of their worth, I have worked with them over the years,
    and they have been counseling and helping our homeowners, and I
    am very, very pleased that they are all here this morning.
        But here is what I would like to do. I would like to find
    out, and I will ask each of our witnesses, in the time that I
    have, whether or not the language in the HEROES Act is doing
    exactly what we need it to do. We know that we are provided the
    right to request and receive forbearance for our homeowners on
    their mortgage payments for up to 6 months, with the option to
    extend for an additional 6 months, for a total of one year. I
    think there was some information shared with us that homeowners
    don't necessarily know this. What can we do to make sure that
    servicers share this information? And I would also like to
    know, should there be additional language about loan
    modification for forbearance?
        So, let me ask each of our witnesses to share with me
    whether or not they think it is sufficient.
        Let me start with Marcia Griffin, whom I have met with for
    so many years. Thank you, Marcia.
        Ms. Griffin. Wonderful. Thank you. Housing counseling
    organizations definitely support the HEROES Act. This is great
    progress. It also really helps to sort of rein in some of the
    issues that we are seeing with private, non-Federal loans. We
    are very, very appreciative of the suggestion of support,
    supplemental support for housing counseling. It is very, very
    much needed.
        The focus on repayments and forbearances is good. And we
    should certainly continue. We have spoken about our views on
    the HEROES Act, also, in our written testimony. So, we are just
    applauding you.
        Chairwoman Waters. I want to make sure I get to the other
    two witnesses. National Consumer Law Center staff attorney, Ms.
    Cohen, do you think that we need additional information
    following the 1-year forbearance?
        Ms. Cohen. Thank you for your question, Chairwoman Waters,
    and for being at the hearing today. Your question sounds like
    it is focusing primarily on this question of whether people
    need more than one year of forbearance?
        Chairwoman Waters. Yes.
        Ms. Cohen. First of all, the HEROES Act has a lot of
    excellent provisions in it, and we hope to see the Senate take
    up something like that, look at those issues, and find a way to
    get something done.
        With regard to your specific question, as you heard Dr.
    DeMarco, people need to transition from forbearance to
    repayment. And so what we would like to see is legislation and
    programming to help people get into repayment. Now, of course,
    if the financial situation in the country goes on in an
    unexpected way, we may need to reevaluate that. But at this
    point, what we would like to see and what is in the HEROES Act
    and could be in Senate legislation is more affordable post-
    forbearance repayment options that are mandatory.
        Chairwoman Waters. Very good. I think we are talking about
    the same thing, when you talk about repayment options after the
    forbearance period.
        Let me ask Donnell Williams, president, National
    Association of Real Estate Brokers. I have worked with the
    REALTORS, just reconsolidated in L.A., and I appreciate your
    work so much. What do you think--you have given us some advice,
    and you have pointed out a few things that you think we can do
    additionally. Of those four or five things that you pointed
    out, which stands out most in your mind that we should do to
    make sure that this forbearance and loan modification process
    works?
        Mr. Williams. I think that the servicers need to get the
    information about the borrowers' rights out to the community
    and to the borrowers. That can be done by mail--they are not
    getting this information or trusting this information in any
    other kind of way. If it doesn't come through the REALTOR
    organization, and it does come through the mail, that would be
    great through email and what have you. We also need to have
    data collection. But servicers need to supply this information,
    this data to the CFPB and to Congress.
        I just had a borrower in Irvington, New Jersey, and another
    one in Morris Township, New Jersey, tell me their servicer,
    like Congressman Green said, only gave them 3 months, and that
    the whole balance would be due in 90 days.
        Chairwoman Waters. Well, let me stop you. Do you think we
    should have some penalties for servicers who violate the law
    that we have in the HEROES Act, and require lump sum payments
    like that?
        Mr. Williams. I do believe so. They are roadblocking. They
    are stopping. They are clogging it up so that we can't have
    progress.
        Chairwoman Waters. Well, I thank you for your testimony
    here today.
        And thank you, Mr. Green. I yield back the balance of my
    time.
        Chairman Green. The gentlelady yields back.
        The ranking member of the subcommittee, Mr. Barr, is
    recognized for 5 minutes for questions.
        Mr. Barr. Thank you, Mr. Chairman. And thank you to all our
    witnesses for your testimony, which was, obviously, very
    powerful testimony about the vulnerability of homeowners at
    this time. And if I may just offer one comment or observation
    about the testimony of all of our witnesses, it just speaks to
    the very important need for us to avoid any future shutdowns of
    the economy. Of course, we need to practice hygiene and mask-
    wearing and all of the things to prevent the spread of the
    virus, but particularly for minority borrowers, based on the
    testimony that so many have offered here today, it just speaks
    to the importance of getting people back to work so that they
    can provide for their families and meet those payment
    obligations.
        Let me start with a question for Dr. DeMarco about the non-
    federally-backed mortgages. I think your testimony was that for
    those non-government-backed mortgages, those borrowers are
    actually experiencing a higher forbearance rate than federally-
    backed mortgages.
        Dr. DeMarco, what does that tell you about the marketplace
    and how the marketplace is responding without the HEROES Act?
        Mr. DeMarco. I think it is telling us a couple of things. I
    think it is telling us that what was in the CARES Act, the
    forbearance provisions in the CARES Act that had been
    implemented for federally-backed mortgages is a sound approach
    to dealing with this kind of situation, and that servicers that
    are not required under the CARES Act to provide this support
    are still utilizing those same tools to assist their customers
    in non-federally-backed mortgages.
        I think that servicers recognize in this situation that
    payment forbearance is an appropriate response to assist their
    borrowers, and, in fact, they are doing that, whether required
    by the CARES Act or not. So, this has really developed as a
    best practice that it is being utilized by servicers of non-
    federally-backed mortgages, very effectively, and as you noted
    and as I noted, at a greater rate than we see in the GSEs now.
        Mr. Barr. The HEROES Act, which, as you know, passed
    without any Republican support, contains some new parameters
    around options for homeowners experiencing difficulties. But
    apparently, the authors of the HEROES Act believe that
    instituting mandatory automatic forbearance for all borrowers
    and limiting loan modification options would benefit borrowers.
        Dr. DeMarco, how would these proposed sections of the
    HEROES Act impact a servicer's ability to work with their
    customer, and would they actually help or hurt American
    families trying to stay in their homes? And in the context of
    answering that question, could you talk about the importance of
    communication between servicers and borrowers?
        Mr. DeMarco. That is actually where I was going to start. I
    understand the intention behind wanting to create an automatic
    forbearance opportunity for borrowers. But there is actually, I
    suggest, something more important here that actually comes out
    of the work that Congress did in the Dodd-Frank Act and has
    been implemented since by the CFPB, but it was also part of the
    development servicer practice as a result of the Great
    Recession.
