U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

75–079 PDF 2012

AN EXAMINATION OF POTENTIAL 

PRIVATE SECTOR SOLUTIONS TO 

MITIGATE FORECLOSURES IN NEVADA 

FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MARCH 15, 2012 

Printed for the use of the Committee on Financial Services 

Serial No. 112–107 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

JAMES H. CLINGER, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

SHELLEY MOORE CAPITO, West Virginia, Chairman 

JAMES B. RENACCI, Ohio, Vice Chairman 

EDWARD R. ROYCE, California 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JEB HENSARLING, Texas 

PATRICK T. MCHENRY, North Carolina 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

MICHAEL G. GRIMM, New York 

STEPHEN LEE FINCHER, Tennessee 

CAROLYN B. MALONEY, New York, 

Ranking Member 

LUIS V. GUTIERREZ, Illinois 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

RUBE ́ N HINOJOSA, Texas 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

NYDIA M. VELA ́ ZQUEZ, New York 

GREGORY W. MEEKS, New York 

STEPHEN F. LYNCH, Massachusetts 

JOHN C. CARNEY, JR., Delaware 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

March 15, 2012 ................................................................................................. 1 

Appendix: 

March 15, 2012 ................................................................................................. 31 

WITNESSES 

THURSDAY, MARCH 15, 2012 

Campbell, Verise, Deputy Director, the State of Nevada Foreclosure Mediation Program ....................................................................................................... 6 

Chide, Leonard, President/Executive Director, Neighborhood Housing Services 

of Southern Nevada, Inc. (NHSSN) .................................................................... 10 

Grady, Janis, past President and current Treasurer and Director, Nevada 

Association of Mortgage Professionals ............................................................... 13 

Longson, Susanne B., Vice President, Business Development and Community 

Relations, SCE Federal Credit Union, and former President, SONEPCO 

Federal Credit Union ........................................................................................... 15 

Lynam, Keith, REALTOR® and Sales Associate, Windermere Prestige Properties, on behalf of the Nevada Association of REALTORS® ........................... 17 

APPENDIX 

Prepared statements: 

Campbell, Verise ............................................................................................... 32 

Chide, Leonard ................................................................................................. 39 

Grady, Janis ...................................................................................................... 48 

Longson, Susanne B. ........................................................................................ 51 

Lynam, Keith .................................................................................................... 60 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Heck, Hon. Joseph: 

Written statement of Senator Dean Heller .................................................... 63 

Additional information provided for the record by Janis Grady .................. 64 

(1) 

AN EXAMINATION OF POTENTIAL 

PRIVATE SECTOR SOLUTIONS TO 

MITIGATE FORECLOSURES IN NEVADA 

Thursday, March 15, 2012 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER CREDIT, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 9:30 a.m., at the 

Clark County Commission Chambers, Clark County Government 

Center, 500 South Grand Central Parkway, Las Vegas, Nevada, 

Hon. Shelley Moore Capito [chairwoman of the subcommittee] presiding. 

Members present: Representatives Capito, Heck, and Berkley. 

Chairwoman CAPITO. This hearing will come to order. 

I would first like to thank Representative Heck for inviting us 

and for hosting the subcommittee this morning. I would also like 

to thank Representative Berkley for coming today. We joke between one another because we are the two ‘‘Shelley’s’’ in the House 

of Representatives, and we’re both ‘‘Shelley’’ with an ‘‘E–Y.’’ So we 

have a lot in common. 

What I’ll do basically is sort of walk you through the process. 

This is a field hearing of the Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit, of which 

I am the chairman, and so we’re coming out really to hear what’s 

going on across the country. 

We had a hearing yesterday in San Antonio, Texas. We focused 

that on financial institutions and bank examination procedures and 

today, knowing of, and hearing quite frequently of, your issues with 

foreclosures, certainly in the Financial Services Committee we have 

had numerous programs before us and numerous testimony on how 

woefully short these Federal programs have been falling, in terms 

of the foreclosure issues. 

So what we will do is I will recognize each of us for 5 minutes 

for an opening statement, and then I will recognize the witnesses 

for 5 minutes for a summary statement. After that, we will have 

several rounds of questioning. 

As I said, the topic of this morning’s hearing is critical to the 

community of Las Vegas, which is one of the hardest-hit communities in the aftermath of the financial crisis. There have been numerous Federal programs taxed with addressing the challenges in 

2 

the housing market and reducing the number of foreclosures across 

the Nation. 

By and large, these programs have really failed to meet the expectations or stem the growing tide of foreclosures. 

The purpose of this morning’s hearing is to better understand 

what has worked and what has not. Members of the subcommittee 

are especially interested in learning more about private sector solutions to mitigate foreclosures. 

Too often, I believe, the Federal Government programs designed 

to help people struggling to stay in their homes fail to help those 

who are truly in need. Part of the reason for the deficiencies in 

these programs is because they’re relying on Washington-based solutions. The real estate market is highly regional, therefore, solutions to the problems in this market may be region-based, and I 

think we are going to learn about that today. 

Today’s hearing will allow Members to learn more about creative 

ideas tested at the local level, and I look forward to that. 

I would like to thank each of you. I would like to thank the Clark 

County Commission for their help in putting this together and for 

letting us use their chambers. It’s a beautiful city and a beautiful 

chamber here, and I want to thank the staffs of both Members here 

for helping. I would like to thank my own staff as well for their 

help. 

I know these settings can sometimes—the witnesses might be intimidated. But the purpose of this is a dialogue and conversation. 

Field hearings, I think, are really important for us to learn more 

about the unique challenges. I’m from West Virginia and we have 

not—we don’t suffer the highs, so we haven’t suffered the lows, although we are playing at 12:00 today. So, everybody watch your 

brackets there. 

But seriously, our real estate market has not suffered the kind 

of demolition that yours has. We have sort of stayed in the middle 

all the time, and so we’re still in the middle, and gratefully so, in 

the bad times. We’re here to listen and learn. 

I would now like to recognize Ms. Berkley for the purpose of 

making an opening statement. 

Ms. BERKLEY. Thank you, Madam Chairwoman, and I’m absolutely delighted to welcome you to my congressional district and 

my hometown. And Mr. Heck, it’s always a pleasure to share the 

stage with you and I’m delighted that we are here to talk about an 

issue that is so very important to the people that I represent. Also, 

I want to welcome the witnesses. 

I’m looking around and I know that we have the best that there 

is and people who are working in the trenches and know exactly 

what’s going on in the State of Nevada and will be able to share 

it with the committee. 

As we all know, our State faces the highest unemployment rate 

in the Nation, and we have the highest mortgage foreclosure rate. 

People come over to me all the time. They say, ‘‘Congresswoman, 

I have never missed a day of work. I have never missed a mortgage 

payment. I lost my job. I lost my home. What am I going to do?’’ 

They are losing their homes through no fault of their own, and 

there are tens of thousands of my fellow Nevadans who are strugVerDate Nov 24 2008 17:21 Aug 07, 2012 Jkt 075079 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\75079.TXT TERRIE
3 

gling. In February, 1 in every 274 housing units in our State had 

a foreclosure filing. That’s more than twice the national average. 

One in 16 properties in the State has been foreclosed on, the 

highest in the country. Freddie Mac and Fannie Mae own 179,000 

mortgages in Nevada, and nearly 14 percent of the 1.2 million 

homes owned by the State, 61 percent—I should say that since 

2007, more than 130,000 homes have been foreclosed on in Southern Nevada alone—of Nevada homes are underwater, or 343 properties across the State. 

Our State continues to lead the Nation for the percentage of 

homes underwater. The average home, the last time I checked, was 

145 percent underwater, loan to value, which is a negative cash equity of $14.1 billion. We only had 3,800 new home sales in February, which is the lowest in the Nation. 

We need to be focused like a laser on the serious challenges that 

Nevadans are facing today, and our foreclosure crisis is a prime example of one of those serious challenges. We must be examining all 

options for solutions to our housing crisis. We should leave no stone 

unturned, no option unconsidered. 

I understand that today’s hearing is titled, ‘‘An Examination of 

Potential Private Sector Solutions to Mitigate Foreclosures in Nevada.’’ We have seen how powerful private sector partnerships can 

be. The hardest-hit model relies on cooperation between the government and private sector banks to bring down the principal of 

underwater loans. 

We should be looking for more ways that we can work together 

across private and public sectors to address this crisis. However, I 

think it’s very important to know that after the collapse of the 

housing market, when Congress and the White House took important steps to keep homeowners in their homes and reduce the negative equity, these programs have not always been successful, and 

are hampered by the refusal of Freddie and Fannie and private 

banks to participate in mortgage write-downs and modifications. 

Yet, as a matter of fact, let me emphasize that a bit. Freddie and 

Fannie own 179,000 mortgages in Nevada, as of September 30, 

2011. That’s more, as I said, than 10 percent of the homes in the 

State. However, to date, for the most part they have been unwilling 

to refinance or write down mortgages because of the impact on 

their bottom line. I think that’s very bad, and fully 10 percent of 

the homes in Nevada that are Freddie- and Fannie-owned have absolutely no relief whatsoever. 

Yet, there are some out there who think that our Nation’s leaders should do nothing, do nothing for the people who are struggling. I don’t think they get it. And they certainly don’t understand 

what’s happening here in the State of Nevada. 

That we should let Nevadans, or our fellow Americans hit bottom 

and just let the market work is anathema to everything that this 

Nation stands for. Nevadans know this is unacceptable. Nevadans 

know many of them have not yet hit bottom. 

We need leaders who will fight to keep people in their homes, to 

keep a roof over their heads. I’m focused every day on how we can 

get our State back to work and how we can help Nevadans stay in 

their homes. We have taken some steps, but it’s not nearly enough. 

4 

We need to find real solutions that write down the principal of 

properties that are underwater. We need to focus every day on how 

to keep people in their homes, improve their neighborhoods, and 

get people back to work. 

