FORECLOSURE PROBLEMS AND SOLUTIONS: 

FEDERAL, STATE, AND LOCAL EFFORTS TO 

ADDRESS THE FORECLOSURE CRISIS IN OHIO 

FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 16, 2008 

Printed for the use of the Committee on Financial Services 

Serial No. 110–120 

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FORECLOSURE PROBLEMS AND SOLUTIONS: FEDERAL, STATE, 

AND LOCAL EFFORTS TO ADDRESS THE FORECLOSURE CRISIS IN OHIO 

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44–185 PDF 2008

FORECLOSURE PROBLEMS AND SOLUTIONS: 

FEDERAL, STATE, AND LOCAL EFFORTS TO 

ADDRESS THE FORECLOSURE CRISIS IN OHIO 

FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 16, 2008 

Printed for the use of the Committee on Financial Services 

Serial No. 110–120 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

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 

DENNIS MOORE, Kansas 

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 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

DON CAZAYOUX, Louisiana 

TRAVIS CHILDERS, Mississippi 

SPENCER BACHUS, Alabama 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

DEAN HELLER, Nevada 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

MAXINE WATERS, California, Chairwoman 

NYDIA M. VELA ́ ZQUEZ, New York 

STEPHEN F. LYNCH, Massachusetts 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

CAROLYN B. MALONEY, New York 

GWEN MOORE, Wisconsin, 

KEITH ELLISON, Minnesota 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

MICHAEL E. CAPUANO, Massachusetts 

CHARLES A. WILSON, Ohio 

DON CAZAYOUX, Louisiana 

SHELLEY MOORE CAPITO, West Virginia 

STEVAN PEARCE, New Mexico 

PETER T. KING, New York 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

GEOFF DAVIS, Kentucky 

JOHN CAMPBELL, California 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

June 16, 2008 .................................................................................................... 1 

Appendix: 

June 16, 2008 .................................................................................................... 75 

WITNESSES 

MONDAY, JUNE 16, 2008 

Brancatelli, Antony, Councilman, City of Cleveland ............................................ 20 

Ford, Frank, Senior Vice President for Research and Development, Neighborhood Progress, Inc. ............................................................................................... 57 

Gross, Michael, Managing Director, Loan Administration and Loss Mitigation 

Division, Countrywide ......................................................................................... 48 

Guelker, Kimberley, President, Lorain County Association of Realtors ............. 51 

Howell, Andrew S., Executive Vice President and Chief Operations Officer, 

Federal Home Loan Bank of Cincinnati ............................................................. 44 

Kidd, Patricia, Executive Director, Lake County Fair Housing Resource Center .......................................................................................................................... 26 

Kramer, Edward G., Director and Chief Counsel, The Housing Advocates ....... 55 

Lloyd, Engram, Director, Philadelphia Homeownership Center, U.S. Department of Housing and Urban Development ......................................................... 13 

Stefanak, Matthew, Commissioner, Mahoning County Health Department ...... 24 

Tisler, Lou, Neighborhood Housing Services of Greater Cleveland .................... 53 

Van Buskirk, Michael, President and CEO, Ohio Bankers League .................... 45 

Warren, Chris, Chief of Regional Development, Office of the Mayor of Cleveland, Ohio ............................................................................................................. 17 

Wozniak, Tina Skeldon, President, Lucas County Commissioners ..................... 22 

Zurz, Kim, Director, Department of Commerce, State of Ohio ............................ 15 

APPENDIX 

Prepared statements: 

Carson, Hon. Andre .......................................................................................... 76 

Kaptur, Hon. Marcy ......................................................................................... 77 

Kucinich, Hon. Dennis J. ................................................................................. 83 

Waters, Hon. Maxine ........................................................................................ 93 

Brancatelli, Antony .......................................................................................... 101 

Ford, Frank ....................................................................................................... 309 

Gross, Michael .................................................................................................. 320 

Guelker, Kimberley .......................................................................................... 326 

Howell, Andrew S. ............................................................................................ 335 

Kidd, Patricia .................................................................................................... 342 

Kramer, Edward G. .......................................................................................... 360 

Lloyd, Engram .................................................................................................. 397 

Stefanak, Matthew ........................................................................................... 400 

Tisler, Lou ......................................................................................................... 403 

Warren, Chris ................................................................................................... 439 

Wozniak, Tina Skeldon .................................................................................... 445 

Zurz, Kimberly A. ............................................................................................. 450 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Waters, Hon. Maxine: 

Foreclosure Prevention Resources ................................................................... 467 

Page

VI 

Waters, Hon. Maxine—Continued 

Freddie Mac Consumer Resources .................................................................. 474 

HUD Maps ........................................................................................................ 479 

Article from The Morning Journal, dated June 6, 2008 ................................ 484 

Tables from Policy Matters Ohio ..................................................................... 485 

Report from the Center on Urban Poverty and Community Development . 491 

Report from The Slavic Village Vacant and Abandoned Property Task 

Force ............................................................................................................... 507 

(1) 

FORECLOSURE PROBLEMS AND SOLUTIONS: 

FEDERAL, STATE, AND LOCAL EFFORTS TO 

ADDRESS THE FORECLOSURE CRISIS IN OHIO 

Monday, June 16, 2008 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

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

Joseph E. Cole Center for Continuing Education, Cleveland State 

University, 3100 Chester Avenue, Cleveland, Ohio, Hon. Maxine 

Waters [chairwoman of the subcommittee] presiding. 

Members present: Representatives Waters and Kaptur. 

Also present: Representatives Wilson, Kucinich, Tubbs Jones, 

and Sutton. 

Mrs. TUBBS JONES. I am Stephanie Tubbs Jones. I am the Congresswoman for the 11th Congressional District of Ohio. I would 

like to welcome you to the 11th Congressional District and please 

join me in welcoming my colleague from California, our chairwoman, Maxine Waters, and my colleagues from across the State 

of Ohio for this significant hearing. 

We are being hosted today by another alma mater of mine, 

Cleveland State University. And I would like for you to join me in 

welcoming the president of Cleveland State University, President 

Michael Schwartz. 

Mr. SCHWARTZ. Thank you, Congresswoman Tubbs Jones, and 

welcome, Chairwoman Waters. We’re glad to have you and all 

members of this delegation here for a conversation about probably 

one of the two most pressing problems facing this entire Nation, 

and I hope that this turns into an important learning experience 

for all of you who have come here today. 

The Maxine Goodman Levin College of Urban Affairs is probably 

the premiere college of urban affairs that studies issues of housing 

and matters of predatory lending and so on. And so it’s really quite 

fitting that this hearing be held on a campus so devoted the amelioration and solution of issues like this. 

Having said that as the University’s president, I will try to do 

something reasonably intelligent and get out of the way of the real 

business that you’re here for today. Thank you. 

Mrs. TUBBS JONES. Thank you. Madam Chairwoman. 

Chairwoman WATERS. This hearing of the Subcommittee on 

Housing and Community Opportunity will come to order. 

2 

Good morning, ladies and gentlemen. I would like to start by 

thanking Dr. Michael Schwartz, president of Cleveland State University for allowing us to use this space for today’s hearing on 

‘‘Foreclosure Problems and Solutions: Federal, State, and Local Efforts to Address the Foreclosure Crisis in Ohio.’’ The University 

has also kindly allowed us to use some additional rooms to conduct 

a foreclosure workshop where local housing counselors, Legal Aid 

groups, and mortgage servicers are available to work with borrowers trying to avoid foreclosure. 

I would especially like to thank our Ohio Representatives here 

today for requesting that I hold a field hearing focused on the foreclosure crisis and responses to it in the State of Ohio. Your Representatives have been a powerful, persuasive voice in Congress on 

behalf of Ohio’s residents and neighborhoods, which have been devastated by subprime lending and the turmoil that has spread 

through the mortgage markets, and, eventually, the entire economy. In fact, I can attest that every Ohio Member sitting beside me 

today has played an extraordinarily active role in the Federal response to this crisis. 

Representative Kaptur has been a persistent voice in our Democratic caucus for taking bold action on the foreclosure crisis generally, and for holding this field hearing in particular. Representative Kucinich, in his role as chairman of the Domestic Policy Subcommittee of the Government Oversight and Reform Committee 

has painstakingly examined the causes and characteristics of this 

growing problem, including holding a joint hearing with my subcommittee less than a month ago which focused on how best to target Federal aid to neighborhoods and communities facing block 

after block of foreclosed and abandoned properties. The Ohio delegation’s efforts to address the crisis have been bipartisan, with 

Representatives Kucinich, Wilson, Pryce, and LaTourette—who 

wanted very much to be here today. I hope that Representative 

Pryce will join us—some did advise us that they would have unavoidable conflicts. They have also worked to contribute key 

amendments to the bill I introduced, H.R. 5818, the Neighborhood 

Stabilization Act of 2008. That bill, H.R. 5818, would provide $15 

billion in grants and loans, with over $800 million of this amount 

to the State of Ohio, for the purchase, rehabilitation, and resale or 

rental of foreclosed and abandoned properties. My Judiciary Committee colleague Representative Sutton joined us in an effort to 

make sure that bill passed the House. And all of us here are working diligently to see that these critical resources are retained as 

our chamber negotiates with the Senate on the elements of the 

foreclosure rescue package that will eventually make it way to the 

President’s desk, and hopefully that will be done by July 4th. 

Last, but certainly not least, I want to thank Representative 

Stephanie Tubbs Jones, not only for the tremendous logistical support her office and her staff have provided to the subcommittee in 

putting this hearing together, but also for really opening my eyes 

to the scope of the foreclosure problem here in Ohio almost 2 years 

ago. I was here working on a campaign, and she asked if I was 

coming to a town hall meeting that residents had organized who 

were very angry about the fact that there were so many abandoned 

houses in their neighborhood. This is long before Members of ConVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
3 

gress and others understood what was happening with the foreclosure problem. 

I saw residents who were upset that their neighborhoods had so 

many abandoned homes, the grass was overgrown, and the copper 

had been stripped out. They were asking for answers, and nobody 

had answers because no one really understood what this was all 

about. But it was because of her that I began to pay a lot more 

attention and I want to thank her for that today. Thank you very 

much. 

Because of the challenges it has faced economically over the past 

few years, with the loss of manufacturing jobs and population from 

certain parts of the State, Ohio was truly the ‘‘canary in the coal 

mine’’ of the foreclosure crisis, vulnerable to subprime lending and 

its aftereffects much earlier than the rest of the Nation. 

Ohio has contended with rising foreclosures since 1995. According to Policy Matters, from whom we will hear today, the number 

of foreclosures in Ohio has quintupled since that year. Ohio has 

consistently ranked in the top five States monthly in foreclosure filings during the recent crisis. In May of this year, the State ranked 

7th nationally, with 12,295 foreclosure filings, or 1 filing for every 

410 households. 

As the senior member of the Financial Services Committee from 

California, which has been ranked first or second in foreclosures for 

most of the past year, I can certainly confirm that the rest of the 

Nation is confronting the problems that Ohio has grappled with for 

some time. Foreclosure filings in May are up 7 percent from April, 

and fully 48 percent from a year ago. Over 260,000 properties received foreclosure filings last month, or 1 in 483 U.S. households. 

Today, we are here to learn about where things stand in addressing these problems, specifically, the impact of existing and potential Federal, State, and local efforts to prevent further foreclosures 

and to help stabilize neighborhoods that have already seen too 

many of them. I am here primarily to learn, so I will turn things 

over shortly to my Ohio colleagues and the witnesses. I will close, 

however, by noting that I am particularly interested in two issues. 

First, I would like to know whether Ohio stakeholders believe that 

the recent actions taken by the House of Representatives, including 

passage of the Neighborhood Stabilization Act as well as a broad 

housing rescue package that proposes a greatly expanded role for 

the FHA and the GSEs in preventing further foreclosures, might 

be helpful to them if enacted into law. 

Second, I would like to hear specifics about the efforts of the 

major mortgage servicers in the State to engage in loss mitigation. 

Unfortunately, the data provided by the voluntary mortgage industry loss mitigation initiative, HOPE NOW, have been incomplete 

and opaque, and I’m not the only one say that. Treasury Secretary 

Paulson and, more recently, the Office of the Comptroller of the 

Currency, have expressed similar concerns. But the figures HOPE 

NOW does provide, coupled with feedback from constituents facing 

foreclosure and counselors or attorneys helping them, continue to 

trouble me. For example, of the 1.5 million loan workouts HOPE 

NOW members have executed since July 2007, fewer than one 

third have been loan modifications. The rest are repayment plans, 

which can often just postpone the day of reckoning on a subprime 

4 

adjustable rate mortgage, or so-called ‘‘ARM’’ loan. Indeed, of the 

over 600,000 subprime ARMs scheduled to reset in the first 4 

months of 2008, less than 3 percent received loan modifications 

from HOPE NOW members of 5 years or longer, the loss mitigation 

approach recommended by many, including FDIC Chairwoman 

Sheila Bair, one of the few regulators to sound the alarm early in 

this crisis. And the stories I have heard from distressed borrowers 

and their representatives at previous field hearings and town halls 

in my own district suggest that engagement with members of the 

HOPE NOW Alliance is neither as smooth nor as productive as the 

Alliance’s press releases and testimony before Congress suggest. 

For this reason, I introduced H.R. 5679, the Foreclosure Prevention and Sound Mortgage Servicing Act, which would require mortgage servicers to engage in reasonable loss mitigation. In particular, the bill would force them to focus on providing loss mitigation offers that are affordable to the borrower for the long term, 

something we don’t know with respect to any HOPE NOW loan 

workout, be it a repayment plan or a loan modification, because the 

Alliance members don’t report the affordability standards they use. 

I am looking forward to hearing from the witnesses about mortgage servicers’ work here in Ohio, as well as in local and State government efforts to prevent foreclosures and address the foreclosed 

and abandoned properties problem. 

Representative Wilson and I are regular members of the subcommittee present today, but I would like to ask unanimous consent that each of the Members of Congress attending be considered 

part of the subcommittee for the purpose of today’s hearing. Without objection, it is so ordered. 

I would like to recognize our subcommittee members for their 

opening statements. I will be alternating the parties and the subcommittee members. We do not have some of our members here 

today who serve on the committee, but we will start with Congressman Wilson, who is recognized for 3 minutes. 

Mr. WILSON. Thank you, Chairwoman Waters, for convening this 

field hearing today, especially here in the State of Ohio. 

I truly appreciate all that you have done to help put an end, or 

certainly the beginning of the end, to this foreclosure crisis. I’m 

happy that you chose to hold a hearing here in my State to get a 

better view of what is going on, on the ground. 

I also want to thank my Ohio colleagues, especially Congresswoman Pryce and Congressman LaTourette who are on the committee with me. I am proud to have worked with them on the housing legislation produced by our committee this year. Together, we 

were able to bring more money and more help home to Ohio. 

Today’s hearing is particularly significant. As the Financial Services Committee continues to work on this crisis, it is important to 

look at our State. Ohio suddenly became one of the Nation’s worst 

home-loan default zones last year with an 88 percent spike in foreclosure proceeding. 

Ohio filings included about 90,000 properties, with some of the 

properties generating multiple court entries as they moved through 

the foreclosure process in 2007. That represents nearly 2 percent 

of all Ohio properties. By almost every measure, the outlook for 

Ohio is bleak. 

5 

But there is good news. I would like to take this opportunity to 

highlight some of the innovative steps that our State has taken to 

address this issue. 

In Governor Strickland’s first few months in office, he formed a 

Foreclosure Prevention Task Force and charged this diverse group 

with developing recommendations to address various stages of the 

foreclosure process. Since the release of the recommendations in 

September, administrative officials and our State legislature have 

worked diligently to address many of these recommendations. Recently, Governor Strickland and Ohio’s Director of Commerce, Kim 

Zurz, announced that nine mortgage loan servicers agreed to sign 

the ‘‘Compact to Help Ohioans Preserve Homeownership.’’ It is the 

first agreement of its kind in the Nation. The document is a pledge 

by servicers that they will work with the State in making every 

possible attempt to prevent default loans and foreclosures in Ohio. 

The principals agreed to include a willingness to engage in a substantial and large-scale loan modification effort for adjustable rate 

mortgage resets and subprime mortgages. That is something that 

Congress is working to provide Federal insurers if lenders are willing to take a haircut. The agreement also encourages good-faith attempts to contact at-risk or defaulting borrowers as soon as possible. It also creates an incentive for staff and foreclosure counsel 

to modify loans rather than foreclose. 

These steps taken by the State of Ohio are vitally important, but 

now they need a boost from Congress. We are working on that. The 

House has passed a two-part housing package that would first include loans and grants for States to help keep families in their 

homes in flexible ways that are best for that State also. The second 

part is a voluntary program that would permit FHA to provide up 

to $300 billion in new guarantees to help refinance 1.5 million atrisk borrowers. I am happy to have worked on these bills when 

they came through our committee. 

Congresswoman Pryce, Congressman LaTourette and I have 

worked together to modify the funding formula of the first part of 

the House package resulting in loans and grants worth millions 

more for Ohio. 

In addition, I was able to include demolition as one of the ways 

that our State could use these loans and grants. Now States will 

be able to clean up the blight, help families stay in their homes and 

rehabilitate long-vacant and decrepit housing. States will be able 

to stabilize entire neighborhoods that are hurting because of foreclosures. 

This was particularly important in Ohio because many foreclosed 

homes have been empty for a long period of time. Many of them 

have been stripped of their copper piping and other valuable parts. 