        Now, there is the importance of timely communication
    between a servicer and their customer, if the customer is
    having problems paying their mortgage. So we don't want to wait
    60 days and say, ``Oh, well, we haven't had a check come in; we
    put them on forbearance.'' Servicers have to be and should want
    to be in contact with their customers before you get to 60
    days, and want to understand what is the customer's situation
    so that they can, in a timely way, deliver an appropriate
    support or opportunity to help get that homeowner back on their
    feet. So, for example, the homeowner may have missed 2 months
    of payments for reasons having nothing to do with an economic
    disruption due to the pandemic, but for some other reason. And
    so, the servicer wants to get in touch with that homeowner,
    find that reason, and get to solving that homeowner's
    particular problem.
        That is why we should suggest that the idea of making sure
    the servicer is actually staying in contact with their customer
    and the customer is staying in contact with the servicer is
    going to yield a better outcome for the various situations that
    we are going to see here.
        Mr. Barr. My time has almost expired, but I think it is
    important to recognize that different homeowners face different
    difficulties, and a one-size-fits-all approach may not be
    better. And if we can get folks into repayment quicker, we
    should do that.
        And, finally, what we did in the CARES Act or how much
    forbearance requirement or forbearance is allowed in these
    cases, nothing can replace getting people back to work and
    getting kids back in school so people can take care of their
    mortgage obligations. Thanks so much, and I yield back.
        Chairman Green. The gentleman's time has expired.
        The Chair now recognizes the gentlewoman from Ohio, Mrs.
    Beatty, who is also the Chair of our Subcommittee on Diversity
    and Inclusion, for 5 minutes for questions.
        Mrs. Beatty. Thank you so much. It is certainly my honor to
    be on this subcommittee, and I thank you and Ranking Member
    Barr, and I certainly thank our Chair of the Financial Services
    Committee, Chairwoman Waters, and Ranking Member McHenry.
        First, let me say to all the witnesses, thank you for your
    time and for your testimony.
        My first question--I am going to try to get through several
    questions, so, if I kind of put my hand up or move on, please
    excuse that, it is just because of the timer.
        This question is for you, Ms. Cohen. As you know, the CARES
    Act is very explicit about the protections Congress intended
    for homeowners with regards to forbearance. Borrowers
    experiencing financial hardship due to COVID-19 were to be
    provided forbearance for 180 days with the possibility of an
    extension for another 180 days. Despite this, I have gotten
    calls, dozens of calls, and they are confused about what the
    law said and what my constituents' mortgage servicers were
    offering in that way.
        As you know, we passed the CARES Act on March 27th. Can you
    tell me, despite the confusion going on in the marketplace that
    we all knew about--where was the CFPB, who has oversight of the
    mortgage services industry, and why did it take us until June
    4th?
        Ms. Cohen. Thank you for your question. In terms of the
    complaints that you are hearing, we do have some good
    protections in the CARES Act. And the Federal regulators only
    need to step up their game and do much greater oversight of the
    servicers. In terms of the CFPB, they appear to have spent most
    of their time relaxing regulations for servicers and providing
    advice for homeowners. Homeowners need protection.
        Mrs. Beatty. Do you think they should have been doing more?
    I get the relaxing part, but people are still hurting, and they
    have oversight. Yes or no?
        Ms. Cohen. Yes, the CFPB should do more, starting with
    making sure people don't face foreclosure until they get help.
        Mrs. Beatty. Thank you.
        Let me move on to the next question. Mr. DeMarco, this
    question is for you. Earlier in the week, and maybe you have
    seen this article, ProPublica published a story entitled,
    ``Trump Financial Regulator Quietly Shelved Discrimination
    Probes into Bank of America and Other Lenders,'' which found
    that the Office of the Comptroller of the Currency (OCC) halted
    or stalled at least six investigations into discriminatory
    mortgage redlining against the recommendations of their own
    career staff. This was the same time and the same agency that
    was working to undermine and water down the Community
    Reinvestment Act (CRA), which is supposed to protect against
    that type of discriminatory lending. In this article, they
    found that the OCC had found patterns of discriminatory lending
    against African Americans and Latinos in several lending
    institutions, in several areas around the country. It also
    listed a whole lot of other things that were shelved.
        Mr. DeMarco, many of the lending institutions identified in
    the articles are members of those associations you lead. Can
    you tell me your response to this, and what are you doing to
    ensure that members of your organization are not perpetuating
    the social and economic injustices that African Americans and
    other minorities continue to face? This is very troublesome to
    me.
        Mr. DeMarco. Certainly, and I would understand that Mrs.
    Beatty. Forgive me, I am not aware of this article. I have not
    read it or seen it, so I am at a disadvantage there. But I will
    take what you said, and certainly, I would be concerned about
    those sorts of issues. I am sure if any of my member companies
    are named in that article, that they are looking at what is
    going on here, and I would be happy to go and take a look.
        Mrs. Beatty. Thank you so much. Let me go to the chairman.
        Mr. Chairman, I would like to request that the committee
    use its powers and resources if necessary to subpoena documents
    from the OCC related to previous lending discrimination
    investigations, and seek depositions of senior leaders of the
    OCC, including the Director himself, Joseph Otting, to get to
    the bottom of these allegations. We have been hearing them. It
    has been talked about, and I am sorry that Mr. DeMarco is not
    familiar with the article. I will have my staff also send that.
    And my time is up. I yield back.
        Chairman Green. Your request is duly noted and will be
    acted on in the due course of events.
        The Chair now recognizes the gentleman from New York, Mr.
    Zeldin, for 5 minutes.
        Mr. Zeldin. Thank you, Mr. Chairman. I appreciate the
    testimony here today.
        Thank you to Chairman Green and to Ranking Member Barr and
    Chairwoman Waters, as well. I appreciate all of you holding
    this hearing.
        I have the honor and privilege of representing the First
    Congressional District of New York, which covers most of
    Suffolk County. Suffolk County is one of the most expensive
    places to live in the country, so affordable mortgage options
    are essential to my constituents.
        We are here today to discuss mortgage servicers who play a
    client-facing role in mortgage finance. On April 10th, I
    spearheaded a letter to Secretary Mnuchin with 19 other members
    of this committee. The letter highlighted the need to ensure
    adequate liquidity for mortgage servicing because residential
    mortgage servicers are typically obligated to advance payments
    of principal, interest, taxes, and insurance on to investors
    and municipalities and insurers, whether the borrowers make
    those payments or not.
        If a homeowner falls behind on payments, it is the
    servicer's role to work with the borrower and find ways to get
    them back on track through loan modifications. In the CARES
    Act, Congress decided that a nationwide, broad-scale
    forbearance program was needed, but it was important that steps
    were taken to buoy the market if forbearance take-up rates
    continue to skyrocket.
        Mortgage servicers have a vital role to play in helping
    borrowers, but cannot shoulder the entire onus of government
    actions to protect the American homeowners impacted by COVID-19
    if they do not have access to the needed liquidity to execute
    on those government actions.
        I am pleased that Federal agencies have focused on this and
    continue to work with servicers on how best to serve
    homeowners. FHFA and HUD issued guidance and scripts to be
    distributed to mortgage servicers. These step-by-step
    instructions have helped to guide servicer discussions with
    borrowers. Additionally, the GSEs and Ginnie Mae have provided
    assistance to servicers dealing with loans in forbearance.