We cannot succumb to those who want our housing market to hit 

bottom while leaders in Washington provide little or no relief whatsoever. Where do we go from here, and I want to share a very quick 

story, Madam Chairwoman. I had a constituent call me up several 

months ago. I won’t mention his name because he hasn’t authorized me it do that. He called up and told me that he had never 

missed his mortgage payment in his life, he paid his mortgage of 

$800,000. His house is now worth $400,000. He went to his bank 

and asked for a mortgage modification. They told him that he had 

to be in foreclosure. That’s not true. That’s what they told him. 

He told me the hardest thing he ever did was to not pay his 

mortgage. He had never missed a payment in his life, but in consultation with the bank, he did exactly what they told him, and he 

went in foreclosure, and then he started mortgage modification negotiations with the bank. This went on for 10 months, where they 

lost his paperwork on numerous occasions, and they kept changing 

people who were supposed to be working and helping him out. 

At the end of 10 months, he received a notice from the bank that 

they had sold his home. This is absolutely outrageous, and when 

I tell you that is not the first and only situation like that, you can 

take that to the bank. 

So where do we go? Moving forward, we must continue all of our 

efforts, public and private, to provide homeowners with the assistance they need to get out from underwater on their mortgages, 

avoid foreclosure, and stay in their homes. 

At the end of the day, these programs will not work unless the 

banks and Freddie and Fannie are willing to participate. To that 

end, we should continue to pursue government options to encourage banks to refinance and modify mortgages, explore public/private partnerships like HOPE NOW to engage the private sector in 

these efforts, and to encourage the banks, Freddie and Fannie, and 

other lenders to work with the homeowners. 

What we cannot do is do nothing. And with that, I thank you 

very much, Madam Chairwoman, and I’m anxious to hear what our 

witnesses have to say and the solutions that they can provide. 

Thank you, and thank you for having this hearing in my congressional district, which has been hit so hard by the current crisis. 

Chairwoman CAPITO. Thank you. Next, we’ll have Mr. Heck’s 

opening statement. He has been very active on this issue, as many 

of you know, and he has also has introduced a bill I’m certain he 

will talk about, H.R. 4172. 

Mr. Heck? 

Mr. HECK. Thank you, Chairwoman Capito, and thank you for 

driving out here to Las Vegas to hold this field hearing today, ‘‘An 

Examination of Potential Private Sector Solutions to Mitigate Foreclosures in Nevada.’’ 

Now with Nevada’s ongoing foreclosure crisis, and having experienced the highest foreclosure rate in the country, this hearing is 

long overdue. I also want to thank my colleague, Congresswoman 

Berkeley, for participating today, as well as all the witnesses for 

5 

taking the time to be here and give us your perspective of what’s 

going on at ground zero for the foreclosure crisis. 

I often compare the State of Nevada to the marines, and that is 

the first in and the last out. We were the first State into the economic recession and because of our economy’s reliance on tourism, 

unfortunately, we’ll probably be the last out. 

So, the numbers have already been stated, but we have had hundreds of thousands of people affected by foreclosure, and hundreds 

of thousands more who are still underwater. Approximately 42,000 

individuals with Fannie and Freddie Mac have been able to avert 

foreclosures through modifications or short sales and deeds in lieu. 

Additionally, about 43,000 individuals have received Fannie or 

Freddie refinances, with 10,000 of those refinances carried out 

through the Home Affordable Refinance Program, or HARP, and 

while I applaud the Administration’s efforts in providing programs 

to individuals to help them stay in their homes, based on the numbers I just stated, this has simply not been enough. 

It’s very obvious that more needs to be done to help not only Nevadans, but Americans across the country who are struggling to 

stay in their homes. More needs to be done on the front end to help 

individuals avoid foreclosure and stay in their homes, and more 

needs to be done on the back end to help give individuals who suffer foreclosure a second chance at homeownership. 

Earlier this month, as the chairwoman mentioned, I introduced 

H.R. 4172, the Second Chance at Homeownership Act, a process 

that actually began 8 months ago, based on the constituents who 

were coming to our office, asking for help with their housing issues, 

and talking to my housing case worker, there were certain programs available for different categories of people, but the one thing 

she said is we have nothing to offer for somebody who has already 

lost their home, and now could afford a home, if they could only 

get the loan. But they can’t, because of that foreclosure or short 

sale on their credit report. 

So this legislation establishes a program within the FHA, the 

Federal Housing Administration, to provide a guaranteed home 

loan to individuals who were previously foreclosed on. Specifically, 

H.R. 4172 provides a guaranteed, 30-year fixed-rate mortgage to individuals who have not been delinquent on their rent payments for 

the previous 12 months, have not been convicted of fraud or have 

not strategically defaulted on their previous mortgage, and do not 

have a net worth greater than a million dollars. 

Additionally, this legislation goes a step further in that it helps 

to ensure that an individual will stay in his or her home and avoid 

future foreclosures by establishing certain requirements on the 

mortgage itself. These requirements include establishing a maximum loan limit, and capping monthly mortgage payments at no 

more than what the individual had paid each of the previous 12 

months in rent. 

If enacted, this legislation, paired with the numerous other foreclosure mitigation programs out there, will provide a solid foundation of resources for individuals, no matter where they may be in 

the homeownership process. 

To help establish this foundation of resources for individuals, 

today we will hear from witnesses who represent the private sector 

6 

and see what these entities have been doing to mitigate foreclosures in Nevada. Hopefully, there will be some lessons learned 

that we can take back to Washington. I’m sure that we’ll find the 

testimony both interesting and innovative. 

Again, thank you, Chairwoman Capito, for holding this field 

hearing today, as well as Representative Berkley for attending and 

listening to today’s testimony. 

I did speak with Senator Heller prior to the hearing as well. Unfortunately, he was unable to attend due to his Senate schedule, 

but he forwarded me his statement to enter into the record. 

Chairwoman CAPITO. Without objection, it is so ordered. 

Mr. HECK. One thing I would like to highlight in Senator Heller’s 

testimony is his comment that Congress needs to develop policies 

that not only promote responsible homeownership, but also job creation, in order to ensure that Nevada and our Nation will experience economic growth that promises optimism and prosperity. Senator Heller is definitely correct in his statement. Job creation and 

homeownership go hand-in-hand. 

In addition to finding ways of promoting responsible homeownership, we also need to develop and strengthen our job creation efforts so that millions of Americans out there will be able to achieve 

homeownership. 

With that, I look forward to everyone’s testimony today, and I 

yield back the balance of my time. 

Chairwoman CAPITO. Great. That concludes our opening statements, and I will recognize each witness individually before you 

give your statements. 

I do have a little timer here. We’re not so great at keeping our 

time. But it is useful, so I’ll put it up here and you can see it sort 

of blinking, once we get to 5 minutes, and then we can get to the 

question part. 

Our first witness is Verise Campbell, deputy director, the State 

of Nevada Foreclosure Mediation Program. Welcome. 

STATEMENT OF VERISE CAMPBELL, DEPUTY DIRECTOR, THE 

STATE OF NEVADA FORECLOSURE MEDIATION PROGRAM 

Ms. CAMPBELL. Thank you. Madam Chairwoman, and members 

of the subcommittee, thank you for the opportunity to appear before you today. My name is Verise Campbell and I am the deputy 

director for the State of Nevada Foreclosure Mediation Program. 

Prior to joining the Nevada Administrative Offices of the Court, 

I served as the administrator for a large scale international development company, and as the director of administration for the Cosmopolitan Resort and Casino, and also as a deputy municipal clerk 

for a southern New Jersey municipality. 

The State of Nevada appreciates your willingness to come to our 

State and learn firsthand the nature of our foreclosure crisis. We 

hope you will come away with an appreciation for the hard work 

of many individuals who are providing assistance to homeowners 

in our State on a daily basis. 

Nevada has endured the Nation’s highest foreclosure rate for 

more than 5 years. Although the root cause of the problem is complex, two key factors seem to remain constant: high unemployment; 

and negative equity. 

7 

Nevada leads the Nation in the number of negative equity mortgages, which are those home loans that are underwater or upside 

down. More than 60 percent of Nevada homeowners are underwater and unable to refinance due to negative equity. 

In addition, it is estimated that Nevada has the Nation’s largest 

share of outstanding subprime and adjustable rate mortgages. 

These loans continue to adjust to new rates, and because of negative equity, borrowers are unable to refinance. 

Nevada’s unemployment rate exceeds 12 percent and continues 

to fuel uncertainty in the housing market. The prospect for default 

remains high. High unemployment and a collapse of the housing 

market has left many Nevadans underwater and many homeowners unable to pay their mortgages. 

All of these factors have made and continue to make finding solutions to the foreclosure crisis a high priority for many groups who 

are working together in Nevada to tackle the problem. 

Last week, the State of Nevada Foreclosure Mediation Program 

was honored to participate in the Home Means Nevada event 

hosted by our governor, Brian Sandoval. This event attracted more 

than 4,000 homeowners in Las Vegas. They were able to meet with 

their lenders and discuss loan modifications and alternatives to 

foreclosures. I actually witnessed a homeowner who received a permanent loan modification at that event. It’s not in my written 

statement, but there were 100 Bank of America representatives 

there, and there were 60 Wells Fargo representatives there. 

Such events are now commonplace in our State, but that was not 

always the case. In 2008, homeowners began to report difficulty in 

meeting with lenders to discuss their reasons for hardships that led 

to a default. In response to the foreclosure crisis, the 2009 Nevada 

Legislature passed A.B. 149, establishing the State of Nevada Foreclosure Mediation Program. 

The Nevada Supreme Court was tasked by the legislature with 

adopting rules to govern the Foreclosure Mediation Program, as 

well as designating the entity that would serve as the administrative entity. 

The Administrative Offices of the Court was chosen as the administrative entity. The primary focus of the Foreclosure Mediation 

Program is to provide a forum to bring eligible homeowners and 

lenders together to discuss alternatives to foreclosure in accordance 

with the governing foreclosure mediation statutes and rules. 