To rehabilitate such homes is often more expensive than demolishing them. And in fact, in many pockets of my State, we have 

homes that are no longer needed because of the population decline. 

I look forward to hearing from Matthew Stefanak today. He really helped me understand how blight can affect an entire neighborhood. He has been an real asset to us and I appreciate that. 

In closing, I would simply like to praise Governor Strickland and 

his team once again, and encourage Congress to act expediently, 

and to leave you with one final thought: I believe we need to get 

6 

back to our roots and the fundamentals that have been so successful to the people of Ohio in the past. 

Many years ago, when I was on a bank board, you loaned to 

those who would be able to pay the loan back. You kept an eye on 

those in trouble and you reached out when it looked like they needed help. I believe that many in Ohio have kept to those standards. 

But I also believe that many need to get back to those standards. 

I look forward to hearing the testimony from our panelists today. 

Thank you. 

Chairwoman WATERS. Thank you very much. Congresswoman 

Kaptur. 

Ms. KAPTUR. Thank you very much, Chairwoman Waters. On behalf of our entire Ohio delegation, thank you for accepting our invitation to come to Ohio to conduct one of the most important hearings your committee has held outside of the Nation’s capital. It’s 

a joy to be with our colleagues as well and we selected Cleveland 

because we know it is it Ground Zero in mortgage foreclosure challenges facing our great Buckeye State. 

Our State provides a telling picture of what is a recurring problem in our Nation, the largest washout of private savings in the 

form of home equity in half a century. Pew Charitable Trusts estimate that just in the next 2 years, the loss in property values will 

total over $356 billion, and that the cost of this is really well over 

$1 trillion in the washout coast to coast. Nationally, 9 million 

homeowners now owe more on their mortgage than their home is 

worth, the largest share since the Great Depression. In fact, for the 

first time since World War II, net home equity is now negative, 

that is below 50 percent. That is to say that as a whole, Americans 

now owe more on their homes than they are worth. This is an enormous loss of real wealth that affects not just the homeowners, but 

our Nation as a whole. For the first time ever, the securitization 

of these mortgages into the international capital market both 

fueled and masked this risky process. 

The effect has been to make our Nation and its banks more dependent than ever on foreign borrowing and infusions of foreign 

capital. America is now is now a debtor Nation both publicly and 

privately. 

When a homeowner can’t make ends meet they lose their homes. 

But when a giant firm like Bear Stearns can’t make ends meet due 

to this crisis, the Chairman of the Federal Reserve and the Secretary of the U.S. Treasury get involved. Billions of dollars of capital from foreign places such as Abu Dhabi are found to fill the gap, 

mergers of banks expeditiously and the Fed opens its New York 

window with our taxpayers becoming the insurance company of last 

resort pledging the full fees and credit of the United States not just 

to the big banks, but for the first time, to brokerages as well. 

Will ordinary homeowners in our Nation ever be afforded equal 

attention by the Fed and the Treasury? It does not appear to be 

so with the rate of foreclosures and bankruptcies rising every 

month. 

I want to thank all of those who are working so hard to pick up 

the pieces, but we will note that large shares of the cost of this crisis are being shifted to the public sector, to the taxpayers. And I 

would like to enter this opinion for the record and provide addiVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
7 

tional material as attachments. Congress must get tougher in its 

own investigations of what brought America’s financial system to 

this predicament. An equity washout of this magnitude does not 

happen by spontaneous combustion. It was willed to happen. 

Specific people in specific places set the pieces in place to allow 

this to proceed. Many of them have been handsomely rewarded. 

America needs to know who they were and are; I believe Congress 

should authorize a full independent investigation into the roots of 

this crisis and trace back the unstable period following the savings 

and loan crisis in the late 1980’s. The development of the international mortgage securitization instrument itself deserves more 

attention. In effect, this became a clever and high-risk credit device 

with little transparency that acted like a bank. It created money 

or at least the illusion of it in a Ponzi-like scheme or manner and 

it did so without the normal regulatory restraint of full accounting 

and proper examination. How could the national regulators let that 

happen? 

Well, the first institution to embark on subprime lending was Superior Bank of Hinsdale, Illinois, ultimately bought by Charter 

Bank here in Ohio. Superior Bank was created out of the Resolution Trust Corporation. By the late 1990’s, Superior’s return on assets was 7.5 times the industry average. It held a very different 

portfolio. It had a CAMEL rating of 2, yet its executives were financially rewarded for presiding over ruin. No Federal regulator 

stepped in to properly examine the institution. Why? Where was 

the Office of Thrift Supervision? What happened to appraisal and 

underwriting standards? Assuming many of these loans were 

moved to market through Freddie Mac and Fannie Mae, why is it 

their standard and HUD’s regulatory oversight fall short? How 

were their boards and executives compensated during those years 

when risky practices proliferated? Which board members and 

which financial institutions and brokerages, regulators, and secondary market bodies allowed these risky and predatory policies 

that escalated this equity draw down? 

Do we have any evidence that any of those board members personally benefitted from their board decisions? Through which domestic and international institutions were the original 

securitizations approved? Which persons did it? Which regulatory 

agencies sanctioned the process? What role did the U.S. Secretary 

of the Treasury, the Securities and Exchange Commission, and the 

Federal Reserve play in allowing these practices to flourish? 

I find it troubling, for instance, that even when it became known 

that firms like Countrywide had done great damage to the mortgage market, the Federal Reserve maintained them as one of a 

handful of primary Treasury security dealers. Who and which firms 

created the very first subprime loan and rolled it into an international mortgage securitization instrument? What set of individuals were involved in moving it and clearing it to market? Frankly, 

Congress doesn’t know. 

Where are the audit trails for the thousands of those subprime 

loan transactions that international securitizations? Congress 

doesn’t know. 

In 2001, the Federal Deposit Insurance Corporation placed the 

largest fine in American history, $450 million, on Superior Bank. 

8 

Though we know—and I’ll be ending here, Madam Chairwoman, 

with two sentences, though we know what Superior and what Merrill Lynch were involved in, in moving securities paper, we do not 

know which third parties were involved in packaging it, their fees, 

and how that paper was moved into the international market. For 

a crisis of this proportion, the American people have a right to 

know the whole story. 

I’m here to learn from the witnesses today what Congress can do 

to help remedy the current crisis, but also trace its roots to avoid 

a further raid on the private savings of America’s homeowners. 

Chairwoman WATERS. Representative Kucinich. 

Mr. KUCINICH. I wanted to thank Congresswoman Kaptur for 

that very wise and perceptive commentary on this situation. And 

you, Madam Chairwoman, for your work which has been exemplary 

and enormously helpful on behalf of every American, your experience as a community organizer, as someone who has come through 

the political process. And I want to thank you for bringing us together here in Cleveland, Ohio. 

I have here, without objection, Madam Chairwoman, a statement 

for the record from Congressman LaTourette. Congressman 

LaTourette is scheduled for a tour of Ashtabula Harbor with the 

Commandant of the Coast Guard and he is with the Commandant 

right now and he asks that this statement be entered. 

Chairwoman WATERS. Without objection, it is so ordered. 

Mr. KUCINICH. Thank you, Madam Chairwoman. Mr. Delfin, who 

is our staff attorney, is going to be assisting us as I go through 

these maps which will tell the story. 

Cleveland is at the epicenter of the national problem of foreclosure. Last year, the Center for Responsible Lending projected 

that one out of five subprime mortgages originated during the previous 2 years will end in foreclosure. These foreclosures will cost, 

at a nationwide estimate, homeowners as much as $164 billion. 

This is a massive transfer of wealth. 

Here in Cleveland, we can already see the damage. This series 

of maps illustrates the problem here in Cuyahoga County. 

Look at the first map. This is where depository banks made loans 

in 2005. You see the sideways ‘‘V’’ highlighted in light green. Let 

me tell you what that geographical area represents. It is the area 

in the City where the depository banks made very few prime loans. 

Now look at the next map of subprime loans made in 2005. It is 

highlighted in reds and oranges. These are subprime loans. Look 

at the ‘‘V.’’ This is where the highest number of subprime mortgage 

loans were made during the same year. 

Now look at the next map. Again, you see the same ‘‘V’’ pattern 

and the same place. Here, the red dots indicate the number of foreclosures in the first 10 months of 2006. These maps tell you that 

there is a clear and self-reinforcing correlation between the low 

number of prime loans, the high number of subprime loans, and 

the high number of foreclosures. 

Now look at this next map. Again, the familiar sideways-lying 

‘‘V’’ shape. But here the foreclosures, indicated by blue dots, are superimposed on the neighborhoods. Red indicates predominantly African-American neighborhoods. Again, we see a perfect match. 

9 

The next map shows the relationship among high-cost mortgage 

loans made to investors in 2006, increases in vacant homes in 2007 

and 2008, and high minority population based on the 2000 census. 

Again, we see the sideways ‘‘V,’’ but we also see increases in highcost loans and vacant properties in the outer suburbs and outlying 

counties. 

The last map highlights only the census tracts with all three factors: the highest cost mortgages, the greatest increase in vacant 

properties, and the highest minority populations. We still see the 

sideways ‘‘V,’’ but where previously the phenomenon was mainly in 

African-American census tracts in eastern Cuyahoga County, we 

see the problem spreading west to census tracts with larger Hispanic and Arab populations. Now, it looks more like a diagonal ‘‘T,’’ 

spreading in every direction it can spread in Cleveland—east, 

south, and now west. 

Lack of access to prime loans, a high frequency of subprime 

loans, and a high rate of foreclosures are by no means specific to 

any racial group, but the pattern with respect to the African-American community certainly carries a whiff of America’s bleak past. 

Now how did our City get to this point? 

The Domestic Policy Subcommittee, which I chair, has initiated 

a broad-reaching examination of the predatory mortgage and 

subprime lending industries, and the Federal regulators overseeing 

the Nation’s banking industry. As part of that effort, the Domestic 

Policy Subcommittee intervened in a major bank merger in Ohio 

between Huntington Bank and Sky Financial. We asked the Federal Reserve Bank of Cleveland, which is the primary regulator, to 

expand the public comment period and to hold a public hearing. Instead of giving the merger greater scrutiny in light of the mortgage 

crisis and particularly this phenomenon in Cuyahoga County, the 

Federal Reserve and the Office of the Comptroller of the Currency 

rubber-stamped the merger based on the banks’ self reporting of 

Community Reinvestment Act compliance. 

As a result of that merger, we see more depository bank closures 

in low- to moderate-income communities, including Euclid and 

Cleveland here in Cuyahoga County, as well as Canton, Grandview, Lima, New Philadelphia, and Revanna. And as we can see 

from the newest data, the problem is getting worse. 

Madam Chairwoman, because of the Waters Amendment which 

you drafted to the Banking and Branching Efficiency Act of 1994, 

the City of Lima, Ohio, held a meeting to determine what actions 

must be taken due to the Huntington bank branch closing there. 

Last week, a similar meeting was held in Cleveland due to the 

Huntington branch closings in Cleveland and Euclid. We don’t 

know what, if any, result will come of these meetings with the Federal Reserve, the Office of the Comptroller of the Currency, and the 

Nation’s and State’s other bank regulators, banks, and community 

representatives. However, with your leadership and understanding 

of the problems facing our cities nationwide, and particularly here 

in Ohio, the Waters Amendment was able to be invoked so we can 

pay attention to its effectiveness where more depository bank 

branches have been closed in low- to moderate-income communities. It is now up to us to listen carefully to what the witnesses 

today say about the crisis in Ohio and to find ways to supplement 

10 

the mandate of our Nation’s regulatory agencies where necessary 

to get out of the current crisis and avoid similar ones in the future. 

Again, I want to thank you, Madam Chairwoman, and I do want 

to say that I know that your whole life is about fairness and equity. 

We have to find a way to bring about some kind of equity for good 

people who had everything they worked their lifetime for stolen 

from them by unscrupulous lending and sharp mortgage practices. 

I think if this committee can do anything, we need to delve very 

deeply into who precipitated, who made the money, and to see if 

there’s any way that we can find remedies for people who have 

been cheated out of their dream of a lifetime. 

I thank the Chair again, and I look forward to hearing the testimony. 

Chairwoman WATERS. Thank you very much. 

Congresswoman Tubbs Jones. 

Mrs. TUBBS JONES. Good morning, again, and thank you, Madam 

Chairwoman. When I first came to Congress, I served on the Financial Services Committee, and she was the ranking member on 

the Housing Subcommittee at the time. Now she chairs that subcommittee and we continue to move forward to try to accomplish 

things within our community. 

Before I go any further, I am joined by a number of my elected 

official colleagues from across my Congressional District. I am 

going to ask those who are here to kindly stand because their communities need to know the fact that you are here in support. Zach 

Reed from the City of Cleveland, I see Council Member Brian 

Cummins, West Side, City of Cleveland. I see the Mayor of the City 

of South Euclid, Georgine Welo. I see the President of the City 

Council of East Cleveland, Gary Norton. I see the Councilman from 

Ward 18, Jay Westbrook. Thank you all for joining us this morning. 

This is an issue that we have been paying attention to throughout 

Cuyahoga County. 

I know that there are other people who are represented here 

from the AGs Office, Ed Krause and Nancy Rogers on behalf of AG 

Nancy Rogers. And the list goes on. I thank you very much for 

being with us today. 

I want to say that in the City of Cleveland, we have been paying 

attention to predatory lending for a long time, but no one was hearing us. In 2001, I introduced a piece of legislation called the Predatory Lending Reduction Act of 2001, trying to focus in on brokers 

who were not telling people that they represented a company and 

got a commission, and brokering these foreclosures. I knew that if 

I shamed the financial district, then people would start paying attention to predatory lending. 

I also recall in yesterday’s Plain Dealer an article about the impact and I want to celebrate my colleague, Jim Rokakis, the Treasurer of Cuyahoga County. We know that school systems are going 

to suffer as a result of reduction in dollars coming into, captured 

as a result of — 

We also know that next generations are going to suffer because 

working class families pass homes from one generation to the next 

to give their kids a start. These days there won’t be homes to 

transfer from one generation to the next. 

11 

I could go on, but I have a statement, Madam Chairwoman, that 

I seek unanimous consent to have placed in the record. I am just 

so thankful that you came up here. 

There are a lot of organizations that have been working consistently around this issue such as the Ohio Credit Union, and the 

Eastside Organizing Project Housing Advocates. 

Cleveland Housing, I just thank you for your diligence. The Legal 

Aid Society, all of you. We have to continue fighting on behalf of 

the people that we represent and get this fixed. I am pleased to say 

that a little piece of that 2001 predatory lending legislation I introduced got included in recent legislation that was introduced by my 

colleague, Maxine Waters, and the chairman of the Financial Services Committee, Barney Frank. We have to be consistent. We have 

to make our communities stay in place. 

Thank you, Madam Chairwoman. Thank you for bringing this 

home to us and focusing in on the State of Ohio and all my colleagues. It is nice to see all of these Members of Congress right 

here. 

Thank you. 

Chairwoman WATERS. Congresswoman Betty Sutton. 

Ms. SUTTON. Thank you very much. Thank you for inviting me 

to participate here today and I would like to recognize the strong 

leadership of Chairwoman Maxine Waters on this issue. Chairwoman Waters has been a tremendous advocate during her whole 

career for working families, and with the crisis that we face, this 

has been no exception. She has been stellar. 

I also want to thank my other colleague, Representative Tubbs 

Jones, for hosting this event and Cleveland State as well. 

The foreclosure crisis has been devastating for Americans all 

across the country, from all walks of life. Just recently, one of my 

staff members told me of an experience he had right in our office 

building. When he entered into an elevator, and as they rode on 

the elevator between the floors, there was a woman who got on and 

she started to sob and my staff member, being the great caseworker that he is, he reached out and asked her if he could be of 

assistance and asked her what was wrong. She conveyed to him 

that she was on her way to sell her wedding ring to try and make 

the house payment to save her house from foreclosure. And then 

not long after that, I received an e-mail from a person whom I had 

come to know who has been actively involved in the community, a 

woman who had a job, but lost her job, and is actively trying to 

find a job that will help her make ends meet. The e-mail said that 

she had done some art work in her spare time, paintings, and 

didn’t really want to sell them, but she was going to try to find 

some people who might be interested in buying them. So people are 

trying and I am the proud owner of some of her artwork, by the 

way. 

Statistically speaking, in recent months, this crisis of historical 

portions, the Mortgage Bankers Association recently released numbers showing that more than a million homes are in foreclosure, 

which is the highest number reported since they began collecting 

those statistics in 1979. 

RealtyTrac on Friday released numbers showing that for 29 

straight months, foreclosure rates have seen a year-over-year inVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
12 

crease nationwide. And yet economic experts predict sadly that we 

haven’t seen the worst of it yet. 

Ohio has consistently been at the forefront of this crisis, as the 

chairwoman rightfully points out. We are the canary in the coal 

mines. We see a massive exodus of manufacturing jobs that have 

long been the backbone of this State’s economy. Food prices and 

fuel prices keep going up and families who were already struggling 

to make ends meet are now at that breaking point. The credit crisis 

which has been discussed here has made it difficult for families to 

purchase new homes or to refinance old loans. And all of these factors can compound the problem and create a spiral effect that’s difficult to break out of. 

Although the figures from RealtyTrac released last Friday show 

that the number of foreclosure filings in Ohio have declined by 7 

percent, the State still has the dubious distinction of ranking 9th 

in the area nationally; 50 to 60 percent of homeowners who received a foreclosure filing will eventually lose their home. That has 

to change. That translates into a staggering human and economic 

cost. 

