Washington, DC – Three federal agencies announced agreements on Wednesday with the nation’s largest mortgage servicers aimed at reforming the industry.  The regulators’ consent agreement is in response to an interagency review from last year that documented a host of abuses in the loan servicing industry.

Oregon’s Senator Jeff Merkley, a member of the Senate Committee on Banking, Housing and Urban Affairs, issued the following statement:

“Less than three years ago, our economy was devastated because of an economic collapse that originated in predatory mortgage lending practices.  It has become painfully apparent that, in the years leading up to the collapse, regulators were asleep at the switch as mortgage providers issued faulty loans, while investment banks packaged and sold those loans to unwitting investors.

“Today’s agreement makes clear that if regulators are not still asleep, they are close to dozing off.  This agreement does not take the kind of strong enforcement action needed to make servicers more responsive to the needs of homeowners who are currently struggling.  In essence, the agreement requires a servicer to have a ‘primary point of contact’, but fails to outline requirements that would make this a real change in addressing the call center chaos that has dominated the industry.

“Moreover, asking servicers to hire a company to examine their practices is hardly the sort of regulatory action that will change abusive practices.

“Families across our nation have been stuck in limbo because of uncertainty over loan modifications and an unwillingness on the part of servicers to work with them to modify loans.  This hurts our economy.  We need to take real steps to keep those families in their homes.  I do not believe this agreement does that.”

Senator Merkley has proposed a comprehensive plan to keep families in their homes.  It is available online here.