        Meanwhile, the New York attorney general, on April 24th,
    called for mortgage servicers to, ``automatically waive late
    fees and place homeowners in 3-month forbearance as soon as a
    payment is missed, whether or not this action is requested by
    the homeowner.''
        Dr. DeMarco, my question first for you is, should borrowers
    be automatically enrolled in forbearance, or is it better for
    the borrower to speak with his or her servicer first regarding
    the best options for his or her situation?
        Mr. DeMarco. I think it is definitely better for the
    borrower to speak with their servicer as soon as they have any
    issues with making a mortgage payment, explain what those
    issues are to the servicer, and the servicer may work with the
    borrower to determine what is the appropriate course and the
    best course for that particular borrower's circumstances.
        Ms. Cohen. May I respond to that?
        Mr. Zeldin. Please.
        Ms. Cohen. Because the subject came up twice, I will do it
    quickly. We agree that people should try to talk to their
    servicers, but as I stated before, more borrowers are not
    paying their mortgages than are making forbearance arrangements
    with their servicers, according to the U.S. Census Bureau.
    People who are already late on their mortgages have taken a hit
    on their credit, and they shouldn't face foreclosure, and they
    should get more assistance. Thank you.
        Mr. Zeldin. Thank you.
        Dr. DeMarco, forbearance take-up rates seem to have leveled
    off for now. What is your assessment of the servicer liquidity
    situation?
        Mr. DeMarco. I think that, as a result of the
    administrative actions that you mentioned, particularly by FHFA
    and HUD, as well as some actions by the Federal Reserve and the
    mortgage-backed securities market, the liquidity situation has
    stabilized. And the interesting thing here is by regulatory
    actions that put guardrails around or limits around the
    servicers' liquidity responsibility on any given loan actually
    enabled the private market to step in and provide additional
    liquidity. Once we had greater certainty about what the rules
    of the road were going to look like in terms of the answers and
    what the duration was going to look like, the markets actually
    stepped in. And we still believe that the Federal Reserve and
    the Treasury can and should be ready to step in as needed if
    the situation turns worse again and liquidity is needed for
    nonbank services.
        Mr. Zeldin. Thank you. My time is running out, so I just
    want to thank again all of the witnesses for being here.
        To Chairwoman Waters, Chairman Green, and Ranking Member
    Barr, it is great to see all of my colleagues here. I look
    forward to seeing you in person. I hope you and your families
    are healthy. To all the staff on the call, thank you for what
    you do to make this hearing possible and for your service to
    the Financial Services Committee. I yield back.
        Chairman Green. The gentleman's time has expired. The Chair
    now recognizes the gentleman from Massachusetts, Mr. Lynch, who
    is also the Chair of our Task Force on Financial Technology,
    for 5 minutes.
        Mr. Lynch. Thank you very much. I appreciate you holding
    this hearing, Mr. Chairman.
        I guess, I would like to look further out in terms of, in
    January or when we--hopefully when we start to come out of this
    lockdown, especially in the southern States, what does the
    transition look like in terms of recognizing the inability--
    well, recognizing the tremendous pressure that has been put on
    individual homeowners, in banks, local community banks, what
    does that transition look like in terms of trying to slowly,
    incrementally get us back to where there is full opportunity
    for people to catch up on their mortgage payments, in some
    cases, reengineering some of the mortgage products that are out
    there or reconstituting the mortgages that are on property that
    are inadvertently falling behind? How does that all come
    together? And is it the mortgage servicer or is it--obviously,
    the mortgage servicer has obligations to the shareholders. So,
    I am little bit unclear on how we can reengineer this in a way
    that doesn't put the homeowner or the renter, in some cases, at
    severe risk.
        Let's say the President pulls off the emergency status, and
    by Executive Order might end all of the support and relief that
    we have been providing, what does that look like, and how do we
    help those people transition slowly back to some semblance of
    normalcy?
        Mr. DeMarco. I will be glad to take a crack at that,
    Congressman.
        With 4.8 million households in forbearance, you can imagine
    that not everyone is going to come out of forbearance in the
    same situation.
        Over the last few months, I think between FHFA, the GSEs,
    FHA, and I don't want to leave out VA and USDA, there has been
    a lot of development about refining for servicers the
    guidelines of these programs for what that post-forbearance
    looks like, but I think across all of them, it can be simply
    boiled down into, broadly speaking, three buckets.
        For a borrower who comes out of forbearance and actually
    has the capacity not just to continue to pick up their mortgage
    payment, but to make a greater payment, they may determine they
    want to be on a short-term repayment plan and get caught up
    faster.
        For a lot of borrowers, if they get back to work, they can
    resume their pre-pandemic mortgage payment, but can't pay more
    than that. In that case, for most of those borrowers, their
    forborne payment is going to get added to the end of the loan--
    life of the loan to be paid then and then resume a normal
    payment, but for those whose income has been permanently
    disrupted, they can't go back to their prior payment, we are
    going to be able to do a loan modification where we get a way
    of getting them caught back up by redoing the loan using loan
    modification terms. That is it, briefly.
        Mr. Lynch. Okay. So you don't anticipate any objection on
    the part of some of the shareholders that are due payments from
    the mortgage servicers, and you don't expect any action that we
    would have to take in order to make that happen? It is already
    in place?
        Mr. DeMarco. Certainly, with the--
        Ms. Cohen. I can take that.
        Mr. DeMarco. Okay.
        Ms. Cohen. Just briefly, what we saw in the last crisis and
    what we continue to see is that, as you said, Mr. Lynch,
    servicers on private mortgages are beholden to the guidelines
    from the investors, and so what we would like to see is a safe
    harbor for mortgage servicers from investor liability so that
    they can provide loan modifications along the lines that the
    GSEs and FHA and the other government agencies can provide that
    are sustainable.
        I would add that these issues are unprecedented and we
    don't yet know whether the loan modifications being offered
    will be affordable to enough people.
        Mr. Lynch. Okay. That is a perfect answer. That is what I
    wanted to know, in case we need to create a safe harbor to
    allow the loan servicers to give a break to some of these
    mortgage holders. We need to collaborate on that. I think that
    would be a win-win all the way around, but thank you very much.
        And I yield back.
        Chairman Green. The gentleman yields back.
        The Chair now recognizes Mr. Rose for 5 minutes.
        Mr. Rose. Thank you, Chairman Green and Ranking Member
    Barr, and thank you to our witnesses for testifying before the
    committee today.
        Currently, as we know, approximately 4.1 million homeowners
    are in forbearance plans, some due to the uncertainty
    surrounding COVID-19. Reports have shown that a large number,
    however, have continued to make payments even after requesting
    forbearance. That number has dropped sharply between March and
    June, though.
        Back here in Tennessee, folks are ready to get back to
    work, and I believe we need to do so as quickly and safely as
    possible.
        Dr. DeMarco, why did some people opt into forbearance but
    continue to pay down their principal, in your opinion?