In many respects we are still in unchartered territory and the 

types of actions necessary to mitigate the crisis will require solutions that move beyond what we have now come to know and embrace. 

Too often Federal, State, and local governments operate in their 

own spheres. What we are facing is unlike anything we have ever 

faced before and it will require innovative new ways to address the 

problems of those we represent. That is why I am so happy to see 

so many people from various levels of our government here today 

to help become part of the solution, a part of this charge that will 

overcome this challenge, including the housing advocates and the 

advocates who are out there being stricken so hard by the consequences of our plight. 

We’re fortunate to come from a State where we have leaders who 

are willing to face this head on. The Ohio Foreclosure Task Force 

that the Governor set up generated a number of excellent recommendations, one of which was the basis for an amendment that 

I was able to include in H.R. 3915, which passed, as you have 

heard, last December. 

I am also proud that the Ohio legislature quickly acted to curb 

the predatory lending practices that played such a major role in 

precipitating this crisis. And as you have heard, we’re also working 

on solutions at the Federal level and we have to do more. The need 

is great, the challenge is enormous. We have to do everything we 

can to overcome this crisis because the wellbeing of so many families in all of our communities, and frankly, the health of our Nation 

depends on it. In the House, we have passed a number of mortgage 

foreclosure related bills such as the Neighborhood Stabilization 

Act, FHA Stabilization, and the Homeownership Retention Act. 

And these bills provide funds to cities and States to purchase and 

rehabilitate vacant homes and provide new refinancing mechanisms through the Federal Housing Administration, both of which 

are critical in northeast Ohio. 

We still have significant challenges and I know I’m not telling 

you anything new for those of you who are in this room. These 

13 

challenges lie ahead and that is why today’s hearing is so important. 

Again, I thank the distinguished committee and I thank the distinguished witnesses for being here today and all of you gathered 

because I know you are here because we’re looking for solutions. 

Thank you. 

Chairwoman WATERS. Thank you. At this time, I would like to 

introduce our first panel: Mr. Engram Lloyd, Director, Philadelphia 

Homeownership Center, U.S. Department of Housing and Urban 

Development; Ms. Kim Zurz, director, Department of Commerce, 

State of Ohio; Mr. Chris Warren, chief of regional development, Office of the Mayor of Cleveland, Ohio; Mr. Antony Brancatelli, councilman, City of Cleveland; Ms. Tina Skeldon Wozniak, president, 

Lucas County Commissioners; Mr. Matthew Stefanak, commissioner, Mahoning County Health Department; and Ms. Patricia 

Kidd, executive director, Lake County Fair Housing Resource Center. 

I thank you all for appearing before the subcommittee today and 

without objection, your written statements will be made a part of 

the record. You will now be recognized for a 5-minute summary of 

your testimony, and we will start with Mr. Lloyd. 

STATEMENT OF ENGRAM LLOYD, DIRECTOR, PHILADELPHIA 

HOMEOWNERSHIP CENTER, U.S. DEPARTMENT OF HOUSING 

AND URBAN DEVELOPMENT 

Mr. LLOYD. Thank you, Chairwoman Waters. I appreciate the opportunity to speak to you today on behalf of Steven Preston, the 

Secretary of the U.S. Department of Housing and Urban Development. I am Engram Lloyd, Director of the Philadelphia Homeownership Center. 

The significant effects of foreclosure on our national economy and 

on world markets bring us here today. Congress and the Administration have for some time been looking at legislative and regulatory options for minimizing foreclosures. At HUD, I can report 

that we are working on both in our efforts to mitigate the adverse 

effects of this market correction on borrowers. 

One of the strongest tools we have to protect both borrowers and 

markets is the Federal Housing Administration. As you may know, 

FHA helps individuals secure credit by providing mortgage insurance through a private sector distribution network that makes 

owning a home more affordable and safe and, therefore, a reality 

for many borrowers that might otherwise go unserved. 

Several times in testimony before Congress last year, HUD witnesses stated that many of those who ultimately entered the 

subprime market would have been better off with an FHA-insured 

loan. Many may still be eligible to refinance today. Although we 

cannot go back in time to ensure that each borrower made the best 

decision when obtaining a mortgage, we can provide refinancing options when obtaining a mortgage for many subprime borrowers. 

And we can do more to help people make better decisions and we 

can provide new financing options to many subprime borrowers and 

we can do more to help people make better decisions going forward 

through both innovative products and counseling support. 

14 

The Administration has taken decisive action to help responsible 

homeowners stay in their homes. Last fall, the Administration 

launched the FHASecure initiative and facilitated the creation of 

the HOPE NOW Alliance, which together has helped more than a 

million struggling homeowners. 

FHASecure is a refinance option designed specifically for conventional and subprime borrowers who default on their mortgages 

solely because they can no longer afford the payments on their adjustable rate mortgages after the interest resets to a higher rate. 

On April 9, 2008, the Department announced a dramatic expansion of the FHASecure program to help additional borrowers stuck 

in subprime mortgages, some of whom may owe more on their 

mortgage than their home is worth. Under the original FHASecure 

program, FHA modified its refinancing program to help credit worthy homeowners who missed payments after their teaser rate reset. 

Now, FHASecure has expanded its eligibility standards to cover 

borrowers with adjustable rate mortgages who were late on as 

many as 3 monthly mortgage payments over the previous 12 

months. 

FHA has already helped about 250,000 people refinance into 

safer mortgages and with these additional changes, FHA is expected to help approximately 500,000 homeowners refinance by the 

end of the year. 

One of the goals of the HOPE NOW Alliance was to develop and 

fund a nationwide advertising campaign to encourage delinquent 

borrowers to seek help through the 888–995–HOPE network of 

HUD-approved housing counselors. HOPE NOW is an alliance 

among counselors, servicers, investors, and other mortgage market 

participants. The Alliance maximizes the outreach efforts to homeowners in distress to help them stay in their homes. Its purpose 

is to reach and support as many homeowners as possible. The 

members of this Alliance recognize that by working together, they 

will be more effective than by working independently. 

In the fall of 2007, HUD released informational video footage 

containing foreclosure prevention tips and information for homeowners who are struggling to pay their mortgage. Among other 

things, the video includes a list of 10 tips on how to avoid foreclosure. I suggest anyone who owns a home or who is in the market 

to buy a home visit HUD’s Web site at www.hud.gov for more information. 

Throughout this year, HUD staff and senior officials have sponsored or participated in more than 92 separate homeownership retention events in Ohio including clinics, fairs, targeted mailings, 

advertising, and joint task forces that reached a combined audience 

of over one million people. The Philadelphia Homeownership Center, in cooperation with the Ohio congressional delegation, the 

State of Ohio, and HUD’s field offices have conducted housing preservation clinics and foreclosure summits to spread the word about 

foreclosure prevention alternatives. Participants besides HUD include Fannie Mae and Freddie Mac, various agencies within the 

State of Ohio, local governments, congressional representatives, 

housing counseling agencies, lenders, and Realtors. Of these, the 

most effective have been our Homeownership Preservation Clinics 

in Cleveland and Columbus, which enabled homeowners to meet 

15 

face-to-face with participating lenders, including Wells Fargo, 

Countrywide, and National City, and were attended by over 1,000 

participants. These clinics also enabled on-the-spot counseling sessions with an approved counseling agency. 

In addition to these Homeownership Preservation Clinics, staff 

from the Philadelphia HUD has attended several banking and Realtor conventions. 

As you can see, the Department has taken several steps to address foreclosures, but there is much more work to do. Thank you, 

and I look forward to your questions. 

[The prepared statement of Mr. Lloyd can be found on page 397 

of the appendix.] 

Chairwoman WATERS. Thank you very much. We will now hear 

from Kimberly Zurz. 

STATEMENT OF KIMBERLY A. ZURZ, DIRECTOR, DEPARTMENT 

OF COMMERCE, STATE OF OHIO 

Ms. ZURZ. Thank you, Chairwoman Waters. I appreciate the opportunity to be here on behalf of Governor Strickland and the Ohio 

delegation to be able to speak to you today about the impact of 

foreclosures on our State. 

The mortgage foreclosure crisis has touched all corners of Ohio. 

Virtually every county has recorded an increase in foreclosure filings from 2005 to 2008, and has reached the highest level statewide in over 13 years. 

We are making concerted efforts here in Ohio to help our citizens, and I would like to tell you a little bit about that today. 

We have collaborative efforts crossing all of our branches of government and expanding into the private sector as well. Today, as 

I explain Ohio’s crisis and our innovative efforts to combat foreclosures, I hope you share my perspective, and also that of Ohio’s 

community. 

The Supreme Court reported, as you know, 83,230 new foreclosure court filings in Ohio in 2007. That’s a high record of over 

5 percent over 2006. While we consider the numbers rise and the 

trends are equally alarming across-the-board according to the reports of the Association of Realtors. We also recognize that we are 

taking every effort we can to help our citizens stay in their homes. 

When we listen to the statistics, we realize the sobering reality 

of them, but they aren’t speaking to the human stories behind each 

of those mortgage foreclosures and they don’t speak to the uniqueness that Ohio has on this issue. 

I have attached to our report some of the statistics since 1994 for 

your review to show that Ohio has been facing this issue for many, 

many years. 

In the last couple of years, some States have just begun their 

fight. Obviously, Ohio has had its share of economic problems 

which has contributed to the trend. However, we have also been accounted for in the unscrupulous lending until the passage of Senate 

Bill 185, the Homeowner Protection Act. 

I hope you don’t lose sight of the fact that Ohio has been facing 

this issue for a number of years as Congress continues to work toward legislation to address these issues. 

16 

In Ohio, the impact of vacant and abandoned properties varies 

from one locality to another, from neighborhood to neighborhood, 

but the impact is just as devastating no matter where it might be. 

The scale and impact of the problem is some things considered on 

the level of a natural disaster where emergency assistance from the 

State and Federal Government that some have compared to that of 

Katrina. As you visit our neighborhoods, you can see the devastation that we’re talking about. 

Our cities are trying to do the best that they can to combat the 

problem. More needs to be done to assist them. Ohio desperately 

needs the Federal and State actions to help to reduce the impact 

of the vacant and abandoned properties. 

Ohio’s response has been vast. On March 7, 2007, shortly after 

becoming Governor, Governor Strickland established the Foreclosure Prevention Task Force of which I was appointed chairwoman. This is a group that was brought together to provide a unified coordinated statewide effort that would respond to our citizens 

with the goal of keeping as many people in their homes as possible. 

We brought together local, State, and Federal government, and 

housing agency organizations and associations, many of which are 

here today. We asked them to put their personal agendas on the 

table and to put their feelings aside and try to work for an overall 

solution that everyone could live with. This is a group that had to 

come up with solutions. 

We held 11 meetings. We had 22 subcommittee meetings and we 

had about 6 months to complete our report. We worked on a very 

short timeline with a great deal of information. 

After we had those meetings, and listened to a lot of the testimony, we reported to the Governor on September 10, 2007, with report recommendations of the best ideas and the best approaches we 

felt Ohio could use to move forward to address the foreclosure problem. We had 27 recommendations and we moved forward on each 

of those recommendations and took action on each one of those recommendations to date. 

The most important piece that the country is talking about and 

has been recommended and talked about a little bit today was the 

Compact. The Compact that would help Ohioans preserve their 

homeownership was signed earlier this year, and we are hoping 

that the Compact will be something that we will be able to continue to use to help our families be able to work with their mortgage servicers and come to some type of workout of loan assistance 

as they move forward. 

Under the Compact, servicers were asked to take all kinds of 

measures. They were asked to increase the loan workouts, including adjusting their staff and resources to include major improvement, preventive efforts, and loss of litigation. We have asked that 

they report to the Department of Commerce on a regular basis. We 

have asked that they do loan modifications and that they work 

very diligently to actually contact the borrower. We recognize that 

the contact piece is the most difficult piece, and many of them 

tried, but we want to make sure that they understand that it is imperative that they make that extra effort. 

In December of this year, I met with servicers and their trade 

associations to discuss this proposed Compact. We finally agreed on 

17 

six principles on which we based the final product. It substantially 

matched the spirit of our original conversations with the servicers 

and will help us move forward to come to fruition of the Compact 

that was actually signed April 7, 2008, by Governor Strickland, myself, and nine of the loan servicers. We will continue to look forward to try to get more folks to join us in that Compact in Ohio. 

We are seeing that it is having an impact on our citizens and we 

hope that it is something we will be able to use as an example for 

others to follow. 

We encourage the servicers to join with us to try to help those 

that are not part of the Compact at this time to join along with us. 

The more folks we have following our effort, the more helpful it is 

to our citizens and the more that we can do as we reach out across 

the State. 

We also kicked off what is called Save the Dream. Save the 

Dream is our new effort for the State that tells you how to contact 

the State and the State will then help you to get an attorney or 

a housing counselor and put you in direct contact with your 

servicer. All the efforts we are making on the State’s end are what 

we can do, but we also need your help. 

We need Congress’ help on many of the things that you have before you today. Many of the pieces that you talked about are the 

challenges that we face and if you will be able to move forward 

with some of those pieces regarding housing counseling, it would 

greatly impact what we can do here. Our citizens have watched 

Wall Street be bailed out. They most desperately need to be bailed 

out. There needs to be help for the citizens of Main Street, not just 

those on Wall Street. 

I thank you for coming here and taking the time to learn about 

Ohio. Thank you. 

[The prepared statement of Ms. Zurz can be found on page 450 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Next, we have Chris Warren, chief of regional development, Office of the Mayor of Cleveland. 

STATEMENT OF CHRIS WARREN, CHIEF OF REGIONAL 

DEVELOPMENT, OFFICE OF THE MAYOR OF CLEVELAND, OHIO 

Mr. WARREN. Good morning. Thank you, Chairwoman Waters, 

for bringing this hearing to Cleveland. You’re not only welcomed, 

you are desperately needed because Cuyahoga County, and the 

State of Ohio is trying to recover from the devastation caused by 

unchecked predatory lending practices. This has been a murderous 

unnatural disaster, one that has wiped out decades of patient community development work, threatened our futures, and left thousands of homeowners and renters in the lurch. Call it Hurricane 

Greed. 

Consider the wreckage: 15,000 foreclosures in Cleveland filed in 

2006 and 2007 and it will hit 8,000 this year; 80 percent of those 

are tied to subprime loans. Wreckage: 3,500 certified tax delinquencies as of March of 2008, a 5-fold increase since 2005—5-fold— 

9,500 vacant residential structures and growing as of December in 

our City, 3 times the number in 2005. 

18 

Last year, our City spent out of our general funds, not our block grant funds, but out of our general funds, $12.5 million on public 

nuisance abatement, tearing down vacant structures that cannot be 

lived in again, cutting the grass of vacant properties. As reported 

in the Plain Dealer yesterday, sending our fire trucks out to arsons 

at abandoned properties. 

Cleveland Tenants Organization, a very good group in Cleveland, 

reports a sharp increase in evictions. We’re talking about foreclosures. Why evictions? Because their landlords, many of whom 

are as unscrupulous as the lenders, use predatory loans to buy 

hundreds of properties, turn them into rental properties, and once 

the interest kicked in, they’re gone. And even though these tenants 

have paid their rent, they’re out. They’re evicted. Wreckage. 

Our cities are bracing from declines in property tax valuations 

and the consequent loss of sorely needed funds for public schools, 

city services, our inside millage for borrowing for public properties 

and infrastructure is in shambles. 

As Congressman Kucinich indicated, the devastation does not 

stop at our City boundaries. Double the foreclosure, abandonment, 

and public service cost I cited for Cleveland, and you have a fair 

idea of the impacts on Cuyahoga County. 

Who are the plunderers? It’s a long list, but the main culprits we 

know, subprime lenders and brokers who substantiated loan after 

loan, underwater loans with bogus appraisals while maximizing 

their fee income through questionable assembly line underwriting 

practices. The real estate scam artists whom I mentioned who purchased hundreds of properties, low-valued properties in poor neighborhoods with subprime loans often in cahoots with the lenders and 

converted them to high-cost rentals, no money put into repairs, and 

once the resets came, they were gone. 

Wall Street. We now know that tens of thousands of mortgages 

originated in Cleveland since 2003 were snapped up by some very 

large financial institutions, all of whom trafficked in high risk 

mortgage-backed securities. And in fact, for firms like Deutsche 

Bank, Merrill Lynch, Wells Fargo, Goldman Sachs, and others, it 

appears the only home mortgage business they did in Cleveland 

during that timeframe involved the acquisition of subprime loans, 

the assignment of this paper. 

The default rate on these loans backed by the titans of finance? 

Better than 60 percent. 

What can we do? Drawing on the work of Cleveland’s Vacant and 

Abandoned Property Action Council, here’s a summary. 

For people: place a moratorium on the foreclosure of occupied 

properties that would give defendants the chance to utilize courtsupervised mediation in an effort to restructure their loans. 

For people: building on the work already going on that has Federal, State, and local governments using every available means to 

compel, not just encourage, lender workouts and loan restructuring 

commitments coordinated with local financial counseling efforts. 

For people: as is called for in a number of bills before Congress 

now, increase the amount of FHA mortgage insurance available for 

refinancing restructured subprime loans. 

For people: institute a strict policy by regulatory agencies of policing mortgage brokers, appraisers, and the secondary market. 