The law creating the program specifically directed the Foreclosure Mediation Program to provide an opportunity for homeowners and lenders to meet and discuss foreclosure alternative options, be it a loan modification, an agreement to relinquish the 

home through a short sale, or other alternatives. A.B. 149 went 

into effect July 1, 2009. My first day on the job was July 1, 2009. 

The entire infrastructure of the State of Nevada Foreclosure Mediation Program had to be built, and it had to be built in short 

order. It included establishing offices, hiring staff, creating forms 

and procedures, and most importantly, we had to identify a pool of 

mediators. 

Despite the odds, our program held its first mediation 6 weeks 

later. Through community, government, and public collaboration, 

much work was done in those 6 weeks to develop our program. 

8 

The program initiated ongoing training opportunities for our mediators. We worked in partnership with the staff at the United 

States Department of Housing and Urban Development; Freddie 

Mac; and the United Trustee Association; as well as local agencies 

including the Clark County Neighborhood Justice Center; the Legal 

Aid Center of Southern Nevada; the Financial Guidance Center, 

formerly known as Consumer Credit Counseling; the Nevada Foreclosure Prevention Task Force; and Nevada Legal Services. 

These training opportunities exposed the mediators to current 

legislation, Supreme Court opinions related to the foreclosure mediation program, government and lender mortgage assistance programs, foreclosure fraud, homeowner education programs, and enhanced mediation skills. 

The State of Nevada Foreclosure Mediation Program has worked 

with private lenders, Fannie Mae, and HUD-approved counseling 

agencies as well to develop our curriculum. The program enlists on 

a regular basis feedback and suggestions from organizations such 

as those mentioned on a regular basis because that’s the only way 

we can stay progressive. That’s the only way we can attack this 

problem, we can attack this issue in short order. 

Since September 2009, the program has held nearly 16,000 mediations—we are only less than 3 years old—with more than 11,000 

of that 16,000 not resulting in foreclosure. 

As a non-judicial State, Nevada foreclosure filings begin with a 

filing of a Notice of Default at the County Recorder’s Office, and 

it concludes with a trustee sale. Once a Notice of Default is filed, 

a homeowner of an owner-occupied residential property can choose 

to participate in the program, which essentially gives the homeowner an opportunity to actively participate in meaningful dialogue 

with their respective lenders. Foreclosure mediation is cost-effective and it’s efficient. 

To participate in our State, eligible homeowners must submit 

their election form with their $200 fee and they also must indicate 

on the form whether or not they would like to participate. They can 

relinquish their right on that same form, if they are not interested 

in participating in the program. 

The success of our program is tied directly to our governing legislation. Certain requirements are placed on the lender once a homeowner requests mediation. These requirements dictate if a beneficiary will be allowed to proceed with foreclosure. 

The law requires that the beneficiary attend the mediation and 

bring each document required. Those documents include the original or certified copy of the deed of trust, the mortgage note and 

each assignment and endorsement, as well as a current appraisal 

or brokers price opinion, and a confidential proposal. They must 

also participate in good faith and demonstrate the authority to 

modify the loan. 

If the documents are not produced, then the program will not 

allow the beneficiary to proceed to the trustee sale. 

In the first 6 months of our current fiscal year, between July 

2011 and December 2011, beneficiaries were unable to produce the 

proper documentation 36 percent of the time. The requirement to 

produce the proper documentation took on added significance as 

9 

the revelation of document robo-signing by a number of banks demonstrated a breakdown in the document process. 

Our requirement to produce original certified documents ensures 

accountability on behalf of the lender. Failure to comply with these 

requirements can result in the beneficiary being sanctioned. A District Court can impose a fine and, ultimately, the beneficiary is unable to foreclose on the home. This was recently reaffirmed in 2011 

in two Nevada Supreme Court rulings: Passillas v. HSBC Bank 

USA, and Leyva v. National Default Service Corp. In both of these cases, the Nevada Supreme Court unanimously 

held that lenders must strictly comply with the Foreclosure Mediation Program’s production of documents provisions, as well as 

other statutory requirements. Failure to do so is sanctionable by 

the District Courts. Failure by beneficiaries to comply with the 

statutory requirements will prohibit the beneficiaries from concluding the foreclosure process. 

Ironically, the requirement for proper documents has nearly halted the filings of notices of defaults in Nevada. In October 2011, a 

new law, A.B. 284, went into effect requiring beneficiaries to file 

a copy of the deed of trust, the mortgage note, and each assignment 

and endorsement when they file the Notice of Default. 

Last month, the Mortgage Bankers Association reported Nevada 

showed a large uptick in 90-day delinquencies. For the past few 

months, banks have indicated that the requirements of A.B. 284 

are too difficult with which to comply. Consequently, Nevada’s foreclosure problem is masked as homeowners go into default, yet a 

Notice of Default is not filed by the bank. In September 2011, nearly 5,000 Notices of Default were filed in the State. The following 

month, that number dropped to 40. 

Foreclosure mediation fosters meaningful dialogue. Bank and 

beneficiary representatives have indicated in recent weeks they 

will soon begin filing Notices of Default again in Nevada after a review of their documentation and the announcement of the Federal 

agencies and State attorneys general historical mortgage servicing 

settlement in February 2012. Although Nevada’s Notices of Default 

have climbed from a record low of 40 filings reported in October 

2011, they are still relatively low, fewer than 400 for the month of 

February 2012. 

This is important for many homeowners in Nevada because the 

foreclosure mediation election form is included in the Notice of Default packet. In most instances, the foreclosure mediation program 

offers the first and only opportunity for homeowners to meet faceto-face with a lender. Without the filing of a Notice of Default, it 

is up to the beneficiary to reach out and help homeowners regarding their default status. 

If this is not done, homeowners are left with the worry and frustration of not being able to meet their obligations, discuss possible 

solutions to stay in their home, or a way to gracefully exit from 

their obligations. 

Most homeowners want to resolve a default. Homeowners want 

alternatives to foreclosures and they want banks to consider loan 

modification through the various government and lending programs available to them. While the major lending institutions have 

instituted programs to assist homeowners, I often wonder if there 

10 

is a unified plan throughout these vast and multi-layered organizations to reformulate policies and procedures to create systems that 

will assist the organizations with compliance with Nevada’s foreclosure laws and other related legislation across the Nation. 

The problem of communication between lender and homeowner 

remains, due to the overwhelming number of homeowners in default or in danger of default. 

Our program is identified as a model for four other foreclosure 

mediation programs throughout the country: Washington, D.C.; Hawaii; Washington State; and just this week, we learned, Oregon. 

These programs have modeled their foreclosure mediation program legislation after the Nevada law. We did not invent foreclosure mediation. In fact, we borrowed from other programs, including those in Ohio, Connecticut and Philadelphia. 

We recognize that this is an ongoing process of learning and 

sharing, and as we work together towards a common goal of reducing the number of foreclosures in Nevada and nationwide, we continue with the dialogue with these other States as well. 

In closing, participation by homeowners and lenders in mediation 

programs has proven to be a successful method in bringing homeowners and lenders together to discuss alternatives to foreclosure 

and to keep homeowners in their homes where possible. Our program, however, is part of the foundation of what is required to rebuild the American dream of homeownership. We as a community, 

as a State, and as a Nation, must keep the focus on strengthening 

foreclosure mediation program efforts around the country. 

We must also keep the focus on improving communication and 

restoration of faith by the American people in mortgage and lending institutions. And as was mentioned earlier, we must also keep 

the focus on dramatically decreasing unemployment, and stabilizing the housing market, to truly make the necessary strides to 

turn this crisis into a triumph. Albeit difficult, it is not impossible 

if we remember that in this crisis, we are together as one. We are 

working hard together to build new American dreams that still include homeownership. 

Thank you for allowing me to address this committee. 

[The prepared statement of Ms. Campbell can be found on page 

32 of the appendix.] 

Chairwoman CAPITO. Thank you. Our next witness is Leonard 

Chide, president and executive director, Neighborhood Housing 

Services of Southern Nevada. Welcome. 

STATEMENT OF LEONARD CHIDE, PRESIDENT/EXECUTIVE DIRECTOR, NEIGHBORHOOD HOUSING SERVICES OF SOUTHERN NEVADA, INC. (NHSSN) 

Mr. CHIDE. Thank you. Madam Chairwoman and subcommittee 

members, first, thank you for inviting us as a nonprofit to come 

down here to speak with you today. To give you a little bit of a 

timeline, back in 2008, when the crisis was really ramping up here 

in Las Vegas, we, like many nonprofits, found ourselves scrambling 

to ramp up our staff, to train our staff on the various programs 

that the government had come out with, as well as the internal 

programs that the bank had. And those are constantly changing. 

So we are constantly trying to catch up to understand exactly what 

11 

was needed so that we could advocate on behalf of the homeowners 

who were potentially going to lose their homes. 

I can speak about it personally because I actually fell into that 

trap. One of them was, as you said earlier, the bank that I had my 

loan with—I owned a construction company prior to becoming involved with this nonprofit. 

Construction in July of 2007, long before anybody says anything 

was happening as far as the recession and everything else, we got 

our first call that said you need to renegotiate your contract, you 

need to redo everything, and oh, by the way, I don’t know that 

we’re going to pay you anymore because the project is going belly 

up. Hence, loss of construction company. 

Thankfully, I was the one of the ones, though—I actually had 

over 2 years of savings and a 401(k) and other things to continue 

to take care of my household. Many folks didn’t have that many 

years of funds available. I talked to my bank, which was Wells 

Fargo, explained to them that I lost the company in 2008. Here it 

was 2010, trying to get them to mediate with me, and the answer 

was, ‘‘No. You are not delinquent. You don’t qualify for the HAMP 

program.’’ The HAMP program was minimal 90 days delinquent. I 

did this for almost 6 months. 

Finally, I bit the bullet and went delinquent. What has that done 

for me today? My credit is shot. I can’t get refinanced now. I can’t 

even get loans of any nature. Yet, the only reason I ever went there 

is because that was the only way I could get them to help me. It 

took another 10 months after that to get them to finally come to 

the table, and even then, it was only because of my recommendation that we go from—I had 23 years left on my mortgage, let’s extend it back out to 30 years. 