        Mr. DeMarco. Congressman, I am not sure there is one
    explanation for that. In some cases it might have been a timing
    issue. Maybe they weren't sure whether they got the request in
    on time for that first month. In other cases, I believe, and
    this may be the majority, that the consumer wasn't exactly sure
    what their economic situation was going to be.
        Maybe they had a lot of uncertainty at work, and they
    wanted to get on forbearance quickly, so that they had that.
    And then once they realized that, in fact, their circumstances
    were okay, they may have ended the forbearance or others may
    actually have needed it and have started to take advantage of
    it since, so I think there are multiple reasons here.
        Mr. Rose. Are there any adverse consequences to asking for
    forbearance being approved, but then not taking advantage of
    it?
        Mr. DeMarco. You have to have an economic hardship
    resulting from the pandemic in order to ask for the
    forbearance, but if you ask for forbearance and continue to
    make your mortgage payment, no, there is no adverse consequence
    for you.
        Mr. Rose. Do you believe, Dr. DeMarco, that getting
    Americans back to work would decrease the number of borrowers
    who actually need to be in forbearance?
        Mr. DeMarco. Certainly, Congressman, the more people we get
    back to work, the more they are going to be able to pay their
    mortgage, and the fewer are going to need forbearance, yes.
        Mr. Rose. The CARES Act required unconditional forbearances
    of voters experiencing trouble due to the pandemic. However,
    those provisions only covered federally-backed loans.
        Dr. DeMarco, how have the private mortgage servicers
    changed their practices to help keep families in their homes?
        Mr. DeMarco. They are generally doing the same thing as the
    servicers of federally-backed mortgages. They are offering
    mortgage payment forbearance to their customers who contact
    them and declare they are having a financial hardship due to
    the pandemic. As a result, the rate of those loans in
    forbearance is actually greater than the GSE loans.
        Mr. Rose. Interesting.
        Ms. Cohen. Mr. Rose?
        Mr. Rose. Yes.
        Ms. Cohen. One thing I wanted to point out is that most
    private servicers, if they have an investor that they are
    servicing for, they are advancing payments, so at about 120
    days of forbearance, they are much more financially strapped.
        And we are concerned that 90-day forbearances aren't going
    to go to 180 days in the private market and that is going to
    present a significant problem.
        Mr. Rose. Thank you, Ms. Cohen.
        Mr. Williams. And, Mr. Rose, excuse me, the National
    Association of Real Estate Brokers, in our statement, we have
    addressed that as one of our five solutions that private
    servicers need to adhere to the GSE and FHA guidelines--
        Mr. Rose. Thank you.
        Ms. Griffin. I would also like to add--
        Mr. Rose. Let me go ahead to some other questions--
    reclaiming my time.
        Dr. DeMarco, what other efforts have you seen industry
    stakeholders make to protect homeowners?
        Mr. DeMarco. I think that they have done a great deal to
    set up on their websites clear information for borrowers to
    understand what their options are. They have made a tremendous
    effort to shift all their servicing operations to the
    individuals' homes. They had to do the technology and the
    security around that to make that happen. I think those have
    been terrific efforts that servicers have made.
        And the other is, they are proactively reaching out to
    their customers to find out what their situation is and to make
    sure that they are getting the right tools to help them in
    their situation.
        Mr. Rose. Thank you.
        Throughout the pandemic, I believe, that the Trump
    Administration has continuously rolled out updated guidance for
    industry stakeholders.
        Dr. DeMarco, in the few seconds we have--well, it doesn't
    look like we have enough time, but I would, if time permits
    later, love to hear your assessment of how the agencies have
    assisted with the implementation of the CARES Act.
        And with that, I yield back, Chairman Green.
        Chairman Green. The gentleman's time has expired.
        The Chair now recognizes the gentlewoman from New York, Ms.
    Velazquez, who also happens to be the Chair of the House Small
    Business Committee, for 5 minutes.
        Ms. Velazquez. Thank you, Chairman Green, Chairwoman
    Waters, and Ranking Member Barr for this important, quite
    timely hearing.
        This question is for the panel. Recently, companies and
    organizations like the Center for Responsible Lending, the
    National Association of REALTORS, and Quicken Loans have all
    come out in opposition to the Trump Administration's plan to
    weaken the disparate impact rule; thereby, making it harder to
    pursue housing discrimination cases. Several other groups have
    come out in opposition to the proposed changes as well.
        So with a quick yes or no, does anyone believe now is the
    time to weaken housing discrimination rules?
        Ms. Cohen, let's start with you.
        Ms. Cohen. No.
        Ms. Velazquez. Ms. Griffin?
        Ms. Griffin. No.
        Ms. Velazquez. Mr. Williams?
        Mr. Williams. No.
        Ms. Velazquez. And Mr. DeMarco?
        Mr. DeMarco. No, we don't want to weaken housing
    discrimination rules.
        Ms. Velazquez. Thank you.
        Ms. Cohen, while the FHA has provided some guidance to FHA
    servicers regarding the implementation of the CARES Act related
    to the forbearance, a recent HUD OIG report found that, ``about
    90 percent of FHA loans provided incomplete, inconsistent data,
    and unclear guidance to borrowers.''
        Do you think further guidance from the FHA to servicers
    regarding forbearance is needed?
        Ms. Cohen. Yes. FHA should provide further guidance and so
    should Congress include it in the next package, both about
    websites, written notice, and oral notice.
        Ms. Velazquez. And why do you think the FHA hasn't issued
    such guidance?
        Ms. Cohen. I can't answer why FHA has not done that. I will
    say that I agree with Dr. DeMarco that they have done a really
    incredible job of putting out a lot of guidance and they just
    put out a lot of new rules, which, hopefully, will make loss
    mitigation more affordable for more people.
        Ms. Velazquez. Thank you.
        Ms. Griffin, what has your organization seen in terms of
    servicer communications to borrowers about having to pay a lump
    sum payment at the end of the forbearance period?
        Do you feel misinformation about repayment options is
    discouraging borrowers from accessing the forbearance relief
    afforded to them under the CARES Act?
        Ms. Griffin. Absolutely. The people that we talk to are
    frazzled about this lump sum payment. Few of them have actually
    even heard of the 180 days, let alone a year.
        So, it is causing really a lot of undue headache in these
    communities, and the borrowers are really concerned about their
    ability to pay, even at some point, let alone after 90 days.
        They are concerned that when they are going to work and,
    yes, the question earlier, yes, when employment increases,
    things will be a little bit better, but right now these
    homeowners are frazzled--
        Ms. Velazquez. Thank you.
        Ms. Griffin. --despite everything with the servicer--
        Ms. Velazquez. Thank you.
        Ms. Griffin. --they are not getting the right information.
        Ms. Velazquez. Thank you, Ms. Griffin.
        Yes, Mr. Williams?
        Mr. Williams. Just to dovetail on what Ms. Griffin said,
    that we basically need more awareness, the borrowers need to
    know that their rights are protected. We need to promote on TV,
    on the radio, and even email. They need to know they are
    protected because it is folklore right now.