19 

And as Representative Kaptur said, aggressively investigate and 

prosecute fraud through actions by the Justice Department, our 

regulatory agencies, and anybody else we can find to do the job, including Congress. 

Maintain high levels of funding. We need it for the long haul for 

financing literacy and counseling programs. 

Now for communities: hold Wall Street accountable. In January, 

the City of Cleveland, through the leadership of Mayor Jackson, 

filed a lawsuit against 21 Wall Street firms. The complaint, based 

on Ohio’s public nuisance statute, asserts the defendants could 

have and should have foreseen massive numbers of foreclosures 

when they purchased thousands of unsafe and unsound subprime 

loans from 2003 through 2007. These 21 defendants have filed 

more than 16,000 foreclosure actions in Cleveland and Cuyahoga 

County since 2003. We are spending through the nose through public service expenses that are the result, money that should go to police, fire, basic city services, our suit seeks to recover in this damage. 

So, in addition, we need emergency relief. This is a hurricane, 

Federal relief. Congresswoman Waters, whose leadership in introducing the security package in the House of H.R. 5818 is a huge 

step in the right direction. And we have a game plan here in Cleveland. Cooperation with community-based development corporations, 

national and local foundations we have launched in the State of 

Ohio, we have launched a ‘‘Reclaiming Foreclosed Properties’’ program led by Neighborhood Progress, Inc., Cleveland Housing Network, some very experienced community development corporations. 

This initiative will target six city neighborhoods for intensive preforeclosure workouts, systematic ‘‘property banking’’ of tax-foreclosed and bank-foreclosed properties, clearance of all vacant properties that are unsafe and beyond repair, and the redevelopment of 

homes on terms affordable for low- and moderate-income buyers. 

We have a plan, our county treasurer is leading, Jim Rokakis is 

leading really an incredible effort to establish a countywide land 

reutilization authority or land bank that would make it possible to 

establish and finance a countywide entity capable of holding, maintaining, and redeveloping abandoned and foreclosed properties. 

These programs constitute a solid framework for converting and 

recovering from Hurricane Greed, the successful and meaningful 

saleable level, meaning resources, and we need it fast. We need resources that the Federal Government can provide. 

Last March, the City of Cleveland hosted a half-day forum on the 

foreclosure crisis problem. One of the participants summed up the 

situation well. She said, ‘‘With the help of the Federal Government, 

including the regulatory agencies, we might recover in 5 to 10 

years. Without their help, it will take a century.’’ 

Thank you. 

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

439 of the appendix.] 

Chairwoman WATERS. Thank you. 

Councilman Brancatelli. 

20 

STATEMENT OF ANTONY BRANCATELLI, COUNCILMAN, CITY 

OF CLEVELAND 

Mr. BRANCATELLI. Thank you, Madam Chairwoman, and members of the subcommittee for this hearing today. Certainly, having 

been a young, freshman Councilman, I get to sit in the middle of 

these two tables and also have a bottle of water. The distinguished 

chief is here and I’ll kind of follow his lead. 

My name is Antony Brancatelli, and I have had the pleasure of 

representing our ward for the past 3 years. Prior to becoming a 

Councilman, I served 17 years as the executive director of Slavic 

Village Development Corporation, one of the most successful community-based nonprofits in our city and now led by an outstanding 

executive director, Marie Kittredge. 

Madam Chairwoman mentioned earlier that we want to know 

how it’s working. I think I included in your packets at your desk 

you’ll see a piece, Fight Foreclosures and Abandoned forum, breaking the cycle of abandonment. It was a forum that was initiated by 

Martin Sweeney who supported Jay Westbrook. And it’s really a 

highlight of all the organizations and officials that are working 

hard at stopping this abandonment. 

I think if you look at this piece you’ll see some of the things that 

we’re talking about and breaking the cycle of abandonment. Those 

are detection, prevention, maintenance, and redevelopment. You’ll 

see ways that we are trying to change the face of our neighborhoods and trying to recover from this crisis. 

While tracking this crisis across our City, I have seen a record 

number of negative reassessments and as the chief pointed out, the 

impact has been devastating for our neighborhoods and our residents and our county treasurer estimates that if our property values drop 10 percent, Cleveland stands to lose $10 million. The 

Cleveland Municipal School District will lose $3 million if it drops 

10 percent. 

I’m also providing you with a report entitled, ‘‘Foreclosure and 

Beyond’’ which is a detailed report on ownership following the sheriff’s sale to Cleveland. This report was commissioned by Case University and researched by Michael Schramm, Kristen Mikelbank, 

Claudia Coulton and contains a detailed study of the impact of 

foreclosures. This ‘‘Foreclosure and Beyond’’ really identifies the 

corporate base in our community and the changes that will be impacted by the sheriff’s sales and it will give you an identifying 

number that you can see what will happen when this occurs. 

Across the City, we have points of blight. You see over 10,000 vacant and abandoned homes in our community and as the chief 

pointed out, we’re spending millions and millions of dollars maintaining these homes. Council members have spent hundreds of 

thousands of dollars of their own precious EBG dollars and many 

of you know how previous those dollars are. Just to cut lots and 

maintain some of the vacant homes and keep them secured, keep 

our residents from having to deal with this crisis. And we found 

our weapons of mass destruction in the form of Deutsche Bank, 

and JP Morgan just to name a few, but used the Wall Street gold 

to destroy our community. Wells Fargo officials openly admit their 

dependence on Federal dollars to bail them out. Many panelists 

21 

will talk about how to recover from this, but first I want to talk 

about the impact of the crisis in our local community. 

Our community has been the victim of a perfect storm. This is 

not a community with adequate banking presence. We have some 

of the highest quality banks in the region. We have great shopping, 

retail dining, and recreation opportunities in our communities. We 

also have a wonderful employment base with quality manufacturers, industry, and service providers. 

What we don’t have is an adequate protection from predatory 

mortgage companies, corrupt mortgage brokers, and title companies who openly participate in the destruction of our company. 

There were a questionable number of mortgages given by a handful of mortgage brokers and appraisals which resulted in millions 

of dollars of foreclosures, yet these brokers and appraisers are still 

licensed today. As you go through that document, you can see those 

firsthand. We have residents like Barbara Anderson in our community who are working hard to identify this fraud and that report 

clearly puts it in perspective. This is not a neighborhood that was 

not hit with hard economic times and market conditions that people would believe it was hit hard with predatory lending. This 

neighborhood averages two foreclosures a day. In the last 3 years, 

we lost 10 percent of our population and currently have 1,000 vacant homes. 

Hundreds of homes are condemned and waiting for the wrecking 

ball. Houses are being stripped at an incredible rate, and scrap 

prices are at an all-time high. This was not unforeseen. 

We need to develop a Federal housing policy and legislation that 

provides for the continuation of existing leases a minimum of 90 

days as a determination of the tenancy of the tenants in the event 

of a foreclosure. We all seen the effects of vacant homes and keeping families in their homes until suitable and appropriate housing 

makes sense. 

I have seen proposals by the Federal Government; we talked 

about those today. Supporting H.R. 5818 and supporting H.R. 5870 

brings millions of dollars and billions of dollars to help save our 

neighborhoods is critical. Demolition is a critical tool for our recovery. We have over 10,000 structures in our neighborhood and many 

of those homes were factory-built and by today’s standards are 

functionally obsolete. This proposal not only financially condemns 

these homes, they’re now physically condemned and should be demolished. 

There are a number of plans in place for reuse of this vacant 

land but what we need is help from the Federal Government. We 

need the Federal Government to place all the mortgage companies 

under stricter government lending laws. We need stricter licensing 

and mortgage brokers and licensing of appraisers. We need the 

Federal Government to make it a priority to prosecute mortgage 

fraud at a high level. We need the Federal Government to not bail 

out banks but to hold them accountable for their actions. The city 

is doing their part and will now enforce the registration laws and 

code enforcement laws in at a very aggressive level. The community is doing its part to help cut back some of the problems in our 

neighborhood. The nonprofits are doing their part. 

22 

It’s my hope that the next President will learn from our experience and hit the ground running to change the policies and help 

save our neighborhoods and this year we will see meaningful mortgage packages that we can use now coming from Congress. Thank 

you very much. 

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

101 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Next, we will hear from Tina Skeldon Wozniak, president, Board 

of Lucas County Commissioners 

STATEMENT OF TINA SKELDON WOZNIAK, PRESIDENT, LUCAS 

COUNTY COMMISSIONERS 

Ms. WOZNIAK. Good morning, and thank you so much, Chairwoman Waters, for this opportunity and to the members of the 

Housing and Community Opportunity Subcommittee for coming to 

Ohio for this very critical and important hearing. I would also like 

to thank my own Representative, Congresswoman Marcy Kaptur, 

for this opportunity. We’ve been working hard on this issue at 

home. 

I represent 450,000 residents of my county which is located about 

100 miles from here, as you know. I also come to you as a trained 

and professional social worker, here to share stories of the deep 

worry in the faces of many of our residents. 

I’d like to be able to tell you that our problems are unique, but 

the truth is that Lucas County and Northwest Ohio are just like 

every other community in America that is dealing with this foreclosure crisis as you have heard from this great panel here today. 

You’ve heard countless times the story of a family member who 

lost their job and a family that subsequently lost their home. You 

know too well the pain that unscrupulous lenders have caused not 

just for homeowners, but in fact in whole neighborhoods in our 

area. You’ve seen the struggle on the faces of the people who have 

come before this subcommittee, whether it’s in our Nation’s capital 

or the main streets of America. 

This problem is more than just the statistics, more than a report, 

and data that is gathered in the field. But to fully grasp the extent 

of this problem, the data is where we have to begin. 

Since 2002, foreclosure filings in Lucas County have increased by 

over 50 percent, and in the last 5 years, we have calculated over 

18,000 homes have been part of foreclosure filings. That is nearly 

10 percent of the total housing stock in Lucas County and that’s 

a dramatic figure for any community to deal with. 

Single-family homeowners are not the only victims. According to 

RealtyTrac and information from our county auditor, almost 5 percent of all rental units in Lucas County have been involved in a 

foreclosure action. This proves that you don’t have to own your own 

home to be hurt by this crisis. 

A recent study by the policy group ReBuild Ohio determined that 

vacant and abandoned properties in Toledo, Lucas County’s largest 

city, cost taxpayers at least $3.8 million in 2006 alone. But it’s not 

just our cities like Toledo; the foreclosure crisis in Lucas County 

has hurt almost every community in our area, especially in the 

23 

area of declining home values and this decreases basically the revenue available to provide necessary services. 

Yes, the data is dramatic, but we know that the real story of this 

crisis is in the faces of those who have been disrupted and who 

have lost their chance at the American Dream. It is both a story 

of the individual and their family. 

But as tragic as those stories are, what’s left after a family loses 

their home is not just a personal crisis, it’s a community crisis too. 

Those homeowners who didn’t take any risks, who didn’t fall victim to the slickest sales pitches or unbelievable claims, and who behaved appropriately, are now too watching their homes fall in 

value in the foreclosure crisis. They are looking across the street 

to the yard which hasn’t been mowed all summer. They are worried 

about what pests might be attracted by the vacant buildings. They 

are wondering why their city is no longer able to provide the same 

tree-trimming, street-cleaning, and trash collections that they have 

experienced in the past. 

When a foreclosure happens in Lucas County, instead of just a 

family in crisis, a household is in crisis, a bank is in crisis, and 

that foreclosure leads to a block, a neighborhood, a city, a State, 

and a Nation in crisis. 

Crime rates that had been dropping start to go back up. Middleclass families move out of their former neighborhoods, contributing 

to greater and greater urban sprawl. The falling value of our 

homes keeps families from making needed investments and contributing to starved local economies. 

In Lucas County, trust me, we’ve seen it all. Before the foreclosure crisis became a daily news item for the media, we started 

working. In 2006, in partnership with city, county, and State leaders, as well as nonprofits like United Way, the Toledo Fair Housing 

Center, and Advocates for Basic Legal Equality, we formed the 

Lucas County Save Our Homes Task Force. 

This innovative group developed an important mailing that is 

sent to families at the start of their foreclosure crisis, so they can 

connect immediately with the many resources available in the community. About 5,000 have already been sent out and that’s a good 

thing. 

Working with our Department of Job and Family Services, we 

were the first county in Ohio to devote over $400,000 in Federal 

TANF dollars toward low-income foreclosure assistance. 

The judges of our Common Pleas Court have also responded, setting aside resources to create a foreclosure magistrate and develop 

an expedited mediation process for homeowners and lenders. 

Elected officials and nonprofit leaders from across the county, including myself, went door-to-door in the hardest-hit neighborhoods 

and talked to residents about upcoming sessions where homeowners could try to work out a mediation with their lenders. 

With the limited resources that our county government provides, 

we’ve done a great job reaching out, but we know it’s not enough. 

We’ve been smart about our outreach, we’ve tried to target our resources responsibly, but we’ve just nibbled around the edges. At the 

end of the day, families keep losing their homes and we haven’t 

solved the problem. 

24 

I wish that I were here today with a new idea or a new solution 

that could make a real difference. I am happy that this subcommittee does have the right ideas and does know the best solutions. Ultimately, Lucas County families need the power to bring 

the lenders to the table to renegotiate these loans. Our homeowners need the opportunity for a fresh start with mortgage terms 

that they can afford. 

This is not a bailout. It’s an investment in our future, and it’s 

clear that only the Federal Government has the authority, the 

clout, and the resources to make it happen. 

There are two pieces of legislation currently being considered by 

the Congress that I believe will bring a tremendous amount of relief. Having listened closely to the conversation regarding H.R. 

5830, the FHA Housing and Homeowner Retention Act of 2008, it’s 

clear that these key provisions will give at-risk homeowners the 

tools needed to get out from under a bad mortgage. 

As a local government official, I am pleased by the initiations by 

the subcommittee. These two bills address the twin grievances that 

communities like Lucas County are facing in the foreclosure crisis. 

Our people are not afraid of hard work and are not afraid to do 

their part to get out of a bad situation. We do not need any special 

treatment. What we need, both at the homeowner level and the 

level of the local government, is a readiness by our leaders in Congress to take action and make a difference. 

Whether you’re in Toledo, Houston, or Los Angeles, we know that 

you are listening to our issues. Thank you very, very much. 

[The prepared statement of Ms. Skeldon Wozniak can be found 

on page 445 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

We will now hear from Matthew Stefanak, commissioner, 

Mahoning County Health Department. 

STATEMENT OF MATTHEW STEFANAK, COMMISSIONER, 

MAHONING COUNTY HEALTH DEPARTMENT 

Mr. STEFANAK. Thank you, Chairwoman Waters, and I would 

also like to thank my Congressman, Representative Charlie Wilson, 

for listening so intensively to our concerns about the growing blight 

problem in this district. 

When I started my public health career nearly 20 years ago, I 

never thought of myself as an anti-blight worker, but over the last 

couple of years, I have come to realize that the blight problem 

caused by this housing crisis is a public health problem. 

Blighted dwellings attract nuisances, and they attract disease 

vectors, like raccoons, rats, and mosquitoes. This is the public 

health concern that we face. 

Also, unmaintained properties, especially those that were built 

many years ago when the use of lead paint was commonplace, release lead and threaten to poison children when they reoccupy 

those properties. In the Youngstown area, where 90 percent of our 

housing stock was built before 1950, lead-based paint was in common use. 

This housing crisis came home to roost for me over the last few 

years, when I saw our numbers of housing complaints triple. Last 

year my sanitarians struggled to respond to over 240 of these. 

25 

I serve a health district that comprises 14 townships and 9 municipalities in Mahoning County. They range from old steel towns 

like Campbell, Ohio, all the way to Smith Township, which is a 

rural Appalachian township. And in each and every one of those 

communities, there is a blighted property. 

I have made a poster here showing you some of them. If you 

can’t see it, I am sorry. It illustrates the kinds of properties that 

we are dealing with now in public health. 

To give you a sense of what this means for people trying to keep 

up their homes in some of these blighted neighborhoods, last year 

I was listening to the news. One TV reporter interviewed Ms. Lori 

Mayberry, who lives on Jefferson Street in Campbell, Ohio. She 

tried to keep up her home as a resident, put paint on her front 

porch, and flowers in her front lawn. But she has 10 blighted properties like these up and down her street. 

She told the TV reporter, ‘‘This neighborhood was full, used to 

be full of nice, quiet families. One by one they either moved or 

passed away. Now it is just a bunch of abandoned homes that are 

just deteriorating. I feel like I am being discriminated against. I 

feel like they have put me in a category like if you live down here, 

you deserve what you get.’’ 

Now, units of local government, like mine and others, especially 

the mayor of Campbell and our township trustees across the county, want to do something to help people like Ms. Mayberry, but 

they either don’t have the money or they don’t have the tools or 

know how to use the tools to take down these blighted vacant 

structures. 

We are losing the war on blight, it seems, in Campbell, because, 

first and foremost, as Congressman Wilson pointed out, we have a 

lot of surplus housing. Our population has dwindled by up to 50 

percent in some communities, like Youngstown, over the last 30 

years. In Youngstown, in 1970, there were 160,000 people. Today 

there are barely 80,000. Campbell has probably lost half of its population as well. 

We have too much housing. You can buy a house in Campbell for 

$2,000. If you bought it for $2,000 several years ago, it is probably 

worth $500 now. You know, it costs $2,500 to $3,000 to knock down 

that home today. It is worth less than it takes to knock it down. 

