United States Senate
Washington, DC 20510

RE:  SUPPORT Senator Casey’s amendment (S. 3891) to provide temporary relief to unemployed homeowners and SUPPORT Senator Franken’s amendment (S. 3902) to establish a homeowner advocate office.

Dear United States Senators:

We, the undersigned civil rights, labor, public interest, and consumer advocacy organizations, write to express our strong support for amendments S. 3891 and S. 3902 to the “Restoring American Financial Stability Act of 2010” (S. 3217).  These amendments will provide much-needed relief to struggling homeowners, ultimately helping our economy stabilize and recover.

As families across the country continue to grapple with extended bouts of unemployment, mounting household debt, declines in property values, and increasing foreclosures, we are disappointed that the federal government and the private sector have still not developed a response that addresses the magnitude of this crisis.  Policymakers have relied on the voluntary efforts of the private sector, namely the Home Affordable Modification Program (HAMP), however, these efforts have fallen well short of needs and expectations.  While some have successfully secured permanent loan modifications under HAMP, millions of other families face foreclosure with no help insight.  Many have even lost their homes to foreclosure while they were in the loan modification process.  Furthermore, unemployment has replaced predatory subprime lending as the main driver of foreclosures; despite this and forecasts that unemployment will remain high for years to come, homeowners in 40 states still have almost no help in preventing foreclosure due to loss of employment.

The ineffective response to the foreclosure crisis is one of the greatest threats to a full economic recovery and a blow to families who were once on the path to financial security and the middle class.  At the close of 2009, approximately 4.5 million homeowners were at least 90 days delinquent on their mortgage or in foreclosure.  For these reasons, we ask for your support on the following amendments, which will provide much need relief to families facing foreclosure.

• Amendment S. 3891 will provide temporary loans to unemployed and underemployed homeowners. This amendment will help prevent another wave of foreclosures by providing $3 billion for loans for up to 24 months for unemployed or underemployed homeowners.  Specifically, the amendment will allow homeowners facing a temporary loss of income due to unemployment, underemployment, or a medical condition to receive low-interest loans for up to 24 months to assist in their monthly mortgage payment.  The loans would also infuse $1 billion into the Neighborhood Stabilization Program, which provides grants to state and local governments and eligible entities to purchase and redevelop foreclosed and abandoned homes and residential properties.  A similar provision was included and passed by the House of Representatives in the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173).

• Amendment S. 3902 will create an Office of the Homeowner Advocate (OHA) in the U.S. Treasury Department. The OHA will be modeled after the successful Office of the Taxpayer Advocate at the U.S. Department of Internal Revenue Service.  The primary function of this office will be to assist homeowners, housing counselors, and housing lawyers in resolving problems with the HAMP program; identify areas, both individual and systemic, where homeowners, housing counselors, and housing lawyers are having problems in dealing with the HAMP program; and identify possible administrative and legislative changes to HAMP.  These measures are necessary because homeowners eligible for modifications often are wrongly denied and the program itself places some  unnecessary barriers before  homeowners seeking assistance.

In addition, if these amendments do not come up for a vote on the Senate floor, we urge you to request that Chairman Dodd and the Senate leadership include them in the Manager’s Amendment.  Thank you for your consideration.  Should you have any questions, please contact Graciela Aponte, Wealth-Building Legislative Analyst with the National Council of La Raza (NCLR), at (202) 776-1578 or gaponte@nclr.org.

Sincerely,

Americans for Financial Reform