        Ms. Velazquez. So whose responsibility it is to get
    information out? Who is failing?
        Mr. Williams. The servicers and the government right now.
    We are spending a lot of money, as we said in our statement, a
    lot of money on--
        Ms. Velazquez. Thank you.
        Mr. Williams, many individuals with mortgages currently in
    forbearance might still be unable to make their payments when
    their forbearance protections under the CARES Act expire.
        Based on what you have seen over the past few months, are
    you concerned about servicers' ability to work with borrowers
    to keep them in their homes after their forbearance period
    ends?
        Mr. Williams. I am very concerned. I have two witnesses,
    two people that I know who said that--one servicer said they
    didn't work with the program at all. It is a variable note. So,
    that is what they told this lady, that they didn't work with it
    at all; they would not be able to.
        Another servicer gave the person, the borrower, 90 days, 3
    months, and they have a payment of $17,000 at the end of that--
        Ms. Velazquez. Thank you.
        Mr. Williams. --so I am extremely concerned.
        Ms. Velazquez. My time has expired.
        Thank you.
        Chairman Green. Thank you. The gentlelady's time has
    expired.
        The Chair now recognizes Mr. Timmons for 5 minutes.
        Mr. Timmons. Thank you, Mr. Chairman. It is good to be with
    you all, even if it is on a conference video. I appreciate you
    having this hearing. We need to get this right.
        Just in January/February, we are experiencing some of the
    lowest unemployment in the history of South Carolina, in the
    history of our country, and COVID-19 has just changed
    everything.
        So, the Federal Government did what it could. The CARES Act
    had a lot of great things. It was hurriedly put together, and I
    think overwhelmingly, it was in the right direction. We are
    going to make sure we get the next package right. Phase four
    needs to be tailored to those who need it and people who are
    still struggling from unemployment or with other economic
    challenges. We need to make sure that we get them the help that
    they need.
        We are expecting a vaccine here in December, January,
    February, March, April, the sooner the better, in my opinion. I
    am sure we will all agree on that. I am probably going to be
    one of the first people to get it because I am in the National
    Guard, so I hope they get it right the first time.
        Mr. DeMarco, I am concerned that in October/November, we
    are going to hit our 6 months and we are going to have a lot of
    people who are still unemployed who are going to continue to
    have challenges making their payments. What policies do you
    think we should be considering to address that?
        Mr. DeMarco. For those in federally-backed mortgages, which
    is the majority of homeowners, if they get to 6 months and they
    still are experiencing an economic hardship because of this
    pandemic, then they should be in touch with their servicer
    requesting an additional extension of their forbearance period.
        In that sense, the answer is already there. The larger
    question is getting people back to work, and balancing and
    dealing with both the health issues our country is facing as
    well as the need to get the economy going.
        Mr. Timmons. We are dealing with that exact issue here in
    South Carolina. And the issue is, if you are older or have an
    underlying health condition, we need you to protect yourself
    and we need to make sure that you are able to protect yourself.
        You are not worried about having your credit ruined or
    risking your safety going back to work, but if you are healthy
    and you have a lower risk factor, we need you to get back to
    work, because ultimately, getting the economy restarted and
    getting the vaccine is what is going to get us through this.
        Ms. Cohen. Mr. Timmons?
        Mr. Timmons. Yes, ma'am.
        Ms. Cohen. I just wanted to supplement what Mr. DeMarco
    said. We do want to see people get back to work when it is time
    to do that and they are healthy, but one-third of the mortgage
    market is not government-backed loans and so we want to make
    sure that those people can get affordable loan modifications if
    they need them after their forbearances so that we can see
    increased employment and decreased foreclosure, including in
    the upstate where you live.
        Mr. Timmons. Yes, ma'am. I appreciate that.
        Honestly, it was remarkable to me. I had so many
    individuals calling and talking about this issue we are
    discussing of a balloon payment at the end of the forbearance
    period, and I had a call with the bankers and the credit unions
    immediately the next day, and I just wanted to make sure that
    was not going to be the case anywhere.
        Obviously, it is unacceptable. And I think the adverse
    impact on the perception of any entity that is not providing
    the forbearance necessary to those who need it is sufficient,
    the PR hit would be not worth the rub.
        But on to a different subject. As you all know, the FHFA
    and the GSEs have adopted temporary origination policies for
    the largely remote and virtual environment we find ourselves
    in. This has applied to appraisals, underwriting, and remote
    online notarization. This has been hugely helpful, in my
    opinion, to help maintain the health of the housing market
    during the pandemic.
        I would like to ask each of you, yes or no, do you think
    these remote policies, which are set to expire August 31st,
    should be made permanent?
        I will start with Dr. DeMarco.
        Mr. DeMarco. These policies have certainly helped keep the
    mortgage market going, and yes, in one form or another, we
    would like to see some of these--certainly things like the
    remote online notarization be made permanent.
        Mr. Timmons. Mr. Williams?
        Mr. Williams. I believe some of those programs, some of
    those options should be made available and be made permanent.
        Mr. Timmons. Thank you.
        Ms. Cohen?
        Ms. Cohen. Yes. We think those are important programs, but
    we need to make sure they are only used in certain
    circumstances and we need to make sure that appraisals are
    still reasonably accurate.
        Mr. Timmons. Absolutely. I think we can agree on that.
        Mr. Chairman, again, thank you for having this hearing and
    I look forward to working with you on this issue.
        I yield back.
        Chairman Green. The gentleman yields back.
        The Chair recognizes Mr. Perlmutter for 5 minutes.
        Mr. Perlmutter. Thank you, Mr. Chairman.
        And I have to say, I subscribe to much of what Mr. Timmons
    had to say, and a pretty realistic view of what we are facing
    in the questions that he asked. And I had taken some--not
    offense, but I differed with Mr. Barr as he started off his
    remarks in saying this economic situation we are in is as a
    result of a government-mandated shutdown.
        The bottom line is, this is COVID related, and we don't
    have it under control. This thing is going to continue to
    evolve. It is going to be difficult in we don't know how many
    different ways. And as Mr. Timmons was saying, and I think all
    of us believe, each of us has to provide some kind of latitude
    to others for all of us to get through this thing.
        So, 37 States in this past week have seen increased numbers
    of infections and hospitalization, so we are not out of this by
    any stretch of the imagination, and I think that the housing
    industry, the mortgage industry is going to continue to be
    roiled by this for some time. So, I think this is going to
    evolve.
        I would ask Ms. Griffin and Mr. DeMarco, there are
    provisions in the HEROES Act that contemplate the fact that we
    are not out of this virus yet, and at the end of this month,
    the pandemic unemployment insurance runs out. We see a lot of
    the funding for the PPP loans will have been exhausted by
    individual businesses. We haven't done another stimulus or
    stability payment.
        If this virus continues to roll as it has, and I will start
    with you, Ms. Griffin, are we going to need to implement some
    things in the HEROES Act so people can pay their mortgages?