That is why when Congressman Wilson and his colleague Congressman Tim Ryan, our other representative from Mahoning Valley, introduced the Emergency Neighborhood Reclamation Act of 

2008, we were very excited because we think that kind of shortterm Federal help can help us tip the balance in our war on blight 

in the Mahoning Valley. We need to right size our housing stock 

in order to deal with the blight problem at the same time. 

Some communities, like Campbell, really need that financial assistance because those precious Community Development Block 

Grant dollars for Campbell would need to be fully allocated over 

the next 3 or 4 years to take care of the blight problem at the exclusion of taking care of other needed city services, like sidewalks 

and sewers and whatnot. There just isn’t enough money for cities 

like Campbell to get a handle on their blight problem. 

In not every community is just more money the answer. In Smith 

Township, for example, the township could probably scrape toVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
26 

gether the $2,500 to $3,000 it needs to knock down its blighted 

structures, but it doesn’t know how to do it. 

The township has tools to deal with blight, but in many cases 

they have never done it before. They have never had to do it before. 

And that is why that we have been trying in my district to educate 

our fire chiefs, our zoning inspectors, our mayors, and our trustees 

about their authority under Ohio law to deal with blight. 

We brought in speakers from the State Health Department, and 

State EPA earlier in the spring for a workshop. I have to tell you, 

unfortunately, many of our fire chiefs and mayors came away 

scratching their heads not knowing how to negotiate the regulatory 

process to tear down or burn down blighted structures. One of the 

participants wrote in his comments on the workshop, ‘‘This was depressing. I feel like we are regulating ourselves into a Third World 

country.’’ 

So one point I would make, in addition to supporting short-term 

financial assistance to help communities like ours, is that perhaps 

Federal agencies, like HUD and EPA, could get together and offer 

some clear guidance to their State partners and municipalities on 

how to safely negotiate asbestos regulations and other air quality 

regulations in those communities that want to deal with blight but 

can’t or don’t have the money to do so. 

Finally, my final point is that I wasn’t around for smallpox eradication in my public health career. It was before I started, but I 

would like to be around for the elimination of another major disease for many children in this country, and that is childhood lead 

poisoning. 

We have made a lot of progress in my community and nationwide 

in a push to our goal of eliminating this disease from this country 

by 2010, but I think that progress is in jeopardy now because of 

the deteriorated quality of our housing stock. That is why we would 

ask the Congress to please protect and perhaps expand the opportunities to homeowners and landlords to make their properties 

lead-safe through the HUD Office of Lead Hazard Control and 

Healthy Homes. 

Thank you. I hope I have made the case that this is also a public 

health concern as well as an economic crisis. 

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

400 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Ms. Patricia Kidd, executive director of the Lake County Fair 

Housing Resource Center. 

STATEMENT OF PATRICIA KIDD, EXECUTIVE DIRECTOR, LAKE 

COUNTY FAIR HOUSING RESOURCE CENTER 

Ms. KIDD. Thank you, Chairwoman Waters, and I would like to 

thank you for asking me to come. My name is Patricia Kidd, and 

I am the executive director of the Fair Housing Resource Center. 

We are a nonprofit fair housing advocacy agency that operates in 

Lake County, Ohio. 

Our county and people in the resident counties who spoke, we 

have the same type of issues. But I want to try to take a different 

approach, rather than give you statistics of all the problems. I 

think we are all aware that we have a real issue here. 

27 

Our agency has been a certified HUD housing counseling agency 

since 2002. But, unfortunately, we have been at the front lines of 

this foreclosure crisis since its beginning. Back in the mid 1990’s 

and late 1990’s, I was helping on predatory lending. Here, 10 years 

fast forward, we are dealing with the results of what predatory 

lending brought to us. 

Our agency had always done loss mitigation counseling for homeowners. This is nothing new. It is not a new concept. We have been 

doing this type of counseling since 2002. The difference between 

then and today is that our numbers have increased over 300 percent. 

The numbers of homeowners that are coming to our offices seeking services from our counselors are keeping us so incredibly busy. 

It is time-consuming to assist a homeowner to work out a mortgage 

loan. It is very time-consuming to try to get a servicer on the 

phone. It takes anywhere between 6 to 10 phone calls just to find 

a phone number where we can fax a release form to so that we can 

get permission to speak to a borrower. 

In my testimony, I have outlined 6 pages worth of chronological 

order of one loss mitigation that we received recently, 6 pages, 4 

months, 43 phone calls and e-mails, 43 of them. 

Our qualified borrower was told that she didn’t make enough 

money to get a loan modification at $800 a month but, instead, was 

offered a $1,200 repayment plan. I don’t understand the logic. 

We are dealing with single families, elderly couples. And it is difficult to see an elderly couple sitting before me who have planned 

for their retirement 20 years ago as long as they made a substantial amount of money and realizes today that they can’t afford to 

make ends meet. And the house they raised their children in, like 

somebody on the panel has already said, isn’t past the loan. The 

house is going into foreclosure. 

Everybody looks at the foreclosure statistics. But you want to triple that or multiply it by five. That is how many people are in default. We are dealing with people in default for 30 days, 60 days, 

90 days, and running around scurrying, trying to do everything 

that we can to try to prevent the foreclosure from happening. 

But the other thing that I think Congress needs to take a look 

at is it doesn’t just end after foreclosure. What happens next? What 

about the people then? The house gets foreclosed on. It is not like 

they fall off the face of the planet. They still have to go somewhere. 

They have to relocate. 

Nine times out of ten, the mortgages that the individuals have 

that they are having trouble paying, then forcing them into foreclosure is probably $300 less a month than the average rental 

prices, they’ve learned when they leave that house. And they have 

to rent somewhere else. 

Most of the reputable landlords require a credit report on initiating a lease. Now we have homeowners—they couldn’t even rent 

a decent place because their credit score doesn’t pass muster or 

their foreclosure is a bad stain on their financial circumstances. 

Representative Sutton said—and I had it written down—that we 

have done a lot and there has been a lot initiated in order to try 

to help this crisis moving down, but we need to do more. 

28 

H.R. 5679 is definitely a step in the right direction. Let’s get the 

mortgagors required to speak to us. As a HUD-certified housing 

counselor, it would be nice to have a direct line to a modification 

specialist and a direct individual whose job it is to speak directly 

with our agency. 

It shouldn’t take 4 months to work out a loss—do a loss mitigation or a repayment plan or a modification for a particular homeowner. It should only take a matter of a couple of weeks. The individuals that our agency is seeing, this increase of 300 percent, is 

only 10 percent of the total population. 

Too many individuals are suffering this crisis, packing up their 

belongings, and just leaving without picking up the phone. And 

then when they come to us, we have to go to drag through weeks 

and weeks and weeks of promises and we’re trying, we want phone 

calls. I think there needs to be more accountability. We need to 

have more direct contact with the servicers. 

Mandatory mediation for any foreclosure filing after 30 days of 

the complaint, not tail end of the litigation process, at the beginning. Let’s bring the borrowers and the lenders to the table, bring 

somebody who can mediate and negotiate on behalf and try and see 

what we can do to try to keep people in their homes. 

We are seeing too many. And theres are too few of us in our office to try to handle this. We can get more money for increased hiring, our staff needs, but it takes us a while to get somebody trained 

and up and running in order to effectively counsel individuals. Taking a look at the—just something simple as the Ohio domestic relations laws to try to prevent losing a primary home residence in the 

issue of a divorce, tough regulation on every recovery scam program. 

We have enough bad things that are happening out there. Now 

we have these individuals who are duping homeowners into quit 

claiming their properties over to them, thinking that they are recovering their home when, in fact, all they did is just went from 

being a homeowner to being a tenant. If they are 2 days late on 

their rent, they are evicted, and they don’t even realize that they 

ever transferred their property. 

Increased offer instance to try and get homeowners to get to 

counseling, to contact housing counseling agencies, such as myself 

and the rest of my colleagues. And it is—then it is through State 

governments, through renter regulations dealing with renters’ 

rights to prevent price gouging in rent or unfair and unconscionable lease option purchase agreements, which is going to be the 

next issue that we are going to see in the future. 

Thank you. 

[The prepared statement of Ms. Kidd can be found on page 342 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

I would like to thank all of you for your testimony. And let me 

just share with you that I think this is the first time that I have 

conducted a hearing where witnesses were willing to call names, to 

identify problems in such a pointed way. 

I have a great appreciation for the recommendations that you 

have made. I have sat here listening today, and I am going to ask 

a few of you to help us improve on some of the legislation that we 

29 

are working on and to help us formulate even additional legislation 

because I have heard some things here today that I think really 

need to be addressed. 

I will start my questions by simply asking whether or not you 

know of any of our lenders or our service providers who have done 

an excellent job in helping to do workouts and modifications and 

whether or not they have had an impact in any of your communities or areas because they have been so great that they have 

done outreach, they have found people who need help, they have 

stopped foreclosures, they have been easily accessible. Anybody 

know any of the lenders or servicers with that kind of description? 

Ms. Kidd? Thank you very much. That was a loud ‘‘no’’ that you 

don’t know anybody? 

Ms. KIDD. No. 

Ms. WOZNIAK. Madam Chairwoman? 

Chairwoman WATERS. Yes, Ms. Wozniak? 

Ms. WOZNIAK. I was just going to say the service providers, locally it is the Fair Housing Center and GABEL, which is, you 

know, the attorneys who assist communities, are the greatest resource, but, as Ms. Kidd said, if there is anything that Congress 

could do to assist with legislation to allow proper staffing levels 

with agencies like that because the numbers are so great. 

So, chairwoman, thank you for that question. I think they are 

the most unbelievable agencies with the ability that they had to actually reach lenders, unlike anyone else. 

Chairwoman WATERS. I thank you. And I certainly was not referring to Ms. Kidd’s organization. You know to whom I was referring. 

Ms. WOZNIAK. Right, all of them. 

Chairwoman WATERS. Basically those who have been, some of 

whom have been, identified are here today that have a responsibility for a lot of the subprime lending that we are not getting a 

connection to. 

Let me just ask Mr. Lloyd, could you provide us with some detail 

of the number of Ohio homeowners assisted by FHASecure to date, 

the impact of the recent changes to that issue, and the proportion 

of homeowners in the State relative to the total need for assistance 

preventing foreclosures you expect FHASecure ultimately to have? 

Let us know what is going on. What is happening with that issue? 

Mr. LLOYD. Well, to date, we have endorsed over 12,000 

FHASecure mortgages in the State of Ohio. 

Chairwoman WATERS. You have done much of this? 

Mr. LLOYD. Well over 12,000, 12,244. 

Chairwoman WATERS. What did you do? 

Mr. LLOYD. Well, for those particular loans, they were either delinquent or they were conventional ARMs that were converted to 

FHASecure mortgages. They could have been conventional mortgage products, subprime mortgage products, that were converted 

into FHASecure and refinanced in a sense. 

We have FHA, just standard FHA, loans across the State of 

Ohio. We have roughly 10 percent of the market share, which the 

point is still valid, 161,000 FHA-insured mortgages statewide. 

As far as subprime, and when you look at FHASecure, that is 

primarily for mortgages that have either reset or are about to 

reset. 

30 

Chairwoman WATERS. So describe to me the ARMs. Give me the 

numbers of the ARMs that have been—that you have dealt with 

when the—prior to reset so that people were able to either get refinanced, to be able to continue with the mortgages that—in the way 

that they were contracted with in the beginning of the—when the 

mortgage began, and did not have to go into the reset or the increased rate. How many of them? 

Mr. LLOYD. I would have to go back and provide that information 

to you. I don’t have it broken out for my records here. 

Chairwoman WATERS. Because 12,000 is a lot. I mean, you are 

giving us a figure of 12,000 that you dealt with, but we don’t feel 

it here, do we? 

Mr. LLOYD. I guess the other thing that I was going to say is that 

when you look across—this information is based on the mortgage 

bankers delinquency survey that came out, I think, at the end of 

March. When we look at the situation across the State of Ohio, 

there are 9,000 subprime ARMs out there that—whereby 28 percent of those are now delinquent and facing foreclosure. So, you 

know, when you look at it in those terms, there are a vast number 

of mortgages that are still out there. 

What we have been trying to do in doing our outreach, we have 

been trying to encourage people not to wait until they are reset but 

to come in and explore the possibility of refinancing. 

Chairwoman WATERS. How do you do that? How do you encourage it? 

Mr. LLOYD. Well, we have done that through outreach events 

that we have held here in Ohio and— 

Chairwoman WATERS. I am sorry? Outreach? 

Mr. LLOYD. Outreach events. 

Chairwoman WATERS. What does that mean? 

Mr. LLOYD. That means foreclosure summits, foreclosure prevention summits. 

Chairwoman WATERS. In direct mail? 

Mr. LLOYD. In direct mail to people who are anticipating resets 

within the next 6 months. 

Chairwoman WATERS. What kind of response have you gotten 

from your direct mail? 

Mr. LLOYD. Usually we get a response. It is very low in a sense 

but roughly maybe 21⁄2 to 3 percent. 

Chairwoman WATERS. What would you advise us to do to help 

FHASecure really identify outreach, too, and get people in to get 

those mortgages before the resets kick in? 

Mr. LLOYD. If we could do more advertising, prime time advertising, I think that would help tremendously. We have just gone on 

a rally type of training campaign where we provided training to 

lenders. We brought in practitioners, counseling agencies, and 

State finance agencies to just talk about barriers that may be out 

there that preclude people from being able to refinance. 

One of the strong suggestions that was made—and we were encouraged to take this back to Brian Montgomery, our Housing 

Commissioner—is to expand it to include not only just ARMs but 

all subprime, you know, subprime fixed mortgages, fixed-rate mortgages, and the like. 

31 

Chairwoman WATERS. Okay. Thank you very much. I am going 

to move on. 

Councilman, you talked about statutes or efforts to prosecute 

fraud. Do you think we should do more of that? 

Mr. BRANCATELLI. Thank you, Madam Chairwoman. 

Absolutely I think it would be more aggressive marshaling all of 

our Federal resources to prosecute. And then the flipping report 

that you have shows where people were blatantly using the system, 

blatantly using the no document loans, loans that were put out 

there by mortgage companies. 

And until we start going after measures of brokers and companies who are participating in this, we are not going to be able to 

make as much headway as I think we should. 

Chairwoman WATERS. I have been wanting to advocate to eliminate the illegal no doc loans altogether. Do you support that? 

Mr. BRANCATELLI. I would welcome that with open arms. 

Chairwoman WATERS. Thank you. 

Mr. Mayor, I am going to ask Congresswoman Stephanie Tubbs 

Jones to bring us the information on the lawsuit that has been filed 

by the City, against the Wall Street creditors, so that we can take 

a look at that and perhaps somehow introduce that into the record 

in a general way. Perhaps we can take some time on the Floor and 

talk about that. 

So I would like to thank you. 

Ms. ZURZ. Absolutely. 

Chairwoman WATERS. All right. Congressman Wilson, do you 

have any questions? 

Mr. WILSON. Thank you, chairwoman. 

I have a couple of questions. Number one, I would like to make 

a statement before I ask a question. The statement is that we understand on a Federal level and in Congress what is going on, and 

we don’t fault you at all for being angry. This new direction Congress is trying to address the issues that need to be addressed. 

I, for one, feel like I have been among a lot that has gone on 

here, that I was in the Ohio Senate when we did Ohio Senate bill 

185. I was very proud to be a part of that and feel that we were 

able to curb some of the things that had been going on in the State 

of Ohio. Red flags had been going up for several years. So it is nice 

that we could finally get something done. 

I wanted to mention as far as in Congress what has happened 

since 2007, which I think it is never enough and it is never quick 

enough. But I would like to touch on H.R. 5818 and H.R. 5830, 

both of which have been discussed here this morning. They have 

passed the House and are moving forward. 

Also H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007 has passed the House in December of this past 

year. Now, H.R. 1427, the Federal Housing Finance Reform Act of 

2007, Chairman Barney Frank’s bill, has passed the House and is 

now moving forward. It passed May 24th. 

So action is happening. We would have liked to have seen this 

4 or 5 years ago, instead of now. And then certainly what is going 

on with Chairwoman Waters’ bill, that is, the Expanding American 

Homeownership Act of 2007, has passed the House also, on September 19th of this past year. 

32 

So things are moving. How we get them past the House and then 

through the Senate is another situation. But we are definitely 

going to continue working and continue pushing. 

My first question is for Matthew Stefanak, from our area. Matthew, thanks, first of all, for your help that you have given in the 

good things that you have written and said for Jim Ryan and I as 

far as with the new legislation moving forward. 

We need to do as much as we can. The Neighborhood Stabilization Act, which Chairwoman Waters helped us with very much, I 

have never really had an opportunity to personally thank you and 

thank you for— 

They have had us on a comparative basis with California, our 

housing values with the chairwoman’s State. There is a difference, 

and we were able to get her to hear that and be able to get into 

that, I think. 

You know, really, she didn’t have to, being a senior member and 

the chairwoman of our committee, but she was willing to do that 

for the State of Ohio. 

I just wanted to make that point because many times those 

things go unheard. And thank you so much, Congresswoman. It is 

that kind of thing that is showing this new direction Congress 

working together to be able to accomplish things. And we have a 

bipartisan effort on this. So I am proud of that. 

Back to Mr. Stefanak. My understanding is that a lot of what is 

going on in Youngstown right now is you had been doing some 

demolition and gearing down to be more addressing your population, I think you were saying it has gone from 160 to about 80. 

And so you are gearing down. 