Can you cut my interest rate? Nope. You have been delinquent. 

You are kidding me. I went delinquent because it was what you, 

as the bank, instructed me to do. Unofficially, by the way. They 

would not go on record with that piece of it. 

Long story short, I finally got it. No principal reduction, no reduced interest rate, and every time you speak to them the sense 

is well, you were delinquent, therefore no, you don’t qualify. 

Jump to 2009, we had our staff itself ramped up, we have had 

our staff trained. Most of the government programs just were not 

working for most folks though. Stipulations and stuff did not make 

it work for them. 

The biggest issue we are running into really isn’t so much that 

people didn’t want to pay for the homes or pay for the mortgages; 

they were unemployed. People that we were able to assist in getting modifications in 2008 and 2009, find a job, get the modification, and lo and behold, they would get unemployed again. Therefore, they were back needing modification, thanks. We’re not happy 

about that. 

Right now one of them—I’m going to jump all the way up to 

2011. It was a very strange year in that there were ups and downs 

when it comes to the number of clientele that we helped. We saw 

one quarter where literally we saw 50 percent of our cases go away. 

Why? People had given up. 

We have seen that today most individuals have no desire to even 

proceed in the modification process unless they can get a principal 

12 

reduction. Put yourselves in the banks’ shoes, and this is what I 

try to explain to the clients. Realistically, if I came to you and 

asked you to loan me $10,000, and you did, through no fault of 

yours, and no fault of mine, that investment went south. Would 

you expect me to just walk up to you then and say you know what, 

forgive me $5,000 of it. 

That’s how the bank makes its money. That’s what they are 

there for. Do I agree that their bottom lines are there? Yes, I could 

say that they probably could afford it. But I can’t say that I blame 

the banks for not being willing to give principal reductions. 

In the last 3 months since A.B. 284 came out, we have seen 

something that to me has probably been one of the best ways to 

look at it, and that is we’re finally getting banks, that while they 

are still not doing principal reductions, what they are doing—I included it in your packet—they are actually going in and do a confirmed loan. 

Like you, Ms. Berkley, we had a lady—ironically she is in the 

mortgage end of it, for one of the major banks. It was one of the 

vice presidents—purchased a house for $780,000. Her house today 

is worth about $320,000. 

She works in that industry. She loans the money, but she 

didn’t—and actually it was a different bank than she has the mortgage through. They ended up going and deferring about $350,000 

of her note, extended it out for 40 years, reduced her interest rate. 

But at least now, she can afford to stay in that house. 

The win/win there is that she can stay in her house, her mortgage payments are now reasonable, and from the bank’s standpoint, they actually have a chance now of getting all of their money 

back. 

Because one of the things that you find, when you talk to many 

of the residents, is they want principal reduction and principal reduction only. Otherwise, they don’t accept what they have been offered. The problem with that is the banks don’t want it because 

they are guaranteeing themselves losing the money. 

One of the questions that has always been asked is if we reduce 

it $50,000 today, and your house goes up in the next 5 years to 

where it’s now recouped that $50,000, are you going to give it back 

to the bank? And every homeowner says the same thing: No. 

Once again, I can’t blame the banks, if the homeowner is not 

willing to take the reduction and then give it back later when the 

house goes up because you just gave them $50,000 on its face. 

That’s one reason why I think this program has been, in my mind, 

a win/win. The bank still has a chance to collect all of its money, 

it’s deferred, zero percent interest on the amount that they have 

deferred to the back end of it. Basically, it’s like a balloon payment 

at the end of the 40 years, or should they decide to resell or rebuy 

their house somewhere in that next 40 years, at that time, the 

$80,000 or $50,000 or whatever is deferred would then be paid to 

the bank. 

So it does give everybody that hope and that chance that now 

they can stay in their home, as well as they are not paying the full 

ride, at least here in the beginning. 

That’s really all I have. Thank you very much. 

13 

[The prepared statement of Mr. Chide can be found on page 39 

of the appendix.] 

Chairwoman CAPITO. Okay, thank you very much. 

Our next witness is Janis Grady, treasurer and director, Nevada 

Association of Mortgage Professionals. Welcome. 

STATEMENT OF JANIS GRADY, PAST PRESIDENT AND CURRENT TREASURER AND DIRECTOR, NEVADA ASSOCIATION 

OF MORTGAGE PROFESSIONALS 

Ms. GRADY. Thank you very much for having me here. I was the 

president of the Nevada Association of Mortgage Professionals for 

2 years, and recently turned that over. So I have been very involved with a lot of the mortgage brokers and bankers in this industry. I have seen us go down with a lot of problems. 

Some of the situations, we do have lost jobs, which have also decreased income, where people are just now getting by. We have 

property values that are underwater, some up to the amount of 200 

percent. 

We had temporary bank modifications that have provided a short 

time of relief, but now some of those are coming due and the payments are going to increase again. 

Mortgage qualifications for loans have tightened up to the point 

that many no longer qualify, for one reason or another. 

In the mortgage industry alone, in the State of Nevada during 

the peak, we had 2,200 mortgage brokers in this State. We now 

have 161, and 80 mortgage bankers. So that’s basically a loss of 

2,000 small businesses that were renting spaces, paying utilities, 

hiring staff, using courier businesses, title companies, escrows, the 

restaurant, the sound shop next door—2,000 just from one industry 

alone. 

Also, the people in the market, we had 20,000 mortgage originators. We now have about 2,000. So we have lost 18,000 jobs there 

in this industry. 

I have a solution on that is when we come up with all these different programs, including Congressman Heck’s second chance program, if we can utilize the local brokers and bankers to execute 

these programs on the ground. 

Another situation we have is concerning appraisals. With the implementation of the Home Valuation Code of Conduct, HVCC is 

what it’s referred to, it mandates that an appraisal be ordered 

through appraisal management companies. 

Now what this has done is created a problem of increased fees 

because now you have a middleman there, and the appraisers are 

now making less money, sometimes a third of what they used to 

make, and so the consumer has to pay more and the appraiser is 

making less, just to support a middleman that is mostly owned by 

the banks. And it was originally set up to avoid this type of situation, that they own the mortgage management companies, appraisal management companies. 

Part of my solution is, along with these local programs, if we can 

use the local appraisers and knock out going through the management companies, and that way we’ll get our local appraisers back 

to work, and if we use the system like the VA has, where they do 

14 

a rotation, so it’s not one appraiser who is getting all the work, but 

it rotates through every licensed appraiser in the State. 

As for home evaluations, we have a problem there, where appraisals are comparing dollar for dollar, they’re comparing houses 

with upgrades against houses with cement in the toilet and holes 

in the walls, that have been destroyed by previous tenants who are 

upset with the banks. 

So you might have a house that is on 3 acres, everything is upgraded, and it is being compared and given the same value as one 

that has been totally destroyed. That is not fair and it keeps pulling down our values in this State and keeping them down. 

I can’t do anything about the laws federally, but we can do something here locally and make it a requirement that the appraisers 

have to include upgrades in their appraisals and take that into account, and if someone did $100,000 worth of upgrades, then that 

should be taken into account to give a proper value on that house. 

In regards to in-State originators and out-of-State originators, 

per the mortgage lending division, they are—at the time of renewal 

in December, there were 1,930 mortgage agents licensed, so 1,930 

mortgage agents licensed in the State of Nevada. 

Of these, 756 are loan officers who are out-of-State. That’s 40 

percent of our loan officers licensed to do loans in Nevada are from 

out-of-State. So, we only have 60 percent working here. 

What I suggest on that is that out-of-State loan officers who are 

licensed here are required to come into the State to do their continued education on Nevada law. And that does—it doesn’t put a lot 

of money into the State, but that’s 756 people coming into the State 

for a weekend to do their continued education to get licensed and 

they have to come back every year in order to renew that license. 

So that helps a little bit. 

Now, I’m going on to primary residences—50 percent of the 

monthly purchases right now are cash purchases. So if there are 

3,000 purchases closed, there are probably 1,400 or 1,500 that are 

financed, using the 2,000 loan officers. So right there, it wipes out 

a lot of our business for the mortgage industry. 

Right now, Fannie Mae does have in place a 30-day waiver 

where on their properties investors cannot put bids in on those 

properties for 30 days, giving the chance for primary residents, 

locals to look at the properties and put in a bid. 

There is a situation where there are locals looking for a home, 

they put in their bid, they had to get financing, but a cash investor 

comes along and that home is taken away from them right there. 

So to prevent that happening, I’m proposing that on any sales on 

MLS, on the REO and the foreclosures, that those be given a 

chance, opened up for owner-occupied bids before going to investors 

for 30 days. That way, we’ll also help prevent the State from becoming a rental state. Because we want to get our people in homes. 

On the downpayment assistance programs, there are over six 

downpayment assistance programs, but there are a lot of loan officers who don’t know about those programs. So I’m suggesting that 

we put it in as a requirement on the continued education, while we 

are trying to pull out of this mess, and require all loan officers, including those out-of-State have to find out and take a class on 

15 

downpayment assistance programs so that they know how to help 

get these people into homes. 

Then in regards to strategic foreclosures, we do have the HARP 

program, HARP 2 coming out, which will definitely help, and that’s 

something I have been campaigning for 3 years, trying to get 30- 

years streamlined to help lower people’s interest rates. But there 

are attorneys who are on TV pushing strategic foreclosures, and to 

me that forwards and continues defrauding the lender, which is not 

okay, and the bar needs to do something about it. 

Thank you very much. 

[The prepared statement of Ms. Grady can be found on page 48 

of the appendix.] 

Chairwoman CAPITO. Thank you very much. 

Our next witness is Sue Longson, vice president, SCE Federal 

Credit Union. Welcome. 

