Frank and OTS Urge Foreclosure Moratoriums
A key member of Congress and one federal regulator Wednesday urged financial institutions to enact foreclosure moratoriums, until lawmakers hash out the details of a "comprehensive" plan to address the housing crisis, which is currently in the works. "I would ask all of you now to please make sure that we have a moratorium in effect," Frank said at a hearing before the Senate Budget Committee Wednesday, where the CEOs of eight major banks were drilled as to their usage of government aid. The Office of Thrift Supervision joined Frank in requesting financial institutions put a temporary halt on all foreclosures. “OTS-regulated institutions would be supporting the national imperative to combat the economic crisis by suspending foreclosures until the new Plan takes hold,” OTS Director John Reich said. The Plan unveiled yesterday by Treasury Secretary Timothy Geithner will likely commit around $50 billion of the 1.5 trillion financial stability plan to prevent avoidable foreclosures by reducing monthly payments for homeowners, but the details aren't finalized. And many lawmakers, including Frank, aren't certain $50 billion will cover the costs of the program. "[W]e need some assurance that, assuming this works as we hope it will, there will be more money available," Frank said. A Treasury staffer said Tuesday, according to a MarketWatch report, that the program could resemble a proposal introduced by Federal Deposit Insurance Corp. Chairwoman Sheila Bair -- a loss-sharing program between mortgage servicers or investors and the FDIC that deals with loans that fail six months or longer after being modified. Geithner suggested the plan will be presented in a few weeks, which according to Frank, is "too much time." Congress is anxious for answers. Before the Senate Budget Committee Wednesday, Geithner also faced fire about how soon the Obama administration would provide details of its financial-system rescue plan -- which he outlined publicly Tuesday, see full story -- and about how much more those initiatives will cost taxpayers. Lawmakers Wednesday also wanted assurance that the funds -- provided by taxpayers -- already committed to the bailout had not been wasted. Executives at the hearing, including the heads of Citigroup Inc. (C), Bank of America Corp. (BAC), Goldman Sachs Group Inc. (GS), and Wells Fargo & Co. (WFC), insisted they had been lending as much as they could. Write to Kelly Curran at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.