    Forget about forbearance for a second. I think we would all
    like them to pay their mortgages.
        Ms. Griffin. Absolutely. The reality is that the more help
    we can give to homeowners, the better. They are going to
    absolutely need it, as you just said. This situation is not
    getting better. It is getting worse.
        Certainly, consideration to helping homeowners, helping
    organizations like ours, and others that can help these
    homeowners get on their feet and work with these servicers,
    this is really critical.
        Our homeowners do not have--many of them, at least, don't
    have a grasp for what is next. And so the work--and I will just
    certainly say with the counseling organizations, that we can
    just kind of settle people down, give them direction, even help
    to provide advice and guidance about working with their
    servicer as well as how to enhance their own lives. This is
    what we want.
        And we certainly need to think about a HAMP-like program
    that was very affected the last time. I think that this will be
    very effective going forward, and this is something that we
    would really, really encourage.
        Mr. Perlmutter. And I thank you for that. Ms. Griffin, I
    think, you hit the nail on the head. When you have uncertainty
    and you have fear in an economy, it slows the economy down. No
    ifs, ands, or buts. There needs to be some level of certainty,
    and to try to hopefully, get a vaccine as soon as we can or
    make some technological breakthroughs in therapeutics to take
    away the fear.
        But Dr. DeMarco, what do you think we are going to need,
    assuming that this virus isn't extinguished or isn't fought off
    by a vaccine for 5, 6, 7 months?
        Mr. DeMarco. Mr. Perlmutter, I agree. This is a big-picture
    question about our economy. It is about small businesses, and
    even large businesses that are suffering because of how the
    pandemic intersects with those industries and those businesses.
    It is causing great hardship among families because of the
    furloughs and the unemployment that is resulting from that.
        So, this is a big macroeconomic challenge and that is a bit
    outside of my scope, but I would say that I understand that
    Federal Reserve Chairman Powell has been up before Congress
    recently, talking about the need for continued fiscal support
    in face of how the pandemic and the economic response to it is
    affecting our economy, our businesses, and our workers.
        And so, I don't have a particular prescription, but to say
    that I think Chairman Powell certainly identified that as a
    role for Congress.
        Mr. Perlmutter. Thank you.
        And I yield back to the Chair.
        Chairman Green. The gentleman's time has expired.
        The Chair now recognizes Mr. Taylor for 5 minutes.
        Mr. Taylor. Thank you, Mr. Chairman. I appreciate this
    hearing. I think this is a very important topic and I think we
    have been--I get a lot about the individual impact and I think
    all of us, as Members of Congress, see that every day in our
    districts.
        I was at a food bank this morning in Allen, Texas, and just
    watching the real need in our communities has deeply affected
    me. I want to take a second and kind of step back and talk
    about the macro for a second, talk about the big picture.
        Right now, about 8 percent of the home mortgages in the
    United States, according to the data I have seen, are currently
    in forbearance. And just thinking about what that could mean if
    there wasn't forbearance.
        Let's just kind of take that for a second, and say if there
    wasn't forbearance, my guess is that would mean about 8 percent
    of the homes in the United States would be foreclosed within
    the next year. And then, when they go to sell those or
    liquidate those, it would basically collapse the real estate
    market.
        So, home values would collapse across the country because
    you have a tremendous amount of foreclosures, and I am saying
    that based on the experience that Dallas, Texas, went through,
    and Texas as a State, during the 1980s.
        I remember the savings and loan crisis and you watched a
    tremendous number of foreclosures with the Resolution Trust
    Corporation (RTC), what are referred to as the RTC days in
    Texas in the 1980s and early 1990s.
        And the liquidations were such that things were literally--
    office buildings were trading for $10 a square foot, people
    literally could take retail properties just by paying the
    taxes.
        So I just wanted to know if any of you have any thoughts
    about what if we didn't have forbearance, how bad would it be
    for the housing market in this country, when the valuation side
    in 12 or 24 months, once you had a bunch of liquidations, then
    collapses in values?
        Mr. DeMarco, do you want to speak to that?
        Mr. DeMarco. Congressman, it certainly would be bad. I
    don't know how to size it any differently than you just did. It
    would be bad. It would also--one of the things that forbearance
    has accomplished is it has assisted in the response to the
    health crisis by allowing people to be able to stay home to
    quarantine, or whatever the particular standard is in a
    community to help suppress the virus. It is helping combat the
    virus, recognizing we are providing economic support to that
    household or those workers because they are not going to be
    able to pay their mortgage.
        So, there is not just the economic toll and what happens in
    the real estate market, there is also the question of the
    health impact, and we create an incentive where people feel
    they have to go back to work, even if that is not coinciding
    with good health practices in this environment.
        Mr. Taylor. Sure.
        Mr. Williams, do you want to talk about what we are trying
    to stop from happening here?
        Mr. Williams. I do. It would be horrific. But what happened
    to--when I went to school, they taught me the three important
    necessities in life were food, clothing, and shelter. Well, how
    did we get to bailing out the airline industry before we look
    out for the homeowner?
        I just feel that if we don't do something, if we don't act,
    if we don't get everyone involved and get on the same page in
    the program, if we don't move quickly, then we are going to be
    in for a huge, huge problem.
        Ms. Griffin. Absolutely. If I could add to that--well,
    first of all, the forbearances have provided a profound help to
    homeowners. Without it, we would be inundated with foreclosures
    where there is a possibility we are headed towards that and we
    certainly need to work together.
        But without question, for people of color, for these
    vulnerable communities without the forbearances, without the
    work that we are doing together, there would be a whole other
    generation of loss of wealth. It is bad now, it appears to get
    worse, and hopefully we can sort of work together to stem this
    tide.
        Mr. Taylor. Ms. Cohen, do you want to make any comment on,
    again, the macro situation? It seems like there is consensus
    that we are avoiding a macro catastrophe by trying to use
    forbearances and mechanisms to get to the other side.
        Ms. Cohen. I agree with that, Mr. Taylor. I think what we
    should also keep in mind in this macro situation is, who isn't
    making their payments and doesn't have a forbearance, and what
    is that going to do to the economy and to property values as
    well, and how can we collect enough data that we understand
    what is going on so we can prevent a catastrophe?
        Mr. Taylor. Sure.
        And in my final few seconds, I will just point out that I
    am working with a lot of members on this committee on both
    sides to try to work on forbearance or trying to help within
    the commercial real estate space because we have done a great
    job. We have heard that on the home side. There is much work to
    do, but we are headed in the right direction, but in commercial
    real estate, I am very deeply concerned that we are about to
    have a foreclosure crisis--
        I yield back, Mr. Chairman. Thank you for indulging me.
        Chairman Green. The gentleman's time has expired.
        The Chair now recognizes Ms. Tlaib for 5 minutes.
        Ms. Tlaib. Thank you so much, Mr. Chairman, and thank you
    so much for this really critically important hearing.
        I know Chairman Al Green has come to my district and
    actually deeded tower of housing justice tour and saw that,
    even in the last recession, just how much communities are still
    suffering. So many of my residents, especially throughout Wayne
    County, have been in survivor mode.