STATEMENT OF SUSANNE B. LONGSON, VICE PRESIDENT, 

BUSINESS DEVELOPMENT AND COMMUNITY RELATIONS, 

SCE FEDERAL CREDIT UNION, AND FORMER PRESIDENT, 

SONEPCO FEDERAL CREDIT UNION 

Ms. LONGSON. Thank you very much. Chairwoman Capito, Representative Heck, Representative Berkeley, and distinguished subcommittee members, thank you for inviting me to testify at this 

very important field hearing. 

As you are aware, Nevada, and more specifically the greater Las 

Vegas area, has been ground zero for the unemployment and housing crisis that has plagued our Nation for the past few years. Even 

today, as many other States are beginning to see signs of recovery, 

Nevada is still deep in troubled times. 

My name is Susanne Longson. I am the vice president of business development and community relations for SCE Federal Credit 

Union, a $560 million credit union located Irwindale, California. 

Until recently, I was president of SONEPCO Federal Credit Union, a $55 million credit union located in Las Vegas, which was 

organized to serve the employees of NV Energy and their family 

members. I served as president and CEO for over 16 years, until 

the credit union merged with SCE Federal Credit Union at the end 

of 2011. 

I am proud to be third generation credit union person working 

in the credit union movement. My grandfather organized the first 

credit union in Nevada in the late 1930s, and over 400 in the western United States. My parents also worked in the credit union 

movement. 

I am pleased to come before the committee on behalf of credit 

unions that provide financial services to over half a million consumers here in Nevada and nearly 94 million in the United States. 

The recession and the housing crisis have left credit unions battered and bruised, especially those here in the Silver State. Credit 

unions are not-for-profit financial cooperatives, owned by our members who democratically elect our volunteer board of directors. 

We do not have stock, are not publicly traded, and return all 

profits to our members in various forms. The credit union model of 

operations is different from others in financial services, as we focus 

on what is best for our members. 

16 

To date, no credit union has taken a dime of taxpayer money, nor 

received a government bailout. 

Prior to this crisis, credit unions rarely used the terms we frequently hear today. Most credit unions had never processed a foreclosure, short sale, or loan modification. As I speak about it in my 

written testimony, SONEPCO has never foreclosed on a member 

during this financial crisis. 

Credit unions are about people helping people, and here in Nevada, we live up to this mantra. In SONEPCO’s first 52 years of 

operation, our total loan losses were $1.3 million. In the last 4 

years, our loan losses were $4.8 million, more in the last 4 years 

than in the previous 52 years. For a $55 million credit union, that is significant. At credit 

unions, losses are taken directly from capital, which means if we 

aren’t breaking even, our capital is depleted. This is an alarming 

problem that will require congressional action to fix. My written 

testimony goes into further details about this issue. 

Credit unions were not responsible for the types of loans that 

brought on the housing crisis. Our loans were and continue to be 

strongly underwritten, and our loan products are designed to best 

serve our members’ needs. In fact, during the period leading up to 

the crisis, several credit unions were rejecting member requests for 

exotic mortgage products. We simply said no, and were largely able 

to avoid the housing bubble. 

However, as property values rapidly declined and unemployment 

skyrocketed, credit unions suffered losses through no fault of our 

own. In the past 4 years, at least 6 credit unions were either liquidated or merged with out-of-State credit unions, and SONEPCO 

was one of those. Thankfully, however, SCE Federal Credit Union 

retained all of the local branches and employees. 

That is another problem for the 2.7 million residents of Nevada, 

a drain of locally-owned financial institutions. As of today, only 21 

credit unions remain in Nevada. 

If this committee is in search of solutions to address the ongoing 

problems here in Nevada, I highly recommend you do everything 

possible to empower local financial institutions. While large Wall 

Street banks have the liquidity to lend, taxpayer or otherwise, they 

have not. 

Credit unions, on the other hand, are working with our members 

and because we are here on the ground and can address problems 

head-on. My written statement shows how loan modifications and 

pursuing alternative options have kept SONEPCO members in 

their homes. While our regulators opposed these options, we stuck 

to our mantra and found ways and solutions that benefited our 

members. 

Finally, in my recommendations I state that there are several 

legislative remedies before Congress that will help credit unions 

continue to do the right thing. From addressing credit union examinations—and thank you, Chairwoman Capito for that—to passing 

legislation allowing credit unions to make a new small business 

loan, everything we support supports the credit union member, our 

community, and our State. 

I look forward to our dialogue today, and I hope you can provide 

insight for solutions to this crisis. Thank you. 

17 

[The prepared statement of Ms. Longson can be found on page 

51 of the appendix.] 

Chairwoman CAPITO. Thank you very much. 

And our final witness is Mr. Keith Lynam, a REALTOR® with 

Windermere Prestige Properties, on behalf of the Nevada Association of REALTORS®. Welcome. 

STATEMENT OF KEITH LYNAM, REALTOR® AND SALES ASSOCIATE, WINDERMERE PRESTIGE PROPERTIES, ON BEHALF 

OF THE NEVADA ASSOCIATION OF REALTORS® 

Mr. LYNAM. Good morning, Madam Chairwoman, and members 

of the subcommittee. My name is Keith Lynam. I am a REALTOR® with Windermere Prestige Properties and a member of the 

Nevada Association of REALTORS®, and we thank you for recognizing the unique situation we are experiencing in Nevada by having the subcommittee field hearing in Las Vegas today. 

As you know, Nevada is the hardest-hit State for foreclosures 

and has been leading the Nation in foreclosures for 5 straight 

years, according to RealtyTrac, a company that tracks foreclosure 

data across the country. 

People in Nevada are frustrated. They are angry, and most are 

underwater. Numbers released for the fourth quarter of 2011 by 

the research firm CoreLogic indicates that 61 percent of homeowners in Nevada with mortgages are underwater. That compares 

to 22.8 percent nationwide. We are almost 3 times more likely to 

be underwater here in Nevada than anywhere else in the country. 

The next two States with the highest proportion of underwater 

homeowners are Arizona, with 48 percent, and Florida with 41 percent. You are 50 percent more likely to be underwater here than 

even in the second and third most hard-hit States. 

Clearly, the magnitude of the problem in Nevada is unique and 

very serious, and even though the hearing is entitled, ‘‘An Examination of Potential Private Sector Solutions to Mitigate Foreclosures in Nevada,’’ I was stumped, and I’m quite confident that’s 

not what you wanted to hear, and probably not what you expected 

to hear. 

So I did what all great minds do in today’s world, I went to 

Facebook. And to Twitter. And asked: ‘‘What should we do? What 

is the private sector solution to what we are faced with.’’ 

Shane Kovacs of Arizona, one of my friends, said: ‘‘I think we 

need to find a way to help those who are simply just underwater. 

Most of the programs are for those who are already in big trouble 

financially. The institutions need to open up fairer loan programs 

for those of us who have good credit and sufficient income. We are 

simply trying to improve our financial situation. If we can, we can 

also buy and further stimulate the economy. There has to be a better way.’’ 

Robin Yates, the broker and owner of Windermere Prestige Properties here in Las Vegas, stated: ‘‘We need to reward those who 

have continued to make those payments, but are simply upside 

down, by refinancing at a lower interest rate for those loans not 

backed by Freddie and Fannie Mae. Ramp up the cooperative 

short-sale or deed-in-lieu programs for those who cannot stay in 

their home any longer, and I will talk about short sales and there’s 

18 

a solution that I think might be something that we can talk about 

further.’’ 

I was at the Nevada Hardest Hit program last week as well, and 

the anger and frustration, while there were some great stories that 

come of it, but the anger and the frustration overall was palpable. 

You could see the people who were there that were just simply asking for help from their banks. 

They were asking for someone, other than the 25-year-old person 

who answered the phone, who just took the job 3 months ago and 

was reading from a script, could do for them. They wanted help. 

They don’t want to not make their payments. They don’t want to 

not know what’s going to happen. 

In my mentions to them, and the reason why I am so stumped 

is because the big business, the big government lines have become 

so blurred that they are unrecognizable today. I think people are 

as afraid of big business, more so than they ever have been afraid 

of big government. They don’t know where to go. They don’t know 

how to get to the bottom of what their solution is, and why they’re 

afraid every day as they live. And it’s frustrating. And so it does 

have us stumped. 

What can we do? Where are we going? I want to leave you with 

this, and hopefully you never have to experience this, and I would 

encourage you to spend a day with one of your local REALTORS® 

because this is something that we have to face every day. But I 

hope you have never had to work with a huge financial institution, 

try to weave through the switchboards of madness, have to live 

with the daily mind-boggling frustration of trying to get someone 

to answer a simple question. For example, ‘‘How could you lose the 

same facts 43 times? What difference does it make if a hardship 

letter is dated 32 days ago, and you declined the file and eliminate 

it from your system, what difference does it make?’’ 

These are mind-boggling real experiences that we have to go 

through every day, but specifically going through this process and 

finally getting the relief, the great sense of relief, that your loan 

has finally been modified with payments that make sense for the 

bank and the homeowner, and the relief that goes with that, only 

to have a knock on the door by a representative who wants to tell 

you that your home has been foreclosed on after you have been approved for a modification. 

The foreclosure hasn’t been just a day ago, it hasn’t been a week 

ago. It had been over 2 months ago when you finally get the knock. 

A real live situation, the very next day you get another knock on 

the door and it is the Fed Ex guy and he hands you the approved 

modification paperwork on your now foreclosed-upon home. 

Well, I have. That is my story. And the unbelievable experience 

of having to go to your now 7-year-old daughter and explain to her 

what had just happened. How do you explain it? 

So my final thought is I guess I’m not stumped at all. Madam 

Chairwoman and members of the subcommittee, with all your 

power and all your goodwill, it may not be popular to say, but you 

are the only ones who can remove that kind of arrogance. You are 

the only ones. 

19 

So we look back to you for the answers that I know that are out 

there, and you are the only ones who can help us today. So I thank 

you for having us come in. 

[The prepared statement of Mr. Lynam can be found on page 60 

of the appendix.] 

Chairwoman CAPITO. Thank you very much. 

Great testimony in all cases, and what we are going to do now 

is move to the question portion, and I am going to stick to the 5 

minutes. I will question for 5 minutes, and then Congresswoman 

Berkeley for 5 minutes, and then Congressman Heck, and then 

we’ll go back around, if we need additional questions. 

