Congressman John Garamendi

Representing the 3rd District of California
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Congressman Garamendi Joins House Democratic Congressional Delegation Calling for Investigation of Wall Street Foreclosure Practices

October 6, 2010
Press Release

ANTIOCH, CA – Congressman John Garamendi (D-Walnut Creek, CA) yesterday joined California Democratic Congressional Delegation (CDCD) members in sending a letter to Attorney General Eric Holder, Federal Reserve Chair Ben Bernanke, and Acting Comptroller of the Currency John Walsh requesting investigations into systemic wrongdoing by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures.

Delegation members have received thousands of complaints from residents in their districts, which appear to outline a clear pattern of misconduct on the part of lenders and servicers. In the 10th Congressional District, residents in Antioch and Fairfield in particular have reported problems with some of the largest lenders. Recent press accounts have also reinforced the view that these institutions are routinely failing to respond in a timely manner, misplacing requested documents, and misleading both borrowers and the government about loan modifications, forbearances, and other housing related applications.  

"One report of abuse is reason for concern; thousands of reports of abuse demonstrate a clear pattern. We need to get to the bottom of Wall Street’s dismal response to the foreclosure crisis," Congressman Garamendi said.

"When America’s largest banks were on the verge of collapse, the federal government stepped in to avert an even worse financial crisis," Garamendi added. "Now that most of the banks have paid back their bailouts and reported profits, we expect them to work with Americans struggling to keep their homes and livelihoods. Instead, too many greedy Wall Street firms seem eager to exploit vulnerable families."

Nearly 400,000 California homes are in foreclosure, including 20,754 in Sacramento County, 13,818 in Alameda County, 13,655 in Contra Costa County and 6,139 in Solano County, according to RealtyTrac. Antioch has 2,063 foreclosed homes, and Fairfield has 1,447 foreclosed homes.

A pdf of the letter is available here. Examples of abuse in California are available here.

Complete text of the letter is below:

Dear Attorney General Holder, Chairman Bernanke and Acting Comptroller Walsh,
 
As members of the California Democratic Congressional Delegation, we urge you and your respective agencies to investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures.
 
Over the last few years, thousands of our constituents have reported that many financial institutions, despite good faith efforts on the part of most homeowners to work out reasonable loan modifications or simply seek forbearance of foreclosure, routinely fail to respond in a timely manner, misplace requested documents, and send mixed signals about the requirements that need to be met to avoid foreclosures. We are particularly perplexed by this apparent pattern in light of the many incentives Congress and the Obama Administration have offered to servicers and lenders to avoid foreclosures where financially viable, including subsidies and loan guarantees from taxpayers. Avoidable foreclosures end up being unnecessarily costly for homeowners, lenders and servicers, and our housing market, whose health is essential to our economic recovery.  
 
The apparent pattern reported by our constituents leads us to conclude that their problems are not just personal anecdotes anymore. Recent reports that Ally Financial (formerly GMAC) and JP Morgan may have approved thousands of unwarranted foreclosures only amplify our concerns that systemic problems exist in the ways many financial institutions have dealt with homeowners who are seeking to avoid foreclosures.  
 
We are now in the third year of the worst housing crisis we have seen in decades. Far too many families in California, and across the country, continue to lose their homes. While Congress and the Obama Administration have taken steps to help mitigate the housing problem, this devastation has persisted and, in fact, worsened as the country’s unemployment rate increased. We have heard numerous stories of financial institutions being uncooperative at best or misleading and acting in bad faith at worst. These heartbreaking stories are commonplace, persisting across the state and across lenders and servicers. As you can see from the attached document, which highlights examples of casework throughout California, it appears that banks have repeatedly misled and obstructed homeowners from receiving the help Congress and the Administration have sought to provide.
 
The excuses we have heard from financial institutions are simply not credible three years into this crisis. People in our districts are hurting. We have tried to help them in the face of the many challenges they have faced in their dealings with financial institutions. It is time that banks are held accountable for their practices that have left too many homeowners without real help.
 
Sincerely,  
Congressman John Garamendi