We are hoping that this is going to be helpful to you. Do you see 

being able to have money for demolition for moving forward to remove the blight from some of the neighborhoods? Do you think this 

is going to be a significant positive action? 

Mr. STEFANAK. Congressman, absolutely. I see it as kind of a 

short-term investment that is really helping cities like Youngstown 

and Campbell and other former steel centers tip that balance in 

favor of moving towards a housing stock that is appropriate in size 

for the population of that community. 

Youngstown has a very ambitious plan for creative shrinkage— 

shrink the City with a plan that would tackle the houses, for 

80,000 or so residents, and create opportunities for new green 

space and redevelopment. 

And, as I said, outside of those areas where there are many 

epicenters of the blight problem, like Youngstown and Cleveland, 

there is probably less of a need for management assistance than 

there is for some guidance to these communities on how to deal 

with their blight problem before it becomes of the proportion of 

enormity that it is in some of our cities, like Campbell and Youngstown. 

Mr. WILSON. Good. Okay. Well, thank you. And hopefully you 

will be able to use those funds for other things as the Federal 

money begins coming in and to continue to brighten the neighborhood and lessen the blight. 

Mr. STEFANAK. I would add that there is the ability for municipalities and townships in districts in the State to recover some of 

33 

those costs when those properties are demolished and made available for redevelopment to recoup those costs as property tax liens. 

So a short-term infusion of some Federal assistance could benefit 

those communities on down the line to help them deal with additional blighted properties that come up in the future. 

Mr. WILSON. Thank you. 

Chairwoman WATERS. Thank you very much. 

And let me just say that, Congressman Wilson, I was focused on 

demolition. I was a little bit concerned that we need rehab; we 

don’t need demolition. But hearing you describe what is happening 

with Campbell really helps me to understand a lot better why demolition resources are so important. So thank you very much. 

Congresswoman Kaptur? 

Ms. KAPTUR. Thank you. Thank you, Madam Chairwoman. 

Again, thank you so much for coming to Ohio, which is off your regular beat as you fly across the entire country from Los Angeles to 

Washington on a regular basis. Can you imagine that kind of 

schedule? Ohio truly thanks you for being here today and for bringing the power of this committee to Ohio. Thank you so very much 

for your leadership on so many issues of importance to the vast 

majority of the American people. 

Mr. Lloyd, I wanted to ask you a question, if I could, regarding 

whether you know when HUD lifted its normal appraisal and underwriting standards in the early 1990’s, certain mortgage letters 

that were issued by the Department that overturned prior practice 

within the Department, I believe it was in 1993. I am wondering 

if you are aware of that at all. 

And in addition, in terms of both underwriting and appraisal 

standards, a major change that occurred, I believe it was in 1994, 

was that Fannie Mae and Freddie Mac came under the regulatory 

jurisdiction of HUD. Am I correct in that understanding? 

Mr. LLOYD. That was before my tenure with the organization. I 

have been on board since late 1999. 

Ms. KAPTUR. All right. 

Mr. LLOYD. What I will do, I can take that information back, and 

provide a written document to the committee. 

Ms. KAPTUR. All right. I thank you. 

You know, during this period of time of the 1990’s, we saw the 

time-tested principles of making loans, home loans in particular, 

which used to be measured by character, collateral, and collectibility. I think Congressman Wilson knows that well. Is anybody in 

the audience old enough to remember when you actually knew the 

person who made the loan to you? And we move from that into this 

world of high finance. 

I can remember after we came out of the savings and loan crisis 

in the 1980’s; I served on the committee at that point. And I can 

remember when they said, ‘‘Well, you know, Congressman, you 

don’t ever have to worry because we are going to securitize mortgages. And this magic will be breaking up into pieces and giving 

to the market. This is going to prevent any down turn. We will 

never have another savings and loan crisis.’’ 

But then as we move into the 1990’s, I think around 1997–1998, 

Congress is a part of the problem looking back, because the GlassVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
34 

Steagall Act, which had separated banking from commerce, was 

abolished. 

And so now we see the Federal Reserve bailing out Bear Stearns. 

Think about that. Think about this change that occurred during 

that decade before these fine numbers, many of them, arrived in 

Congress, which set in place the opportunity for the high-risk strategy. So the law also affects what is going on is my point. 

I wanted to ask—I also wanted to thank the chairwoman for 

bringing us together today. You are part of the conversation that 

happened in Ohio that has not happened before. This is very useful, including the people who are in the audience listening and 

thinking with us and the think tanks that are out here, the analysts. 

If we were to look at Ohio and to put your cumulative knowledge 

together, if we wanted to go back and unwind what has happened 

here, what would be the first bank or the first brokerage or the 

first servicer that would have put their footprint on these subprime 

loans in Ohio? 

All right. Cleveland was a big player here. I mean, things happened in Cleveland. But what do we know of Lucas County that 

we could lend to what you are involved with here? Is there a way 

for you to look at the footprints? Go back. What was the first set 

of institutions you stumbled across or who is at the top of your list? 

You mentioned a couple of them here in your testimony, but it 

is not a complete list. If you were to try to unwind what happened 

here in Ohio to fully understand what we are all facing, do you 

want to make any comment for the record? Could you provide for 

the record additional material on your reflection on what is captured and how Ohio was dipped into? 

Who was the first dipper? How did they get here? Then they left, 

right? The paper got taken. Who took it? How can you help us understand? 

I know you are dealing with casualties, and you don’t have time 

to think about this, but this is a very important question because 

this leads us, then, at the national level to understand the architecture, the broad architecture, of what happened. 

What we are doing now, Countrywide has plenty to apologize to 

the American people for, but they are a downstream participant. 

They were allowed to—they got into this market, but they are not 

at the top. They are just involved in it. They and their folks became beneficiaries. 

Can you comment on this? As you look back at Ohio, look back 

in Lucas County and Cuyahoga County. When—who were the door 

openers? How did this happen here? What is the first—that is the 

question across the country. What was the first institution or set 

of institutions to invent the subprime instrument? It may have 

been Superior Bank in Hinsdale, Illinois, but I can’t prove that yet. 

But I want to prove it. 

And then what company, what third party took those subprime 

loans and gave them to Merrill Lynch? And then what happened 

to the paper? We don’t know, but we need to know. What about 

here in Ohio? What happened? 

35 

Mr. WARREN. To the Chair and to the Congresswoman, I will 

start on that. I will be brief. It is the right question. Frankly, I 

can’t answer that with precision. 

Ms. KAPTUR. We need to. 

Mr. WARREN. Yes. And I recognize the need. Part of our goal of 

our lawsuit is that we’ll get to a point where we are able to pursue 

those questions in the courts. We will get to that. There are 21 defendants, Wall Street-based defendants. And we will provide those 

to whoever asks, the details of that lawsuit. 

But the answer is it seems to me—and I mean, I just have sort 

of some feelings about this. I mean, you know, the empirical data, 

you know, provide lots of information on the casualties. 

Ms. KAPTUR. Right. 

Mr. WARREN. Where were the motives? 

Ms. KAPTUR. And in through the media is all focusing— 

Mr. WARREN. Yes. And we are going to— 

Ms. KAPTUR. —on people trying to care for those who get hurt. 

What about the ones that did the hurting? We don’t have as much 

focus there. 

Mr. WARREN. And where did that start? And, you know, they are 

people with names and corporations and signed letters and supporters. 

Ms. KAPTUR. Was Banc One a part of this at all? Do you know? 

Mr. WARREN. Banc One has not been a major player, no. They 

have been involved. They have not been a major player. 

Ms. KAPTUR. Who would it be here in the Cuyahoga County 

area? Who is number one on the list? 

Mr. WARREN. We have Argent. We have Countrywide. We have 

Litton. We have a whole range of the subprime lenders that are national in scope. They descended on Cuyahoga. 

Ms. KAPTUR. Did you know that they were—Countrywide, for example, did you know that they were a primary dealer from the 

Federal Reserve? 

Mr. WARREN. I heard that this morning. 

Ms. KAPTUR. So is HSBC. So is Citigroup. 

Anybody else want to comment on footprints? Mr. Brancatelli? 

Mr. BRANCATELLI. Thank you, Congresswoman. 

I think if you go through some of the reports that we gave regarding mortgages in Slavic Village, it clearly indicates those who 

were really on the front end of the part of the mortgage problems, 

as the chief outlined, Argent Mortgage, Ameriquest, New Century, 

Peoples Choice,— 

Ms. KAPTUR. I am sorry. You are going to have to speak up louder. 

Mr. BRANCATELLI. Okay. Argent Mortgage, Ameriquest, New 

Century, Peoples Choice, Countrywide, Long Beach, Aegis, Wells 

Fargo. You can go down the list and see. 

Actually, if you go to the Web site, it is kind of a mortgage flow 

meter. You can see all the companies that are going out of business 

are those who had their first fingerprints on this. I wouldn’t use 

footprints unless I would use my point elsewhere. Really, it is fingerprints on a crime. And so you can see those who have participated by just looking at the component numbers in our community. 

36 

And I think, as Congressman Kucinich—as a matter of fact, as 

a resident in the Slavic Village neighborhood, you know, the difference between the old Federal days and key bank days when you 

walked in the bank and knew them, when these folks came in to 

do their crime center neighborhood, you can see the devastation 

that they have left behind. 

It is pretty clear you can see the fingerprints on a number of 

these, Beneficial and others, who came in and did their criminal 

acts. 

Ms. KAPTUR. And what percent of those, sir, would it take to get 

that paper and move it to Freddie Mac or Fannie Mae to service? 

What would you guess? 

Mr. BRANCATELLI. Well, what was interesting, when the first 

pieces of that started happening, they didn’t need—many of them 

weren’t insured you know, they hadn’t worked through Fannie Mae 

or HUD. As the crimes continue now, you start seeing a lot of those 

that became insured through Fannie Mae and HUD, they used 

those underwriting standards. And so it changed then and kind of 

really kind of morphed into something different each year as the 

crime changed each year. 

And I think that when you talk about your demolition budget 

and things that can be done, there are some things that can be 

done without adding new House bills, that can be done just by policy, by responding. 

When you look at the number of distressed properties that HUD 

now owns, many of those should be demolished in our neighborhood. The HUD Dollar program right now, we have gotten just in 

our neighborhood 23 houses this year we are trying to get through 

the HUD Dollar program. We have a 10-day window to respond to 

get that household dollar. It has been now 6 months. We still don’t 

have a deed to it. 

Two-thirds of those in our neighborhood are slated for demolition 

on a chiefs bill, and the city is having to pay for that. For a policy 

change, all you have to say is the M&M Brokers have the right to 

demolish properties and they can use the budgets that you have all 

generously given to these M&M Brokers, to demolish those properties today without having to earmark any new funds. 

Chairwoman WATERS. All right. Thank you very much. We can 

move on to Congressman Kucinich. Thank you for that information. 

Mr. KUCINICH. Thank you very much, Congresswoman Waters, 

again for holding this hearing. 

I want to go right back to Mr. Warren. The City of Cleveland has 

brought a lawsuit now against some of these companies. In the 

course of developing the lawsuit, are you looking at the question 

as to whether or not this entire subprime fiasco was engineered? 

It did not just happen by accident, but all across this country, people saw that low- and moderate-income people were a target for 

these subprime products. 

They knew that the people were credit risks to begin with. They 

knew that there was a reduced level of financial literacy in some 

of these communities. They knew that there were loans that were 

being inflated. They knew that Wall Street was building enormous 

portfolios of these subprime loans that were helping to fuel the 

37 

growth of hedge funds. They knew exactly what was going on, as 

opposed to it being an accident. 

Which do you think it was? 

Mr. WARREN. I—to the Chair, to the Congressman, I think you 

are right. It is part of our lawsuit. Let me illustrate the point this 

way. Slavic Village, the community that you represent, representative council and Councilman Brancatelli represents now, between 

2004 and 2006, we saw a study that showed, then, the property 

values of that neighborhood measured by reported purchase prices 

in the county. From 2004 to 2006, actually, led Cuyahoga County 

in great appreciation. 

We saw that. We said, go back and do the study. There was 

something wrong with it. And so you dig into that. And what you 

find out is that properties worth $20,000, $25,000, and $35,000 

were selling, being financed in subprime loans by the fiscal 

$75,000, $80,000, and $90,000, 10 properties reported on the same 

day, almost as if, you know, with the same number. 

And, as you know, Congressman, in Slavic Village on the southeast side of Cleveland, there are a lot of doubles, so prevalent we 

call them the Cleveland doubles, two-bedroom apartment down, 

two-bedroom up. These are classic where the properties were reverted to rentals. And then they were picked up at these $85,000 

and $90,000 rates where really the true market value is $40,000. 

Now, to your point, how does that fit into some sense of conspiracy? Well, the point being is that these are properties that are 

then bundled or mortgages paper bundled and sold to the secondary market. And then values seemingly to the rest of the world 

are so low, they don’t—it is not a blip in the screen. They just bundle them as part of thousands of properties on a portfolio. 

And so you might say—and, you know, we haven’t proved it, but 

we are pursuing this—that part of the strategy, perhaps from afar, 

is to look at markets where the values, property values, are so low 

that a doubling of the value from the true value to the market or 

to what the sale was doesn’t get noticed. It is easily scurried and 

moved along. 

Mr. KUCINICH. Well, here is the point. Speaking out, we should 

be honest here. These banks, these lending institutions, they knew 

exactly what they were doing. They knew they were going into the 

poor neighborhoods. They knew they could jack up the value of the 

properties through inflated appraisals. They knew if they loaned 

and then fronted them later on and then they turned out to be 

securitized, that this would be part of a go-go-go approach on Wall 

Street, a hedge fund. 

And so what you have is some people made a lot of money on 

these scams, but here is Wall Street supposed to be the really 

smart people are going to avoid any risks. They are taking the 

riskiest instruments—the four pronged instruments particularly 

clean piece of property while the rest of the neighborhood around 

them is falling away. Their property value goes down. I mean, this 

is a crime. There is no other way to do it. 

And I would urge the City of Cleveland to look at not only pursuing the fraud statutes against these people but also a fast action 

suit on behalf of African Americans who, no question about it— 

there are civil rights implications. 

38 

And the fact that money wasn’t loaned to people in the first place 

according to the Community Reinvestment Act, subprime loans 

were ignored, and then—the prime loans were ignored, then they 

come up with these subprime products that have fraud written all 

over them. And, you know, this is an issue that goes to the core 

of our financial situation and goes to the core of whether people 

can trust these lending institutions. And the City of Cleveland because it is at the epicenter of this crisis can also be at the epicenter 

of the solution. 

I want to thank all of the representatives from our community 

who are here, the members of the council, who have had to deal 

with this on a daily basis. You know, Mayor Terrell will tell you 

this still concerns the city council. 

When I was at council years ago, if you had a single home in 

your community that was boarded-up, it was a problem. You hear 

about the neighborhood groups organized around this. Okay? 

How many, Mr. Brancatelli, are there out there in Slavic Village 

now? 

Mr. BRANCATELLI. Mr. Congressman, we have over 1,000 vacant 

properties identified. 

Mr. KUCINICH. We cannot let these lending institutions get away 

with this and just say, ‘‘Well, it is the people’s fault. They should 

have known better.’’ They knew exactly, these lending institutions 

knew exactly, what they were doing. Wall Street knew exactly 

what was going on. And there has to be—somebody is going to have 

to pay for this. 

Our community has already paid. Now we have to follow through 

on this. As Congresswoman Kaptur says, we have to follow this 

money all the way to where it leads. 

Madam Chairwoman, I hope this committee gets subpoena power 

so that you can start to go into this. And I will certainly support 

every effort that you make. 

Thank you very much. 

Chairwoman WATERS. Thank you very much. Thank you. 

Congresswoman Stephanie Tubbs Jones? 

Mrs. TUBBS JONES. Thank you, Madam Chairwoman. 

First of all, I would like to recognize another elected official from 

my congressional district who has joined us. His name is Peter 

Lawson Jones. He is my cousin. And he is a Cuyahoga County commissioner. 

Also, because we were limited in the number of witnesses that 

we could bring before the committee, I do want you to also know 

that Mayor Georgine Welo represents the First Ring Suburbs. She 

is the president of the First Ring Suburbs. And I am talking with 

her about these issues. 

In her City, there was a street on which one woman owned 11 

houses. How does one woman own 11 houses and have no real reportable income? Georgine, the City of South Euclid came to the attention of this as a result of receiving more than 1,000 calls and 

complaints on this street for the police department. 

What they ultimately did was they purchased these houses. The 

City bought every one of the houses and then redid the financing 

because there was no other way that they could immediately get 

some resolve in there. 

39 

And I just want to congratulate Georgine Welo and that City for 

the work that they did. 

There are other cases where cities may have the opportunity to 

fix some of the problems. We hope that they don’t have to do that, 

which Georgine Welo was saying that they spent tons of money 

cutting the grass, all of the things that we have been talking about 

in the process. 

I would also hope that when we get to our second panel, you are 

going to hear some of the litigation that has been implemented by 

the housing advocates and other organizations to address many of 

the issues that my colleagues have talked about previously. 

I am just so thrilled that here we are in 2008, paying attention 

to what has been going on in our community for years. And I am 

just so thankful that all of you each took time to come in. 

I would want to pontificate a little bit and ask a few more questions, but I am just going to associate myself with the comments 

of my colleagues. 

I do want to see, Chris, if there is anything else you want to add 

or, Mr. Brancatelli, anything else you would want to add very briefly. And I am going to yield back my time. Chris? 

