Related Document(s):
	Statement

The following is an excerpt of Mr. Story’s oral testimony, as prepared for delivery:

“H.R. 5579 would protect servicers from litigation risk if they engage in certain loss mitigation efforts.   MBA identified litigation risk as a barrier to work outs some months ago, and we have been working as an industry to address this issue.  We are focused on improving clarity between investors and servicers.  Significant strides have already been made and continue to be made. 

The industry formed HOPE NOW to help homeowners avoid foreclosure.  We are funding counseling and are promoting the HOPE NOW hotline for borrowers:  888-995 HOPE.  We have improved and standardized our servicing practices. 

The investor community has stepped up in many ways.  For example, investors have created guidelines to define the term “foreseeable default” that helps us help more borrowers.  This was a major advance.

Many servicers have also instituted foreclosure “pauses” to help give borrowers and lenders more time to work out a solution that keeps borrowers in their homes.

These industry practices allow servicers to do more to help borrowers.  Nearly one point two million
repayment plans and modifications were executed from July 2007 through February 2008, according to HOPE NOW.  This is an unprecedented response by the mortgage industry.

Given what the industry has done already, we recognize that more needs to be done.  H.R. 5579 is a thoughtful proposal to help us do more.  Our concern, however, is that the potential harm may outweigh the potential benefits. 

Borrowers and mortgage companies desperately need greater stability and liquidity in the market.  The best way to improve liquidity is through investor confidence.  Any effort that increases investor risk, including protecting servicers from liability, hampers this goal. 

We are concerned this bill may create investor uncertainty, similar to recent bankruptcy proposals, despite the care the drafters took in trying to balance the interests of investors and servicers. 

MBA believes policy efforts should be focused on giving lenders and borrowers more options to work together, such as new loan products to allow borrowers behind on their payments or “upside down” on their mortgages to refinance.  The Committee is currently working on such a proposal, and we look forward to participating constructively throughout that process. 

MBA is also eager to partner with Congress to finish work on FHA Modernization, GSE Oversight Reform, Housing Tax Incentives and Expanded Mortgage Revenue Bond Authority.  The Mortgage Bankers Association appreciates your efforts to help borrowers stay in their homes.  Servicers will continue to use their contractual authority to perform loss mitigation to the extent permissible and prudent. 

It remains unclear to us, however, whether the benefits of H.R. 5579 outweigh the potential harm the bill may cause the mortgage market overall.”

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.