I really don’t know where to start on my questions. I would, Mr. 

Lynam, like to ask you, some of the government programs were 

supposed to have forestalled foreclosure if you are in a loan modification, and you are telling me that’s not in reality what has happened in your case, and probably a lot of others. Is that a fair 

statement? 

Mr. LYNAM. That is a fair statement and I grant you, this was 

in 2008 when this happened, but it happens today. It happens 

today, and part of it is the Freddie and Fannie Mae guidelines 

where they will tell you that we are not going to put off a trustee 

sale, no matter what. 

We have short sales in front of them that we are waiting for approval letters, that we get foreclosed on, and it just happened to 

me on a listing of mine a month ago. 

Chairwoman CAPITO. Let me ask you just quickly, where are the 

real estate values now? Are they still dropping? 

Mr. LYNAM. I think we’re, we call it the bump— 

Chairwoman CAPITO. Bumping along. 

Mr. LYNAM. Bumping along the bottom. We were up to 9 percent 

last month, in large part because they can’t foreclose on properties, 

in their minds, any longer. 

Chairwoman CAPITO. Let me ask you, Ms. Campbell, on the—I 

think this is a repeating theme in all of your, with the exception 

maybe of the credit union, is the lack of communication or the difficulty in communication. You are talking about trying to meet 

with a large financial institution. 

I know in my district office in West Virginia, we try to mediate 

some of this. We don’t have the volume, so we can actually do this. 

But we can see the frustrations from our office. There have been 

proposals before Congress to try to eliminate that barrier, the communications barrier. 

What else can we do here? Do you have any suggestions on that, 

on the communication aspect? 

Ms. CAMPBELL. Madam Chairwoman, just to speak to what my 

colleague was saying regarding this experience, I can emphatically 

tell you that it is still continuing today, where there is dual tracking by the lenders where they will do a modification effort, as well 

as go forward with the foreclosure process. 

What else can we do? It has been determined through studies 

that foreclosure mediation programs that have a mandatory optout, right now we are an opt-in program. The homeowner must 

elect in. A lot of homeowners, because they have become jaded with 

20 

their lender will not open up their paperwork, so they won’t see the 

form. 

But if we had an opt-out program where it was mandatory that 

they are in the program, then I think we would see more participation, and it would help more homeowners. We receive calls from 

homeowners, unfortunately, who have not opted into the program 

and our program can’t help them after that. 

Chairwoman CAPITO. I would imagine those people, once they see 

themselves starting to decline, they are already declined to a point, 

you try to forestall it, you try not to face the reality as quickly— 

it comes on you a lot quicker than probably you actually say to 

yourself, I’m in deep trouble here, and then you lose your job or 

somebody gets ill or you have a personal tragedy. 

In your—let’s see, who is doing refinancing? In your mediations, 

you are putting them together in the refinancing, are you finding 

that people are refinancing into FHA? Or are you seeing it, because 

it’s taking a larger piece of the pie and it’s causing concern in 

Washington because it’s putting a strain on that. Does anybody 

have any comments on FHA lending? 

Ms. GRADY. From my knowledge, yes, a lot of people are refinancing into FHA because the guidelines are lighter. But with the 

HARP 2.0 Program coming out, that should help give some relief 

to the FHA program because that will allow a lot of people to 

streamline, just lower their interest rates, rather than anything 

else. 

But as to what she was saying on the mediation and going 

through foreclosures, still coming about, I would like to comment 

on that. Because I went through trying to short sale one of my investment properties and I had a cash buyer for $188,000, and we 

were 3 days away from recording when the bank foreclosed, and 

sold it for $155,000 in auction. So they lost out on $30,000. 

But for programs like this, for short sales, mediation, modifications, if they put in filing with the title companies that they are 

under mediation, or short sale, and that way when escrow goes to 

look at the title, they can see something is going on, and not allow 

the foreclosure to happen. 

Chairwoman CAPITO. My 5 minutes has expired. Congresswoman 

Berkley? 

Ms. BERKLEY. Thank you, Madam Chairwoman. May I say, and 

I don’t mean to say this in a condescending way, I’m very proud 

of all of you. One, for the work that you do to help keep my constituents in their homes; and two, for the remarkable presentations 

that you have all made so that we can punctuate to somebody that 

could be of tremendous help to us. 

I am amazed, after all of these years of standing on the Floor of 

the House, explaining what is happening in my State and in my 

congressional district, how it’s still met with skepticism and disbelief that people are suffering in the way they are in this community, and refusing to give the relief that we need. 

The idea that we should just allow everybody to hit bottom and 

not do anything about it is such an anathema to my way of thinking, and it just makes me realize how people in pivotal positions 

in our Nation’s Capital fully do not appreciate what is happening 

21 

out in the real world. And you are bringing home what is happening in the real world. 

When I was a kid, I grew up in Las Vegas. When we bought a 

home for the first time, I remember my parents getting dressed up 

because they were going to the bank to see if they could get a loan 

for the house. The house cost $33,000. That was our first house. 

It was a party home over by Valley High School. 

They were so proud and overwhelmed when they were able to 

take their family to our first home ever. We became part of the 

community. We had an ownership interest. We had roots here. It 

made a difference and it changed the direction of my family. We 

were somebody, and we owned something for the first time. 

For me, dealing with the volume of constituents who contact my 

office who I am sure felt the same way about their homes as my 

family thought about ours—and it was just one of those cinderblock 

party homes that we lived in—it is horrible to me that we haven’t 

been able to do more. 

I first discovered that we were moving towards a crisis when I 

was meeting with the REALTORS®, and they started—I thought— 

we all thought that the town was hot as a pistol. People were buying and flipping and selling and living and we never thought that 

gravy train would end. It was the REALTORS® who saw it among 

the first, and probably the construction companies as well. 

But once we knew we were in crisis, my office did a series of consumer meetings with people who had been foreclosed on and we 

brought the home loan bank representatives from San Francisco in 

to help counsel my constituents on how they can stay in their 

homes. 

Don’t ignore the foreclosure envelope. Open it up, and the advice 

that they were given at the first few mortgage foreclosure seminars 

that we conducted was: Contact your lender. They don’t want an 

empty house. They want to work with you so they can stay in their 

home. They don’t want empty homes. They don’t want empty 

neighborhoods. 

It wasn’t until a few days later when we started getting phone 

calls back from my constituents, the advice they were given at 

those seminars wasn’t working and it truly was the wrong advice. 

They couldn’t find out who their lenders were, and that was a huge 

issue. The telephone numbers on their mortgage payments were— 

there was nobody answering the phone. And if someone did answer 

the phone, they were not in a position to do anything for them. It 

got worse and worse and worse. And the number of foreclosures in 

this community went up and up and up. 

I know what we can do with all the lost paperwork, and we have 

received hundreds of calls on a monthly basis: They lost my paperwork again. I have to start over again. And that’s from REALTORS® and people who are trying to stay in their homes. 

We have Yucca Mountain. Rather than nuclear waste, which we 

don’t want, why don’t we put all the lost paperwork for these mortgage modifications at Yucca Mountain? I’m not sure the mountain 

can hold all of the lost paperwork that we have experienced. It is 

an outrage, and until we can get the private banks to work with 

us, and help modify these loans, or the deferred, I like that suggestion, and while I understand what you are saying about the prinVerDate Nov 24 2008 17:21 Aug 07, 2012 Jkt 075079 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\75079.TXT TERRIE
22 

cipal write-down, I still would rather have half a loaf than no loaf 

at all. 

I want to keep these people in their homes. I want their children 

to continue to go to their neighborhood schools and I want them to 

be able to overcome this hurdle so when they get back to work and 

the family starts recovering economically, they are going to have a 

place to live, and that is their home, probably their biggest investment that they have or will ever have in their lifetime. 

So I thank you for your remarkable testimony. I thank you, Shelley, Congresswoman Capito, for coming here and listening to what 

we are going through. We are ground zero for mortgage foreclosure. 

We need relief and it can’t only be private companies that are 

doing this. We need some response. 

We need response from Freddie and Fannie, we need help from 

the government, and we need help from the private banks, and 

until they are more responsive, we are not going to have any 

progress around here and people are going to continue to suffer. I 

don’t know if the end is in sight, I truly don’t, and I thank you all 

very much. 

Chairwoman CAPITO. Mr. Heck? 

Mr. HECK. Thank you, Madam Chairwoman, and thank you all. 

You have all brought a very interesting and different perspective, 

and I think a much needed perspective to this debate, certainly one 

that hasn’t been heard well within the halls of Congress. 

The current CD 3, my district, is the most populous congressional district in the country right now, with 1.1 million people. So 

multiply that by the number and the percentage of underwater 

homes, and there is nobody, nobody in the United States, in the 

U.S. House of Representatives, has more people suffering from this 

housing crisis than I do. So much so, certainly it’s the largest area 

of case work that we do in our office, and so much so that I went 

and hired a REALTOR® as my housing case worker. I needed 

somebody who understood the process. 

I can talk to a bank, but I have no idea what they are saying. 

I don’t know the lingo. But I needed somebody, and I see as each 

one of you were talking about the difficulties with the process, I see 

my case workers in the audience nodding their heads, yes, we are 

experiencing that on every case. 

Mr. Lynam, first, thank you for sharing your personal heartwrenching story. It is interesting to see that the fellow who has 

worked in the construction industry and doing mediation in a nonprofit organization is suffering this problem. Somebody who is a 

REALTOR® in the industry has suffered it. No one is immune 

from this problem. 

Last month, FHA announced the beginning of a pilot program to 

convert foreclosed properties, or REO’s, to rental housing. The initiative will allow qualified investors to purchase pools of foreclosed 

properties. The investors would then be required to rent the properties for a specified number of years. During the pilot phase, 

Fannie Mae will offer for sale pools of various types of assets, including the rental properties, with a focus on the hardest-hit areas. 