Mr. WARREN. To the Congresswoman and the Chair, again I 

want to thank you for this effort today, your work on a variety of 

fronts on our behalf. 

It is a long way back. I think speed is of the essence. The House 

is clearly taking a strong position. There are issues in terms of 

looking at culpability and motives that can’t be ignored as we look 

at remedies. I would agree with that. Hopefully our lawsuit would 

be helpful in that way. But, again, thank you for your leadership, 

in particular. 

Chairwoman WATERS. Mr. Brancatelli? 

Mr. BRANCATELLI. Thank you, Congresswoman. I think, as I 

mentioned earlier, looking at policies for HUD, Fannie Mae, and 

disposition of those real estate and how we can rescue neighborhoods is critically important. 

The other piece I want to note, which I don’t think any of the 

panelists really hit on hard, was the next wave of the tsunami. And 

this is these houses that are being dumped on the market for pennies, for pennies. You are seeing thousands of houses sold on eBay 

every day for $1,000 or less. 

In our neighborhood, we had hundreds and hundreds of homes 

that are being bought by out-of-town brokers, from California and 

on—I am not saying there is anything wrong with California. It is 

kind of hard to manage scattered site-condemned homes from California. 

Chairwoman WATERS. It is okay. 

Mr. BRANCATELLI. And so we really need to look hard at how we 

can try and get in front of that next wave so that more families 

aren’t impacted. 

The other thing, members of the panel today talked about these 

new lease-purchase programs, not lease-purchase but companies 

that are turning the favor and knocking down the real estate. And 

we need to stay in front of that because that is what our service 

providers are going to be dealing with next. 

40 

And we are looking at cutting ways of dealing with some of the 

issues we are facing. We talk about demolition as a tool. We are 

also looking at deconstruction. And as we pick up our houses, when 

you talk about an energy crisis now, being able to use 

deconstruction as a tool for recycling materials and saving some of 

our neighborhoods and saving some of our resources is just as important. 

So I appreciate your being with us. 

Mrs. TUBBS JONES. Lastly, I want to say in conjunction with the 

comments of my colleague Mr. Kucinich, that as we have been looking and focusing on the fact that predatory lending predominates 

in African-American communities, the Congressional Black Caucus 

has been up front on this issue since way back, almost back when 

you got here, Congresswoman Waters. And we have done a lot of 

things. 

But, lastly, I would say to everybody listening: you must, you 

must understand what you are signing and you must understand 

who you are going to be operating with. It is so very important. 

I don’t care what kind of legislation we implement. I don’t care 

what kind of things we do. If you don’t pay attention to what you 

are doing and get the financial literacy information and understand 

the process, we can’t stop what is going on. 

Whomever is listening, you must pay attention. You must take 

a look at your grandparents and your mothers and your aunts and 

your uncles, the seniors in our community, whom they prey upon, 

not only in the course of building or buying a home but in the 

housing reconstruction and remodeling. That is the other way they 

attack senior citizens in our communities. 

So again, Congresswoman Waters, thank you for your leadership. 

Thank you for holding this hearing. And I yield back my time. 

Chairwoman WATERS. Thank you. 

Congresswoman Sutton? 

Ms. SUTTON. Thank you very much. 

Your testimony was extraordinarily insightful, and I appreciate 

the passion. I just want to be brief. This is obviously a multifaceted 

challenge that we face. And a lot of the angles have been discussed. 

I appreciate the questions of my colleagues, which get at the heart 

of many, many key parts of this issue. 

I would like to begin, though, by speaking to Ms. Kidd. If my colleagues haven’t had the chance yet to look at the transcript or the 

record of you trying to seek assistance to help somebody who was 

trying to take action early on when she identified that she was 

going to have problems and fulfilling the commitment that she is 

in, it is an amazing account. 

And I don’t know if there are more of these that you can make 

available to folks like myself and other members of this committee 

as well as Congress, but this is really helpful because we see as 

we look through this that all of the nonsense that occurs along the 

way, the nonsensical direction that people are given—on one occasion if you were to read through this—I will just share—when you 

are seeking help for getting lower payments, when they do the rework, it is actually a higher payment. And that happens I think 

several times throughout the course of this. You are actually told 

41 

to wait to seek help until you are further behind because then help 

might be available. 

So all of this information is really important. One of the reasons 

why I ran for Congress is because policies don’t always make sense 

when they are being applied. And we also need to see what actors 

are doing what in the process. So that is why this hearing has been 

so good. 

And, Ms. Kidd, if you could provide us with more information 

like this? I know a lot of people don’t want to tell their stories, but 

it is important that we know really how this works at the ground 

level when you are trying to deal with a foreclosure. 

Ms. KIDD. Yes, definitely. 

Ms. SUTTON. Thank you. 

Also, one of the things that has been troubling to me and we 

haven’t talked a lot about it here yet today, although the chairwoman did attempt, Mr. Lloyd, to ask you some questions—and I 

am going to follow up on those—you know, we have heard a lot 

about H.R. 5818 was passed. And it is a great, great bill that the 

chairwoman has shepherded through the House. 

And if that bill is signed into law, which I think it deserves, your 

testimony says that will bring over $830 million in grants and 

loans to Ohio to help us rebuild our communities that have been 

devastated by the effects of this crisis if that bill is signed. 

Now, sadly, that bill isn’t signed. And it doesn’t look like under 

this Administration, that we are likely to get that bill signed. And 

that is a problem. Okay? 

I am troubled about the Administration’s, what appears to be 

overly simplistic responses to some of the thoughtful plans that 

have come out of the Congress and especially the subcommittee 

that we are in today. 

Oftentimes you hear this issue framed as an issue of irresponsible borrowers. And I concur with my colleague Representative 

Tubbs Jones that we have to be careful, we have to be educated, 

and we have to do our best to know what it is we are getting into. 

But it is framed as an issue of irresponsible borrowers and lenders 

that don’t deserve government bailout. 

But then the rhetoric ignores what I said was this multifaceted 

crisis. First, this is a systemic problem that involves the failure of 

multiple regulation and accountability mechanisms. We have heard 

that discussed here today. 

And, second, our fates are tied together. We have also heard how 

that is discussed today. A house goes into foreclosure. Regardless 

of the fault, it doesn’t just affect the family who lives there. It reduces the local tax base. It has health consequences, safety consequences. And so the effects of foreclosure are felt all around. 

And the HOPE NOW program, the initiative that you addressed, 

you addressed, Mr. Lloyd, I just don’t think that it was structured 

to address the enormity of the problem at hand. And so I think 

that there is much lacking. 

There have been some issues with the numbers being reported 

by the HOPE NOW initiative, as the Comptroller of the Currency 

has brought up in recent days. He suggested that perhaps only a 

small fraction of the number reportedly helped by HOPE NOW 

have received assistance. 

42 

And, in addition, there appeared to be significant discrepancies 

between reported percentage of repayment plan versus the actual 

loan modifications. And it is not a rounding error. These are major, 

major differences in the numbers. They are different sets of numbers. 

So, Mr. Lloyd, do you have any numbers on—I know we tried to 

get this a little bit earlier—on how many individuals from Ohio 

have been helped through this initiative, how many have been 

saved, literally saved, from foreclosure, how many have received 

loan restructuring versus loan modifications? I know that it is a bit 

early in the program, but what is the success rate? Basically what 

is the success rate of keeping families helped by HOPE NOW in 

their homes? 

Mr. LLOYD. Unfortunately, I don’t have the numbers for HOPE 

NOW. I have primarily concentrated on the FHASecure numbers. 

And I am versed in our numbers for the FHA portfolio. But I will 

go back and retrieve those numbers for you and try to find out exactly why there has been such discrepancies noted. 

Ms. SUTTON. Okay. I would appreciate that. I realize that you 

don’t run this program, and so this is not an attack on you. But 

the problem reported about the HOPE NOW alliance, we are wondering what we can do to improve it. And that coupled by some of 

the other experiences in the information that has been brought to 

light today, we would find that very useful. 

With that, I yield back my time. 

Chairwoman WATERS. Thank you very much. 

Mrs. TUBBS JONES. Madam Chairwoman? 

Chairwoman WATERS. Yes? 

Mrs. TUBBS JONES. For the record, I have in my hand and I 

would seek unanimous consent to add to the record an emergency 

resolution passed by the Cleveland City Council asking the Cuyahoga Board of Common Pleas to institute an emergency foreclosure 

moratorium, to stay all active and newly filed foreclosure cases involving occupied residences and continue to work with council and 

community organizations to implement a comprehensive program 

that strengthens distressed neighborhoods. And this is from all six 

council members. 

Chairwoman WATERS. Without objection, that will be submitted 

as part of the record for today. Thank you very much. 

Ms. KAPTUR. Madam Chairwoman? 

Chairwoman WATERS. Yes? 

Ms. KAPTUR. I know that you are about to conclude, but I did 

want to just ask or suggest to the representatives from the Cleveland area since we have representatives from Lucas County and 

Youngstown, the Mahoning Valley area, perhaps the attorneys that 

exist in those counties could join your suit or augment your suit. 

People might want to think about this as you proceed forward. I 

think that we probably haven’t done that in our region of the State. 

It is a very interesting path to pursue. 

So I just wanted to put that out there. And I thank you, Madam 

Chairwoman, for yielding the time. 

Chairwoman WATERS. You are certainly welcome. And I would 

just like to send a message to the Governor that we commend him 

on his leadership, including to the Compact. That has not been 

43 

done in other areas for the most part. They have not tackled the 

foreclosure problem in quite that way. We will be interested in 

your submitting more information to us about what the impact has 

been to date. 

And we want to know when you have servicers make their first 

report on their efforts and subsequent successes. And if there are 

servicers who have declined to participate, we would like to know 

that, too. I think that information will be very helpful as we go forward. 

Ms. ZURZ. Thank you, Madam Chairwoman. I will tell you that 

we very much appreciate your recognition of that. We do have a lot 

of work to do here as well. 

But to the point of—and you asked the question earlier of any 

servicers going above and beyond, we are saying ‘‘no.’’ And I would 

be remiss to say that those that signed the compact from our perspective are at least trying to make the efforts. And I don’t want 

that to go unnoticed because they are responding to us and they 

are working with folks. 

Do I think it is enough? No, I don’t, and nor does the Governor. 

But it is a start. We will be happy to get you details, which the 

first reporting period is up in about by the end of the week. 

Chairwoman WATERS. Well, I appreciate that. We don’t have 

time to go into the legislation that I am working on now, but it is 

directed at servicers. And we are going to need some help because 

one of the things we have discovered is that we have no regulation 

over servicers. We have to create a body of law to deal with them 

because they are the key now, based on the fact that our citizens 

cannot get back to the institutions that originated the loans, from 

the broker etc., those security kinds of loans—that was packaged, 

they’re all in service now, and these servicers have a lot of power. 

But they said to us that they were afraid to use the power because 

they could be sued by the investors. 

We have tried to help with that in this legislation by eliminating 

liability and all of that but still they are not coming forward, because they have no laws to make them. We have to help them come 

forward. And we need a lot of pressure from all of our community 

groups and organizations to do this. 

Ms. Kidd, your testimony was right on point about servicers. No 

telephone numbers, no way to get in contact with them. Some of 

the loss mitigation is done offshore, where people use a piece of 

paper with 10 questions. And after the 10 questions are answered, 

the telephone is hung up, and that is it. 

So we know that we have a lot of work to do in this area. I want 

to thank all of you. And I would like to note that some of our members may have additional questions for this pane], 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. 

This panel is now dismissed. And I thank you so much. I would 

now like to welcome the second panel. 

Chairwoman WATERS. Our next panel consists of: Mr. Andrew S. 

Howell, executive vice president and chief operating officer, Federal 

Home Loan Bank of Cincinnati; Mr. Michael Van Buskirk, president and CEO, Ohio Bankers League; Mr. Michael Gross, manVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
44 

aging director, Loan Administration and Loss Mitigation Division, 

Countrywide; Ms. Kimberley Guelker, president, Lorain County Association of Realtors; Mr. Lou Tisler, Neighborhood Housing Services of Greater Cleveland; Mr. Edward G. Kramer, director and 

chief counsel, The Housing Advocates; and Mr. Frank Ford, senior 

vice president for research and development, Neighborhood 

Progress, Incorporated. 

We are going to start our testimony with Mr. Andrew S. Howell. 

STATEMENT OF ANDREW S. HOWELL, EXECUTIVE VICE PRESIDENT AND CHIEF OPERATIONS OFFICER, FEDERAL HOME 

LOAN BANK OF CINCINNATI 

Mr. HOWELL. Good afternoon. Madam Chairwoman and members 

of the subcommittee, I appreciate the opportunity to speak to you 

today on behalf of the Federal Home Loan Bank of Cincinnati 

about the role our bank has played to help restore balance to the 

housing finance market and, specifically, to help at-risk homeowners. My name is Andy Howell, and I am executive vice president and chief operating officer of the Federal Home Loan Bank of 

Cincinnati. 

The Cincinnati Bank is one of 12 regional Federal Home Loan 

Banks established by Congress in 1932 to provide liquidity to community lenders engaged in residential mortgage lending and economic development. For over 75 years, we have fulfilled the housing finance mission with a successful cooperative structure comprised of local lenders and regional management. 

Our primary business is the provision of low-cost credit in the 

form of secured loans or advances to our members. We do not 

securitize loans. Our members, in turn, use these advances to fund 

their daily credit needs, such as originating mortgage loans, affordable housing activities, investing in community projects, or managing their own balance sheets. 

The Cincinnati Bank’s role increased dramatically in 2007 due to 

the unprecedented disruptions in credit and mortgage markets that 

have continued into 2008. Industry access to liquidity was substantially restricted, and members increasingly turned to us to support 

their daily funding needs. Demand for our core products—advances—has reached historic levels. 

Since 2000, the State of Ohio has been severely impacted by the 

substantial rise in residential foreclosure activity. Although questionable lending practices of some have contributed to the rise in 

home foreclosures, our general experience is that many distressed 

homeowners did not originate mortgages with a lot of these financial institutions. Nonetheless, the impacts of foreclosures are substantial to both homeowners and their communities. 

In addition to meeting our congressionally-mandated liquidity 

mission, we believe that the combined efforts of our members, 

housing partners, Advisory Council, and our Board of Directors, 

has led to the development of meaningful foreclosure assistance 

programs. The result has been the offering of three foreclosure 

mitigation programs that address the problem from different perspectives, and a fourth program is under development. 

The first program is called HomeProtect, wherein we have made 

available to our members $250 million in advances at our cost of 

45 

funds, targeting these funds to help our members refinance homeowners at risk of delinquency or foreclosure. We instituted this program in June of 2007, and have approved commitments of more 

than $128 million to date. 

Second, we have taken actions to direct more of our Affordable 

Housing Program funds to assist with foreclosures. Later this year, 

we will award roughly $13 million through this program, and we 

have modified the scoring of these applications to favor high-foreclosure areas and projects that will return abandoned foreclosed 

homes to occupancy. With these new scoring criteria, we expect to 

see funds directed to those areas of Ohio that have been hardest 

hit by the foreclosure crisis. 

Third, in February 2008, our Board instituted a voluntary program called Preserving the American Dream, which will provide 

$2.5 million for foreclosure counseling and mitigation. Under this 

program, we will provide up to $3,500 per household, through our 

members and qualified nonprofit counseling agencies. 

There is also a fourth effort underway. Regulations currently prohibit the bank from using Affordable Housing Program funds to 

help our members refinance mortgages for at-risk homeowners. We 

have petitioned our regulator—the Federal Housing Finance 

Board—for a regulatory waiver of this restriction. 

To date, we have experienced modest success with HomeProtect. 

The interest level for the American Dream assistance is high, and 

we are optimistic that the Affordable Housing Program scoring adjustments and regulatory changes will be well received. 

In closing, we support a collaborative effort with multiple initiatives to provide both preventative and effective solutions to the 

foreclosure issue. The Federal Home Loan Bank, its 726 members, 

and hundreds of housing partners, are working diligently to provide long-term solutions to create and maintain healthy communities and cities. 

Madam Chairwoman, thank you for the opportunity to address 

the subcommittee on this important matter. I would be happy to 

answer questions at the appropriate time. 

[The prepared statement of Mr. Howell can be found on page 335 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

We will now hear from Mr. Van Buskirk. 

STATEMENT OF MICHAEL VAN BUSKIRK, PRESIDENT AND 

CEO, OHIO BANKERS LEAGUE 

Mr. VAN BUSKIRK. Chairwoman Waters, members of the subcommittee, and other Members of Congress from Ohio, thank you 

for the opportunity to appear before you today. 

The Ohio Bankers League is a nonprofit association representing 

Ohio’s commercial banks, savings banks, and savings and loan associations. My name is Michael Van Buskirk, and I am the Association’s president. 

Chairwoman Waters, as you know from your Ohio colleagues, 

and as we all heard from the witnesses on the first panel, our 

State, particularly its northern part, is suffering economically. 

Mortgage loan delinquencies and foreclosures have been one painful result. 

46 

Although foreclosures are a national problem, foreclosures in 

Ohio have remained stubbornly higher than the national average 

for at least the last 3 years. Other parts of the country, including 

your home in Los Angeles, face troubling foreclosure problems. 

However, the nature of foreclosure problems differ regionally. 

Therefore, we are particularly grateful you have come to Ohio to 

gain insight into the circumstances here, as the subcommittee 

works to find ways to help the national recovery. 