        They have been living paycheck to paycheck, and in just one
    of my cities, in the City of Detroit, 88,000 people were
    evicted out of their homes. So, for this to happen in a
    pandemic is not in control of any of us, right? This is very
    much something that came about, that I don't think any of us
    could have truly been able to truly prepare for, especially in
    the housing mechanism. I don't know about the healthcare, but
    especially with housing.
        And so, I want to talk about this. I think this is really
    critically important, and I think my colleague, Mr. Taylor, was
    talking about this. Forbearance and these kinds of moratoriums
    on water shutoff, utility, student loans, mortgages, they are
    just band-aids, because all of that money is going to be due
    when the forbearance is up.
        So, what are we going to do then? I want to start with Mr.
    Williams. You know from many of your clients and even in your
    membership, because what I hear from my residents is, why
    aren't we doing recurring payments? Why aren't we doing
    something as aggressive and bold as we are doing for airlines
    and other industries?
        Why aren't we having a peoples' bailout where we are
    looking at recurring payments so that people can pay all this
    debt down because, again, some of these jobs won't come back,
    but even if the jobs come back, they are not going to have the
    lump sum ready to go to be able to pay it off. They still might
    end up losing their homes.
        Can you talk a little bit about that?
        Mr. Williams. Sure. You are absolutely right, but that is
    why we asked for that five-point plan. We had some serious
    solutions that we want you all to really seriously take a look
    at, because that is the direction we feel we should go in.
        We have been decimated. This is a critical time. It is time
    for action. It is really time for action.
        Ms. Tlaib. No, no. I appreciate you bringing up my Black
    neighbors, because we lost more Black home ownership in
    Michigan than any other State, about 40 percent.
        Ms. Cohen, you have been very thoughtful in how you have
    talked about these issues and the fact that we still are
    leaving a lot of our neighbors across the country, homeowners,
    behind in the way we are approaching this.
        I don't know if you are familiar with the Automatic Boost
    to Communities Act that I introduced, but it would be recurring
    payments of $2,000 per month on a recharged debit card.
        Do you think that will help with some of the issues we are
    seeing with people possibly losing their homes because of this
    pandemic?
        Ms. Cohen. Thank you for your question, Ms. Tlaib.
        I am not familiar with it, because I live in my little
    universe of housing legislation, and I can talk to my
    colleagues about it, but the biggest problem with financially
    strapped people is that they are financially strapped. And so
    they are living on the edge and they need cash in addition to
    needing help from their servicers and from all of their other
    creditors. And so, anything we can do, to do that, will move
    things in the right direction.
        People should also look closely at legislation around that
    Homeowners Assistance Fund, because States can also administer
    programs to hit the hardest-hit areas in ways that might be
    constructive.
        Mr. Williams. Also, Congresswoman, getting the word out so
    that the homeowner or the borrower is knowledgeable enough
    about the program. This has the same effect as the PPP, where
    huge companies got all this money and then we didn't get it,
    because we weren't--
        Ms. Tlaib. Mr. Williams, even with the PPP and my
    incredible colleague, Ms. Velazquez, has been so much on the--
    bringing the voices of small businesses, but it is so
    cumbersome. Let's be honest, the servicers are playing games
    with peoples' lives.
        With some of them, if you are not actually saying the
    correct word, if you do not request it in a certain way--as a
    Member of Congress, myself, and I know I am new, but I have to
    pick up the phone and call a servicer and say, why did you tell
    my resident they don't qualify, when according to the
    legislation we passed they do qualify?
        Well, they need to say it this way. This is not a game.
    They obviously can't pay, so let's put that as an option and
    stop playing games with people who really--they are going to
    lose their home. These are not people who want to lose their
    home. They just don't have the capability of doing it, and I am
    tired of people pretending that it is because of economic
    shutdown or all these other--we did this to them. We put them
    in survivor mode. They have been literally one emergency away,
    and now the pandemic has happened, but they were one emergency
    away from going into poverty.
        So I think it is our responsibility to put people first,
    and I thank all of you so much, but I think we really need to
    talk about it--we talk about this program and, of course, we
    need all of those programs in the five points, but we need
    recurring payments. Enough.
        Other countries are doing that. They are giving people
    human dignity. Let them choose what they needed for their
    family and recurring payments, I think, is going to be key
    here.
        Thank you so much, Chairman Green. It's always a pleasure
    to work with you. Thank you.
        And I yield back.
        Chairman Green. The gentlelady yields back.
        The Chair now recognizes Ms. Dean for 5 minutes.
        Ms. Dean. Thank you, Mr. Chairman, for calling this
    important committee hearing. And I thank Chairwoman Waters as
    well.
        I also thank Ranking Member Barr, and Mr. Barr, you and
    your family are in my prayers, and you have my sympathies on
    your recent grievous loss.
        I am really pleased to be here to talk about this and know
    that the lens that I am looking through what we are talking
    about here in terms of folks and their mortgages in precarious
    places, is one from what lessons did we learn from the past?
    What did we learn from 2008?
        I was not in Congress then. Like Representative Tlaib, I am
    a freshman, but as Representative Taylor talked about, we have
    4 million mortgage loans in forbearance, as our witnesses have
    told us. Many people are not in forbearance and are missing
    payments, so we have a gaping hole there and we put together
    information and important protections through the CARES Act and
    we want to do even more through the HEROES Act. We need to get
    people the protections they need to keep the roof over their
    head to protect their credit, and protect their family.
        Mr. Williams, I would like to start with you. You have
    already talked about this, but you are concerned about what
    mortgage servicers are and are not doing to protect borrowers
    in terms of whether it is communication or reaching out when a
    payment is missed to find out what is going on to see if
    actually they should be put into the forbearance.
        What other things do you think need to be done in order to
    get protection, forbearance to as many borrowers as possible?
        Mr. Williams. I think we need to have some communication
    going out from the servicers. They need to put it in their
    mailings, emails. Hey, this should be a commercial on
    television, getting this information out. I think that we
    hinder ourselves. I think that they are limited in giving
    information for the servicers like diversity as well.
        So, those are the important things, I think, right off the
    bat that we need to increase our communication to the borrower.
        Ms. Dean. Absolutely.
        Ms. Griffin. And I would like to add in there also, get and
    complement. The outreach is critical. What we have found from
    the past foreclosure crisis was that people are--they really
    need some guidance, they really need some help.
        And even if the servicers send out information, it needs to
    be clear, it needs to be simple, and without question. We
    really need to have some advocates in the mix that can be able
    to explain things to these borrowers whom, as you said,
    Congresswoman, they are on the edge and really just need some
    guidance.
        So the outreach is certainly critical, and the hand-holding
    is also critical.
        Ms. Dean. I appreciate that.
        Ms. Cohen. Ms. Dean, can I just say one other thing? I
    agree with Mr. Williams and Ms. Griffin, but the servicers
    don't have the capacity to do the level of default servicing
    that we are going to see. They didn't do it well in the last
    crisis; they are not doing it well now. It is great if you can
    get onto a website and you don't need much from them, but if
    you actually need something from them, it is more complicated.