As a REALTOR® working in the market, do you believe a program like that, does that type of program have the potential to assist areas like Las Vegas that have a large backlog of REO’s? 

23 

Mr. LYNAM. No. Not even close. Put the houses back on the market. They have just admitted to part of the shadow foreclosure, 

shadow inventory that they now control. If they have the capability 

of putting it out on the market for rent, put it out for sale. 

In Southern Nevada, particularly today, we have an inventory 

problem. We have an extreme shortage of homes. Less than 6,500, 

for sure, and it may be even less than 6,000 single family homes 

are on the market. 

Our problem isn’t that we have foreclosed homes, it’s that the 

banks, these financial institutions are not selling them. We have 

renters. We have buyers. Release it and put it on there. And I’ll 

answer this, just, if you want to know what the private sector solution to all this, is to turn off the spigot. Stop allowing the finance 

institutions to take the money, and not to be a contrarian, but they 

didn’t lose $30,000 on that deal because you had $180,000 and they 

foreclosed on it for $150,000. They made money because of all the 

money that they have gotten in their hands. So turn off the spigot 

and I guarantee you, you will have a private sector solution overnight. 

Mr. HECK. Ms. Longson, you talked about how credit unions 

haven’t taken bailouts or taxpayer money and that you have never 

foreclosed on a member. What are the specific methods that allow 

the credit unions to be able to be so much more, I guess, accommodating? We heard about the difficulty in communication in these 

two tracks. The foreclosure track is moving forward while the 

modification track is also moving forward in the larger institutions? 

How has the credit union industry been so successful in this, and 

is there a lesson learned that we should be able to bring back to 

the larger institutions. 

Ms. LONGSON. SONEPCO had never foreclosed. I do know that 

some credit unions have had to go to that, through, gone to foreclosure with their members. 

But what we do is by far and away, and I can speak to 

SONEPCO membership because we retain the loans. We have sold 

very few into the secondary market. 

So when we saw early on that there was going to be a problem, 

as early as late 2007, early 2008, what we started doing was analyzing the value of the home on a quarterly basis. We ran credit 

scores of our members every 6 months, and then so we looked at 

their home value and if their credit scores were declining, that 

spoke to that the member was having difficulty, and we called 

them. 

We said, we see that you are having problems. Can we help you? 

And yes. Yes. We went to people’s homes. Members came into the 

credit union and we did whatever we could do to help a member 

stay in their home, if that is what they sincerely wanted to do. And 

I gave a few examples in my written testimony. 

But I wanted to share with you, I looked at the statistics through 

the end of February, SONEPCO was a very small financial institution, just $55 million in assets. We did $9.5 million in first mortgages. Over 20 percent of that is in workouts at this point, so over 

$2 million. Every single one of those is current and not delinquent. 

So when you deal with your members respectfully, and they want 

to stay in the home, it’s possible for them to stay in the home. 

24 

Now, I want to be very honest in saying that the credit union 

and the board of directors have to throw ourselves in front of a runaway train in the form of our regulator because they wanted us to 

foreclose. They said, you are going to lose on this. This person can’t 

stay. And we said, yes, they can. And no, we won’t lose, and we 

will not displace a disabled person. 

So it’s a difficult row to hoe, but I would like to ask, if it’s not 

too presumptuous of me, in all of the programs that have come out, 

credit unions are often excluded, or I should say not remembered. 

I would like to encourage Congress, when they are looking at programs, to include credit unions in them so that we can help our 

members. 

And speaking to principal write-down, because credit unions are 

cooperatives, there is only one place for a principal write-down to 

come from, and that is our retained earnings, our capital. We can’t 

get our capital back other than through operational efficiencies because we do not have access to secondary capital. Simply put, if 

that were to happen, it would do us under. We need to have access 

to secondary capital, and that is a piece of legislation that has been 

introduced. So just those two things, remember us, and the impact 

of principal write-down on the credit unions would be severe. 

Mr. HECK. Thank you. Imagine a financial institution being 

proactive in reaching out to their clients before they are in trouble. 

Madam Chairwoman, I’ll yield back, if we are going to go 

through a second round. 

Chairwoman CAPITO. I have a question, one of the themes has 

been this behemoth, Fannie and Freddie. We keep tossing the 

names around, and I would dare say the average homeowner, when 

they buy a home, have no idea who Fannie or Freddie are, or that 

their loan has been sold and packaged and sent off and they are 

getting serviced by somebody else, when their originator was 

maybe somebody else. The complications in the system are really 

a lot to grasp for an individual. 

When you say ‘‘turn off the spigot,’’ Mr. Lynam, I’m sure you are 

putting them in there because they are up to $150 billion of taxpayer backstop. And in our committee, we have been trying to figure out a way to wind them down. 

There are some in the committees who want to wind them down 

dramatically, like get rid of them in 6 months. I don’t fall in that 

category. I’m for the gradual wind-down to try to get the private 

sector back in because I think a precipitous wind-down, we don’t 

know what kind of shock it would do to the entire system, and you 

all are ground zero, so you can imagine what kind of an effect that 

would have. 

Does anybody have any suggestions on how we can pull back on 

the involvement of Fannie and Freddie and clarify the system more 

to get that private market back in, in terms of their participation? 

Is this something—this is very complicated, I know, and very big. 

Do you have any suggestions? 

Mr. LYNAM. Maybe a comment. You’re right. You talk to people 

and the average homeowner, including myself, they want to know 

who this Freddie and Fannie are and why they are mucking up 

their lives. Why is their bad marriage affecting now my bad marriage? 

25 

Chairwoman CAPITO. Right. 

Mr. LYNAM. So solutions, yes. I just go back to Main Street lending, is what I call it, and sitting next to Main Street lending. This 

would never have happened, had we not been able to have more 

of an ability for Main Street lenders to fund these loans and you 

get away from that. But that’s all happened. It’s already done. And 

the credit swaps and the billions of dollars of profits have already 

occurred and happened. 

So how do we unwind and unring the bell? Far greater minds. 

Take it to Facebook. Maybe that’s the answer. So, I don’t know. 

Chairwoman CAPITO. Does anybody else have a comment? 

Ms. CAMPBELL. Yes, I have a comment, regarding Freddie and 

Fannie. We are really deep in this. As you said, it is very complex. 

When we first started the program, we actually just told our mediators, you are going to get ready to learn a new lexicon. It is going 

to be a whole new language. 

I called it a ‘‘black hole’’ when I first started. Now, 3 years into 

this, I’m somebody who is educated. I have a master’s degree. I 

bought two homes and I had no clue. 

But what really surprised me is the lending institution industry. 

They should know it inside and out. Why is it left to the American 

people to unwind or unring the bell? The lending institutions have 

the wherewithal, they have the expertise, they have the resources. 

They need to revamp their processes to ensure that they are in 

compliance with the law. We know that they have been allowed to 

be unregulated for quite a long time, and now that they are being 

regulated, we need to hold their feet to the fire. Thank you. 

Ms. GRADY. I would like to bring up that yes, there are problems 

with Fannie and Freddie, but also in between a broker and Fannie 

and Freddie we usually have a bank or a wholesale lender and 

from my own experiences, my deals, mine was a Fannie Mae, but 

I had to deal with Bank of America in order to negotiate and work 

things out. And it wasn’t Fannie Mae’s decision to do what happened, it was Bank of America, as the server. They were servicing 

that loan. 

I think that’s part of the problem, is Fannie is using the different 

banking institutions to do the servicing and they are making the 

decisions and not looking at the whole picture. 

Ms. BERKLEY. Thank you, Congresswoman. There’s a couple of— 

Sue, you and I work very, very closely together. The access to secondary capital legislation that you talk of, do you have a bill number on that? Could I get that? 

Ms. LONGSON. Yes, it is H.R. 3993. Representative King introduced that and our insured, the National Credit Union Administration, supports that and is working with the Congressman on that. 

Ms. BERKLEY. Great. Thank you for that information. 

Another aspect in this community in particular is the way that 

servicemen and women who are serving this Nation overseas, 

largely because we have Nellis Air Force Base in our community, 

and veterans when they get back, they are experiencing not only 

being far away from home, and in a very, very dangerous part of 

the world, protecting and defending our country, but they are also 

hearing from back home that their families are going through tremendous trauma, as their homes are getting foreclosed on. And I 

26 

was very glad to see that there has been some movement in Washington to protect these people who have more important things 

right now to do than worry endlessly about where their families 

are going to be living when their homes have been foreclosed on. 

When we talk about, I think it’s very important to hold the people responsible for what has transpired in this community and 

throughout the United States. There has been a fraud perpetrated 

against the American middle class and almost brought down the 

economy of the world by this reckless behavior, the result of which, 

millions of Americans and tens of thousands of Nevadans are finding themselves without a job and without a home. And if we don’t 

hold them accountable, and make sure that this never happens 

again in this nation, then we have done a tremendous disservice 

to the American people. I think it’s time that Congress gets serious 

about this, and make sure that we do everything we can to keep 

people in their homes through public-private partnerships, make 

sure that we give homeowners every opportunity to recover, stay 

in their homes, and move to a brighter future for their families. 

But I have attended many of those sessions and I put together 

many of those sessions and you are absolutely right, Keith, the 

frustration level in that room is extraordinary. I am always amazed 

at how polite these people are because I’m not sure that I would 

be quite that polite if my whole world had turned upside down. 

They are reaching out for help and it’s very nice that our major 

banks, Bank of America, Wells Fargo, are sending 100 people 

there. But at the end of the day, they actually have to accomplish 

something. And having a bunch of untrained people who are just 

doing this for the first time, I’m glad they have a job, but their job 

is supposed to be keeping these people in their homes and working 

with them, as the credit unions do. 

Until we ensure that they do this, and actually help middle-class 

families by and large stay in their homes, we’re going to continue 

to have the trauma in this community and throughout the United 

States. We need to do better. And it’s up to us to ensure that they 

do better by the American people, or shame on us. 

Chairwoman CAPITO. Joe, Mr. Heck, I have no further questions, 

so you can question on out. 

