The House Oversight Committee met today to discuss progress in resolving the collapsed housing market, the foreclosure crisis, and the banks and mortgage servicers accused of shoddy foreclosure practices. In this first hearing of the year, lawmakers from both parties said more needs to be done to help homeowners avoid foreclosure and to hold banks accountable for taking possibly illegal shortcuts in the foreclosure process.

Some of the harshest criticism was reserved for the Home Affordable Modification Program (HAMP), which was created to help troubled homeowners get sustainable loan modifications that would allow them to keep their homes.

Ohio Representative Jim Jordan, a Republican, said that HAMP has been a colossal failure and called for Congress to give up on the program. Initially, the Obama Administration had projected that HAMP would help three to four million homeowners get loan modifications that would keep them out of foreclosure. In reality, only around half a million homeowners have been given permanent loan modifications. The program has been dogged by stories critical of the banks’ handling of the process.

Nevertheless, Assistant Treasury Secretary Timothy Massad plans to continue HAMP. “It’s still helping a lot of people,” Massad told the Committee. “Turning it back to the servicers would not be constructive at this time.”

House Oversight Committee chair considering investigating the banks

Also discussed during the hearing were the shortcuts in the home foreclosure process some banks took — such as “robo-signing” documents without reviewing them, as was required by law in most states. All 50 state attorneys general, the SEC, bank regulators and the Department of Justice have initiated investigations into these practices. A task force led by the Treasury Department is expect to soon release its report into banks’ foreclosure practices.

Ohio representatives Dennis Kucinich and Elijah Cummings, both Democrats, asked Darrell Issa, the new Republican chair of the House Oversight Committee, to agree to an investigation by the Committee itself. Issa said he would consider their request. If the Committee does decide to probe the banks’ practices, it could add another layer of pressure for banks to work harder at setting up loan modifications.

Source: Reuters, “Top congressional cop may probe mortgage servicers,” Rachelle Younglai, January 26, 2011