        So, we can't put the onus just on the homeowner to
    understand and reach out. We need automated systems and we need
    to make sure that people are offered what they need without
    having to go through a lot of red tape.
        Ms. Dean. Ms. Cohen, that is a perfect segue. I wanted to
    ask you next, what are the lessons that we learned in the past,
    that I desperately hope we do not repeat in this economic
    collapse? What are some of those lessons?
        Ms. Cohen. Thank you for the question.
        The first one is, people need affordable options when they
    can't pay their regular mortgage payment. That is one of the
    good things that came out of the last crisis, was the general
    understanding about that, but we don't know whether the
    programs we have now will be affordable.
        Second, when you have a crisis in Black and Latinx home
    ownership that has been exacerbated by the current crisis, you
    need to look freshly at what the problems are and what the
    solutions are, and to ask yourself whether we need to start
    something new.
        Ms. Dean. Let me ask you, in my final seconds here, you
    talked earlier in your testimony about the CFPB and that they
    need to help people avoid foreclosure.
        What is the responsibility of the CFPB? What could they be
    doing proactively, because we see the number of complaints just
    going through the roof with the CFPB? What should they be doing
    to help people avoid foreclosure?
        Ms. Cohen. I had a pretty long list in my testimony, but
    let me give you two. First, work with the Federal Housing
    Finance Agency on the Borrower Protection Program, provide
    transparent data, learn from the consumer complaints, and take
    action against companies that are misbehaving.
        Second, right now they have an interim final rule that they
    put out. They need to protect people against foreclosure, which
    they haven't done.
        Thank you.
        Ms. Dean. I know my time has expired.
        Thank you, Mr. Chairman.
        Chairman Green. The gentlelady's time has expired.
        The Chair now recognizes himself for 5 minutes.
        I will tell you, friends, I was here in 2008, and I saw how
    we treated the big banks. The truth is this: They were
    overpaid. Overpaid in this sense: There were banks that said,
    we don't want that money. We don't want it to appear as though
    we need the money, but we imposed upon them billions of
    dollars. They were overpaid, but when it comes to the consumer,
    the consumer gets short-changed. The consumer has to jump
    through all kinds of hoops to try to get what Congress intended
    consumers to receive.
        So I am just appalled, to be quite frank with you, at the
    fact that the consumer always seems to find himself or herself
    groveling to a certain extent to get something that these big
    banks get as a matter of course. I am not opposed to big banks;
    I just want everybody to be treated fairly.
        This program, in my opinion, has no consequences. If these
    servicers misbehave, there are no consequences. It seems to me
    that we, in the future, will have to find a way to impose some
    consequences.
        My constituents, who have actually received this notice
    that is according them 3 months of forbearance when they are
    entitled to 180 days, now have to hire a lawyer if they want to
    pursue this.
        They can't get it done simply because they have made a fair
    and just request. They will have to go through some other
    extenuating circumstances. I would like to note that this would
    be submitted into the record, without objection.
        Without objection, it is so ordered.
        It always seems that people of color are having to account
    for themselves. We have to prove that people of color are being
    discriminated against, and this is not just as it relates to
    the financial services industry, it is across-the-board. People
    of color always seem to be at the bottom.
        At some point, we have to have a system, a justice, such
    that people of color will get the same treatment as other
    persons in this society. I think that what happened to George
    Floyd is exposing the underbelly of what is happening to people
    of color, and other people are starting to realize that it will
    take more than our hues and cries to get this done. It is my
    belief that there is systemic discrimination.
        Let me go to you, Mr. Williams, if I may, please, sir. Do
    you agree that there is systemic discrimination taking place in
    lending?
        Mr. Williams. I do. I totally agree. I see it often. We
    have some resolutions. But there is no better time than now to
    address the Black home ownership program.
        Chairman Green. Let me do this. Time is of the essence.
        Ms. Griffin, do you agree that there is systemic
    discrimination in lending?
        Ms. Griffin. Yes, there is.
        Chairman Green. And let me go next to Ms. Cohen. Do you
    agree that there is systemic discrimination in lending?
        Ms. Cohen. Yes, I agree. The CFPB found that for people
    with the same credit scores, Black borrowers were rejected for
    mortgages at higher rates.
        Chairman Green. And Mr. DeMarco, do you agree?
        Mr. DeMarco. I agree that we have certainly had a history
    of this and there seems to still be areas where it is an issue,
    yes, sir.
        Chairman Green. Well, if you agree that there is this
    systemic discrimination, I have proposed that we have a
    department of reconciliation with the responsibility of dealing
    with racism and invidious discrimination in this country. And
    it would deal with financial services, it goes into policing,
    and many other areas.
        If you agree that we have this problem, and we have had it
    for hundreds of years, isn't it about time that we do something
    other than what we have been doing?
        Would you agree, Mr. Williams, that it would be appropriate
    to have a department of reconciliation, which has as its
    responsibility to look out for people who are being
    discriminated against, and this would include the protected
    classes, look out for them and report to the President, through
    a Secretary of Reconciliation? Would you agree that such a
    position should exist, sir?
        Mr. Williams. Yes, sir, I agree wholeheartedly.
        Chairman Green. Ms. Cohen, where do you stand, please?
        Ms. Cohen. Yes. We think that is important and we think it
    is important to change--
        Chairman Green. Let me move on. My time is of the essence.
    I am so sorry, Ms. Cohen.
        Ms. Griffin, where do you stand, please?
        Ms. Griffin. I fully agree that it needs to be monitored
    and there needs to be penalties.
        Chairman Green. And Mr. DeMarco?
        Mr. DeMarco. I have no opinion on a position like that,
    Congressman. I do believe we all have a responsibility to act.
        Chairman Green. Well, let me do this now that you have said
    this, Mr. DeMarco. All persons who are in agreement and you
    think that systemic racism and invidious discrimination as it
    relates to people, including the protected classes, should be
    handled with a department that specializes in this, kindly
    raise your hand, please. Raise your hand so that we may capture
    you all on screen.
        Okay. I see everyone's hands, save Mr. DeMarco. Would you
    do a screen shot of this please, staff? Thank you.
        My time has expired, and I would like to also include for
    the record, a statement from the Mortgage Bankers Association.
        Without objection, it is so ordered.
        Friends, if I may now bring this to closure. I thank all of
    you for appearing today, especially the witnesses. Thank you
    for your testimony and for devoting your time and resources to
    share your expertise with the subcommittee.
        Your testimony today has helped to advance the important
    work of this subcommittee and the U.S. Congress.
        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 5 legislative days for Members to submit written questions
    to these witnesses and to place their responses in the record.
    Also, without objection, Members will have 5 legislative days
    to submit extraneous materials to the Chair for inclusion in
    the record.
        This hearing is now adjourned.
        [Whereupon, at 1:50 p.m., the hearing was adjourned.]

                                A P P E N D I X

                                 July 16, 2020

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