Mr. HECK. Okay. I have one for each, and I will just make my 

way down the panel. I took care of this side of the room and I’m 

going to turn my attention over to this side. So I’ll start with Ms. 

Grady. 

Since HAMP’s inception, concerns have been raised with the program not reaching the expected number of homeowners. In your experience, are there systemic flaws in the HAMP program that are 

preventing it from reaching the homeowners, and if so, what do you 

think would make a difference in making the program more available to people here in southern Nevada? 

Ms. GRADY. At open level right now, we don’t have all the guidelines out and so I can’t really answer that, because I don’t have everything. It has not been the—the regulators don’t have it, or they 

are starting to put it out now. We are going to put together a class 

so people can attend to find out all those guidelines. 

Yes, it will help a lot of people, probably not everybody. But if 

it’s like I went over with you last year, if it’s like a 30-year streamVerDate Nov 24 2008 17:21 Aug 07, 2012 Jkt 075079 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\75079.TXT TERRIE
27 

line, and you are lowering the person’s interest rate, and saving 

them that payment, and they have a job, then yes, it should help 

a lot of people stay in their homes. 

Mr. HECK. Thank you. Mr. Chide, how is the demand for your 

services? How do you see the servicers’ willingness to participate 

in mediation has changed during the evolution of this crisis, from 

2008 to where we are today? Have you noticed any changes in the 

demand for your services and how the servicers are responding to 

you? 

Mr. CHIDE. Yes, the demand just continues. When you go back 

to 2010, we were seeing on average, and keep in mind I only have 

2 representatives who do this, and we were seeing on average 

about 50 to 60 new cases a month. So then, we are always working 

on the additional cases that go—that you’re carrying over—none of 

these are one day. They are many months in the making. 

The thing with these, the demand for it and how the servicers 

are getting it, when you go back to 2008, when you look at HAMP, 

the banks didn’t understand it. And that was one of the biggest difficulties we had found is because my staff would have to train the 

bank on what it is this program was even about. 

So I look at that, it would, it falls on behalf of the bank for not 

making sure they had the staff adequately trained. 

The other thing that you found back then is that most of these 

individuals, it was a phone call. You weren’t meeting anyone in 

person. When I listen to Ms. Longson talk about what the credit 

unions did, going back to using my own case, I called both of them 

before I went delinquent. I did try to get ahead of the curve. I saw 

what was coming. 

I called my credit union, which was Nevada Federal. They had 

me come into their office. The next day, I had a modification done 

within 3 days. They cut my payment in half, and did not charge 

me interest for 2 years. The bank, I couldn’t even get anyone on 

the phone who could answer anything for at least 30 days. 

It wasn’t until about 2010 that you started seeing some of the 

banks actually open up shops in town, whereas you had it with the 

credit unions. They were there. You could meet with them and you 

could see them face-to-face. 

It was a whole lot easier for us to help the consumer with that 

process, not to mention the smaller the institution, the easier and 

quicker it was to actually help someone get modified. When you 

started talking about the larger, especially here in Nevada, you 

have the five banks that primarily you see over and over again to 

deal with, you were calling somebody, you may get the same person; you may not. 

When it changed, and when we got them here locally, I got to 

know Joe Heck. So now every time I had a case that was at his 

bank, I called Joe directly and said, here’s what I have, help me 

work through this, and we found that those, because they had a, 

for lack of a better way of saying it, a better relationship, a personal relationship with them as a counselor, they were then willing 

to say okay, I understand what you are trying to do and they shortened their process. 

But even today, we’re still seeing about 9 months on average for 

a modification. It’s ridiculous. That’s because their representatives 

28 

who are on the phones are the ones that you now see in person 

don’t have the authority to really make the deal. 

When I look at what we went through last week, at Governor 

Sandoval’s event—like everyone else, we go to almost every one of 

them. Usually on my Saturdays, which for my staff means I’m now 

paying overtime for, and everything else, and what you find is that 

most of the banks will take the paperwork and they don’t make 

any—they don’t really—the majority of them, as you saw, the majority of them are not there to really close the deal. 

They are there, yes, you have a face on it, most of them have 

flown in from out of town, so you have some from California, Arizona or somewhere else, and they are not familiar with our market. 

And so, they are not there so that they can really close everything. 

They have just added to their system. And that has been unfortunate because then some of these people get frustrated. They don’t 

want to go to the next event, or they continue to go each time and 

yet their attitude gets a little more jaded, that they just don’t want 

to go anymore, and hence why now they are looking for one thing, 

and one thing only, if you don’t offer it to me— 

I had a gentleman in my office on Monday. They offered him to 

extend it 40 years. They extended it, they wanted to drop his interest rate and he looked at us and put the bank on the line and said, 

‘‘No way. You are not willing to give me anything, it’s just going 

to benefit you because you are going to make more money off the 

interest rate at the end of the day.’’ 

So that’s what we are seeing a lot of, even though yes, we are 

seeing more case load, it did slow down. After A.B. 284, it slowed 

down big time. Why? As someone has already alluded to, in the 

month of October you had less than 40 new cases that went out. 

So all of a sudden, we have seen a tremendous decline in these last 

3 months. 

Yet, on the other side we are seeing more permanent modifications being suggested. Offered. I’m not going to say they are all accepted, but offered. And if I could real quick, you had asked Mr. 

Lynam a while ago a question on the FHFA. One of the things, I 

respectfully disagree with him slightly, only because what I’m finding, as a nonprofit, when you look at that bill, if they—they have 

to own it for 5 years. 

Right now, the banks are not lending to these individuals, so if 

they have to borrow the money to get into the house, it’s not happening. So they are doing the renting. They are renting from a private investor, individuals somewhere else. 

One of the things that’s part of that is that they will actually 

allow the private sector, the investor to partner with the nonprofits. We would actually then service those rentals for them, 

property manage, basically, work with them on it. 

One of the caveats, though, is they have to own it for 5 years, 

unless they sell it to a nonprofit, they can do that as quickly as 3 

years. Personally, I think it should be shortened even more because 

as people can get back up on their feet, especially as unemployment continues to—it is declining here in Las Vegas. Those individuals would be able to get back in those houses sooner. 

If we cap them so that they can only do that for 5 years, that 

I agree with. I don’t think that’s going to work. But when you have 

29 

that caveat in there that if it’s handled in certain ways, it could 

sell quicker, in this case getting a nonprofit involved, the day that 

went out, I had three different investors—one from China, one 

from Phoenix, and one from Florida—contact me and ask me if we 

would be willing to partner with them. 

As a nonprofit, I can’t come up with $250,000 escrow to even look 

at what houses are for sale. They have it. Then, together what they 

were proposing is, look at it together, and then we work out some 

type of arrangement for, obviously I would have to hire individuals. 

Now, I’m putting people back to work as well to do the property 

management for them. 

So that’s something that’s where I slightly disagree. I don’t know 

if 5 years is going to do it. But there are some ways to modify it 

that I think would work. 

Mr. HECK. Thank you. And finally, Ms. Campbell. First, I applaud what the mediation program is accomplishing, and trying to 

accomplish. 

What, if anything, should Washington do to either assist you or 

to get out of your way so you could be more successful? 

Ms. CAMPBELL. One of the things that can happen is that there 

could be uniformity across the country regarding mandatory foreclosure mediation programs. 

When we started our program, there were approximately 13 or 

14. Today, there are over 35. We do know that our program has 

been designed to be a model because we saw the pains that other 

programs had gone through. So we have no problem with readily 

sharing. 

But I think uniformity, and also making it an opt-out program, 

would certainly help. One of the things we continue to see is that 

there is, there appears to be an arrogance on the lenders’ side and 

a resistance to change. 

Making it more difficult for them to resist the law and not allowing them to manipulate, as they have done. Even here in our State, 

I feel like there’s some manipulation going on with A.B. 284. The 

complaint is that they cannot comply. 

Is it that they cannot or that they will not? And the reason I say 

‘‘will not’’ is because I’ll never forget my very first call, after we 

started the program, to a lender’s representative, telling me that 

they were going to be scheduled for one of our first mediations. 

Literally, the representative slammed the headset of the phone 

down on the desk 3 times, and screamed in the phone: ‘‘There will 

be no mediation;’’ ‘‘There will be no mediation;’’ ‘‘There will be no 

mediation.’’ 

But on behalf of the State of Nevada, I very politely told him 

when his mediation was scheduled and they did show up. 

So we have to just hold them accountable, and I think we will 

start to see major successes. Thank you. 

Mr. HECK. Again, my personal thanks to all of you for participating. And again, thank you, Madam Chairwoman for coming out 

and holding this field hearing, and I yield back. 

Chairwoman CAPITO. Thank you. 

I think that concludes our hearing and I want to thank all of 

you. It has been illuminating for me, and I appreciate the passion 

30 

with which you, these representatives and Mr. Heck, are trying to 

dig out of a very difficult situation. 

We have to get people back into the cycle of employment and the 

financial issues are just really, really difficult. So I appreciate what 

you are doing. And I appreciate you telling me about it. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for Members to submit written questions to these witnesses and to 

place their responses in the record. And I want to thank Congressman Heck for giving me the chance to come to Las Vegas. That’s 

always a great thing. 

And with that, this hearing is adjourned. 

[Whereupon, at 11:10 a.m., the hearing was adjourned.] 

(31) 

A P P E N D I X 

March 15, 2012 

32 


75079.001
33 


75079.002
34 


75079.003
35 


75079.004
36 


75079.005
37 


75079.006
38 


75079.007
39 


75079.008
40 


75079.009
41 


75079.010
42 


75079.011
43 


75079.012
44 


75079.013
45 


75079.014
46 


75079.015
47 


75079.016
48 


75079.017
49 


75079.018
50 


75079.019
51 


75079.020
52 


75079.021
53 


75079.022
54 


75079.023
55 


75079.024
56 


75079.025
57 


75079.026
58 


75079.027
59 


75079.028
60 


75079.029
61 


75079.030
62 


75079.031
63 


75079.032
64 


75079.033
65 


75079.034