Ohio’s economy has struggled for at least the last 12 years. In 

northern Ohio, like Michigan, a decline in manufacturing employment continues to be a contributing factor. In eastern Ohio, a part 

of the country that is in Mr. Wilson’s district, a similar story is told 

through the decline in the mining industry. 

While Ohio’s problems are not new, they have grown much more 

severe. In 1995, we suffered 15,000 foreclosures. Last year, we had 

83,000. Not surprisingly, foreclosures have been the highest in the 

northeastern part of the State, where job losses in the auto, steel, 

glass, and rubber industries have been the highest. 

Before I offer the Association’s perspective on what is being done 

and what can be done to mitigate foreclosure short term, I would 

like to offer a few observations on the causes of our current problem along lines that you asked the first panel, which I hope will 

help you as you chart this country’s course to avoid a recurrence. 

Historically, most consumer mortgages in this country were funded from insured deposits. Lenders were banks, thrifts, or credit 

unions that kept the mortgages in their own portfolios. For that 

reason, the lender had a shared interest in the ability of the borrower to repay the loan. It suffered the loss if the consumer could 

not repay the loan. 

In addition, these institutions were regularly visited by trained 

governmental examiners who analyzed both the safety of the lending practices as well as their fairness. That fairness measurement 

was given increased definition by Congress over time through laws 

like the Truth in Lending Act, the Home Mortgage Disclosure Act, 

the Equal Credit Opportunity Act, the Real Estate Settlement Procedures Act, the Fair Housing Act, and the Home Ownership and 

Equity Protection Act, among others. 

By the 21st Century, lending in Ohio had become globally funded. Investors ranging from foreign governments to Ohio public pension funds bought securitized mortgages, rated as very safe by 

international rating agencies. The securitized loans were usually 

originated through a new retail outlet called a mortgage broker. 

The ultimate owner of the mortgage did not know the borrower. In 

fact, they often knew very little about them. 

This new system did bring benefits to the consumer. The huge 

inflow of mortgage funds helped lower interest rates, and market 

entrants, at least when they were ethical, gave consumers more 

choice. Technology allowed mortgage and rate shopping through 

the Internet. However, the new system also triggered significant 

problems. Non-bank brokers had no financial stake in the borrower’s ability to repay. Both the Ohio broker and the Wall Street 

securitizer were compensated by sale. Neither suffered loss if the 

ultimate product didn’t work. 

47 

Historically, mortgage brokers in Ohio were not licensed. In 

2006, when Congressman Wilson was in the General Assembly, our 

legislature required mortgage brokers to be licensed and, for the 

first time, required a criminal background check. While Federal 

lending laws theoretically applied to them, there was no enforcement. Most Ohio mortgage brokers were ethical and did comply 

with the lending laws. However, as history repeatedly has proven, 

scoundrels will flow into an enforcement vacuum. 

Ohio’s Department of Commerce discovered many hundreds of 

applicants were convicted criminals when it began a licensing process. 

Uneven governmental protection had unintended competitive 

consequences, too. Since non-bank brokers do not face the same 

high level of regulation and oversight as banks, they benefitted 

from significantly lower operating costs. Competitively, FDIC-insured lenders in Ohio suffered significant loss of mortgage share. 

Today, Ohio is fighting unethical lending practices. Commerce 

Director Kim Zurz, whom you heard from earlier, has greatly 

stepped up enforcement efforts under the Strickland administration 

during her relatively short time in office. Every Ohio mortgage brokerage today now gets some sort of review every 18 months. That 

compares to no review at all in past years. While we believe more 

needs to be done, efforts continue to achieve adequate rigor of examination. 

Unfortunately, as the subcommittee and the full committee 

learned, many States still do little or no enforcement. Therefore, we 

commend the House’s work to require all mortgage brokers to be 

licensed, to set minimum Federal standards, and to establish a 

Federal alternative if a State fails to act. 

We would suggest you consider one change to the House-approved bill, though. The House designated HUD to act if the State 

fails to do so. While HUD certainly has a great deal of expertise 

in housing, we believe that the Office of Thrift Supervision, which 

has trained mortgage examiners in most major cities across the 

country, including here in Cleveland, in Columbus, and in Cincinnati, is positioned to be immediately effective. 

We also want to take this opportunity to publicly support other 

of your initiatives, including expanding the powers of FHA to guarantee a reworked mortgage, where the investor or lender agrees to 

reduce the principal to less than the current appraised value, and 

to provide grants to purchase abandoned properties in distressed 

neighborhoods and restore it to productive use. 

I want to commend Congressman Wilson’s amendment to the bill 

to increase the allocation formula benefitting highly important cities like Cleveland. Funds to remove the blight of unsaleable homes 

in blighted neighborhoods are sorely needed here. 

We commend the provisions in the bill which would dramatically 

increase funds available to fight foreclosure—a subject I want to return to a little bit later in my testimony. Perhaps most importantly, we support the creation of a credible regulator to ensure the 

safety and soundness of the housing-related, government-sponsored 

enterprises. 

Ohio is not a homogeneous State. To be successful, Ohio banks 

and thrifts must tailor their operations to meet the needs of comVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
48 

munities each serves. Most Ohio banks maintained prudent underwriting discipline in the face of mushrooming competition from 

mortgage brokers and other non-traditional lenders. Very few are 

engaged in subprime lending. As a consequence, these banks and 

thrift institutions lost market share as some customers were attracted to loans with teaser rates, little or no requirement for documentation, or features like non-amortizing payments. 

Remediation processes tend to be tailored to individual markets, 

too. But in surveying practices, the successful ones at least, we 

found common elements. Banks want to keep borrowers in their 

homes. They will work with borrowers on a case-by-case basis, foreclosing only when all else fails. This is not altruism. It represents 

enlightened self-interest. A loan reworked to the borrower most 

times will cost the investor or the lender less than foreclosing on 

a property and selling it under the circumstances we heard the 

first panel talk about. 

If you look across the foreclosure filings in counties across Ohio, 

you see that the overwhelming majority of foreclosure filings are 

not by Ohio-based banks or thrifts. In surveying our members, we 

have found that as long as there is good communication and good 

faith from the borrowers, ethical lenders routinely waive late fees, 

permit partial payments, extend terms, and in some cases, forgive 

past due amounts, lower interest rates, or reduce principal. 

We do need to focus on one recurrent problem—communication 

with the borrower. One of the greatest challenges ethical lenders 

face is getting delinquent borrowers to talk with them. Mailings 

and telephone calls often go unanswered. I think we can understand that financial problems are embarrassing. Financial literacy 

is poor. Too few borrowers understand that an ethical lender is 

strongly motivated to work with them. Too few borrowers understand that there are competent, neutral counseling services that 

can help. 

Increasingly, these competent counseling services— 

Chairwoman WATERS. I’m sorry. Your time was up a long time 

ago. 

Mr. VAN BUSKIRK. I am sorry. Thank you for your indulgence. 

Chairwoman WATERS. Thank you. 

I am going to move on to Mr. Michael Gross, managing director, 

loan administration and loss mitigation, at Countrywide. 

STATEMENT OF MICHAEL GROSS, MANAGING DIRECTOR, 

LOAN ADMINISTRATION AND LOSS MITIGATION DIVISION, 

COUNTRYWIDE 

Mr. GROSS. Good afternoon, Madam Chairwoman, and members 

of the Ohio delegation. Thank you for the opportunity to appear 

here today to discuss Countrywide’s efforts to help families prevent 

avoidable foreclosures. We have testified on three previous occasions to this subcommittee about these efforts, and today I will update our progress, also providing additional information on our activities in Ohio. 

While our progress has been significant, we clearly recognize that 

more must be done. A key component of the successful loss mitigation initiatives undertaken by national servicers includes partnerVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
49 

ships with financial counseling advocates and community-based organizations. 

At Countrywide, we continue to expand our outreach to ensure 

that every customer who needs help is reached. In addition to our 

NACA partnership, which we discussed with this committee last 

fall, we have strengthened our national relationships with 

NeighborWorks, the Homeownership Preservation Foundation, the 

National Foundation for Credit Counseling, and ACORN. 

Nowhere are partnerships with effective counseling and advocacy 

organizations more important than in difficult markets like Ohio’s. 

Here in Cleveland, we have long had a strong relationship with the 

Neighborhood Housing Services of Greater Cleveland. We also have 

forged a strong working relationship and signed a home retention 

agreement with ESOP, Empowering and Strengthening Ohio’s People, which also provides valuable assistance to residents in Cleveland’s hardest hit neighborhoods. 

Since December of 2007, ESOP and Countrywide have assisted 

135 borrowers. With over half of those borrowers, we have been 

successful in preserving homeownership into the future—a success 

rate that both Countrywide and ESOP take pride in but want to 

improve. We also are working with the State program—Ohio Save 

the Dream—and 26 of our borrowers have sought help through that 

program. Likewise, in Cincinnati, we have begun working with our 

borrowers to seek counseling and assistance from the nonprofit, 

Working in Neighborhoods. 

We are actively engaged in foreclosure prevention outreach programs with both governmental and community organizations 

around the country. So far in 2008, we have participated in nearly 

170 home retention events around the Nation, including foreclosure 

prevention fairs and train-the-trainer events. 

In Ohio, we have participated in outreach events around the 

State sponsored by the State of Ohio, HOPE NOW, and ACORN. 

We as well have staff here on campus today helping our customers. 

Countrywide remains committed to helping our customers avoid 

foreclosure whenever they have a reasonable source of income and 

a desire to remain in the property. 

In addition to our work to provide home retention solutions to 

customers, we are working with nonprofits from ESOP to Enterprise Community Partners, NeighborWorks, and others, to identify 

how Countrywide can be a partner to communities with greater 

numbers of vacant and boarded-up properties. We are providing 

them with information on Countrywide-serviced properties in communities where they and a host of other nonprofit partners are 

working. ESOP has connected Countrywide with local nonprofits 

that have expertise in property acquisition and disposition. 

While that work is just beginning, we have already conveyed 

property to the Slavic Village Development Corporation, and we 

are discussing other properties that may be acquired by nonprofits 

like Detroit Shoreway. With national intermediaries like Enterprise, we have been working to build a program that would result 

in the purchase of real properties in certain distressed areas in 

markets like Cleveland. While this program is not complete, Countrywide recently committed $1.5 million in charitable funding to 

50 

Enterprise to assist them in further defining and implementing the 

program. 

As we reported in the last hearing, in the 6 months ending 

March 31st, we saved an average of more than 15,000 homes nationally each month from foreclosure, more than double the pace 

from the first 3 quarters of 2007. The pace continues to improve. 

In April and May of 2008—our most recent data—we completed 

nearly 48,000 home retention workouts in these 2 months alone. I 

would emphasize that these are workouts in which the borrower 

obtains a plan to keep their home. It does not include deeds in lieu 

of foreclosure or short sales, which accounted for less than 7 percent of our workouts. 

Comparing May of 2008 versus 2007, home retention workouts 

are up over 540 percent. The primary cause of that increase was 

a 718 percent jump in loan modification plans, from about 2,000 

modifications in May of last year to more than 14,200 in 2008. A 

new program which has also greatly contributed to these May results was the new Fannie Mae HomeSaver Advance Program, 

which provided 12,200 homeowners with a fresh start. Clearly, the 

efforts of our national and community-based partners, and our own 

home retention teams, are paying off. 

Since we announced a series of retention initiatives last fall, loan 

modifications have become the predominant form of workout assistance at Countrywide. Year-to-date, loan modifications have accounted for more than 68 percent of all home retention plans, while 

repayment plans accounted for less than 16 percent. 

While interest rate relief modifications were extremely rare until 

late last year, that is not the case today. In May 2008, interest rate 

modifications accounted for more than 70 percent of all loan modifications Countrywide completed. Importantly, the vast majority of 

these rate relief modifications had a duration of at least 5 years, 

in a sustainable area. 

The trends are much the same in Ohio. In May 2008, we serviced over 256,000 loans with an unpaid balance of $26.2 billion in Ohio. 

More than 92 percent of these loans are prime or FHA/VA, with 

only 7.4 percent being subprime. As with national data, our home 

retention workouts in Ohio are up substantially. In May 2008, we 

completed 952 home retention workouts that keep borrowers in 

their homes, which is a 120 percent increase over November of last 

year. 

Before I conclude, I would like to briefly address our pending acquisition and merger with Bank of America. The acquisition is 

awaiting final approval by our shareholders next week, and will 

close in the third quarter of 2008. Until it does, I am limited as 

to what I can discuss. However, I can assure you that Bank of 

America is committed to our efforts and to continuous improvement 

in the foreclosure prevention area. 

Chairwoman WATERS. Thank you, Mr. Gross. Your time is up. 

[The prepared statement of Mr. Gross can be found on page 320 

of the appendix.] 

Mrs. TUBBS JONES. Madam Chairwoman, for the record, if there 

is anyone in the audience who is here to do a workout, workouts 

are going on in the room right next door. If you go out the door 

to the left, they are working at one of the tables. The sign-in table 

51 

is—behind that sign-in table is where workouts are going on right 

now. So please feel free to go over there and see if they can be of 

assistance. 

Thank you, Madam Chairwoman. 

Chairwoman WATERS. You are welcome. 

Ms. Kimberley Guelker. 

STATEMENT OF KIMBERLEY GUELKER, PRESIDENT, LORAIN 

COUNTY ASSOCIATION OF REALTORS 

Ms. GUELKER. Good afternoon. My name is Kimberley Guelker. 

I am a Realtor with Howard Hanna Real Estate Estates, and I am 

also the volunteer president of the Lorain County Association of 

Realtors, located in Amherst, Ohio. With me today is our Association’s executive vice president, Tom Kowal. I would like to express 

our thanks to you for convening these discussions to provide an effective solution to the growing problem of foreclosures. 

The Lorain County Association of Realtors is a trade association 

under the Realtor family of the National Association of Realtors 

and Ohio Association of Realtors. Our Association represents 500 

Realtors and 40 brokerage offices in Lorain County. In 2007, our 

members sold over 2,700 residential units with an average market 

value of $143,000. The total transaction value exceeds $375 million. 

During the nationwide real estate market boom years, Lorain 

County experienced a very favorable housing market for buyers. 

Prices escalated about 3 percent, well below the national average, 

during the same time period. Housing choices were good. Local 

mortgage rates continue to be at record lows. As a result, homeownership rates are at record levels. 

Unfortunately, the current economy of Lorain County is stagnant. Lorain County has experienced numerous heavy industry 

plant closings, company relocations, and an aging population. The 

unemployment rate of 6.2 percent in April 2008 was significantly 

higher than the national rate of 4.4 percent and the State of Ohio’s 

rate of of 5.4 percent. As a result, foreclosures are at an all-time 

high according to the Lorain County Clerk of Courts. 

I would like to share with the group an article that was recently 

published in The Morning Journal. In Lorain County, 1 in 54 

homes is foreclosed on, compared to 1 in 201 homes nationally. We 

are 4 times as bad as the national average, according to our clerk 

of courts. 

Foreclosures filed through May were up 8 percent, as compared 

to the same time last year. In one community—Sheffield Lake—1 

in every 28 homes is foreclosed on. The major cities of Lorain and 

Elyria are about 1 in 40. 

In addition, the current inventory of homes on the market for 

sale is over 3,300. That is a 14-month supply. Many of these homes 

are on the market because owners cannot afford the mortgage payment, the homeowner’s insurance, or the real estate taxes. Studies 

on Lorain County foreclosures have shown that the Lorain County 

foreclosure problem is not a direct result of predatory lending practices. 

While the Lorain County real estate market provides many opportunities for affordable housing, greater amenities, and reasonable cost of living, we are beginning to see negative appreciation 

52 

in housing values. The estimated impact on housing values is 

$1,700 if your property is next to or near a foreclosed or abandoned 

home. The cumulative impact would be $56 million on our existing 

inventory of homes for sale. 

According to many of our local lenders, they are seeing foreclosures increasing because of rising health care costs and the uninsured paying for medical care, job losses, and social situations. I 

would also like to add that going forward, the high cost of gas and 

food items will add to the foreclosure rates as homeowners make 

a choice between these items or paying their monthly mortgage. 

Many of our local lenders are trying to intervene with their mortgagees by participating in consumer outreach programs sponsored 

by the Lorain County Save Our Homes Task Force and other community organizations. Many of these foreclosed properties were 

purchased by investors who find very high vacancy rates because 

of the malaise in the Lorain County economy. They are also reporting extensive property damage which is forcing investors into the 

foreclosure alternative rather than additional investment in their 

homes. 

Our Association believes that educating the consumer and our 

Realtor members plays a very important role in foreclosure intervention. In 2005, our Association, with the support of several Lorain County foundations and lenders, provided a 2-day foreclosure 

intervention program for attorneys, government officials, and Realtors. 

The program, which covers the legal, ethical, and intervention 

process with short sale sellers as an alternative to foreclosure was 

again offered in 2007 under the leadership of the Lorain County 

Save Our Homes Task Force, and supported by a grant from the 

National Association of Realtors. These two programs had over 300 

participants. 

Also in response to the need to educate the real estate professionals, an extensive 30-hour foreclosure intervention program, licensed by the Lorain County Association of Realtors, has trained 

over 500 Realtors and attorneys throughout Ohio in foreclosure 

intervention techniques. 

Realtors are encouraged by recent legislation at the national 

level that supported modernization of the FHA, as well as financial 

support of community-based outreach programs for helping consumers. Likewise, recent Ohio legislation on predatory lending 

practices, mortgage rehabilitation programs, and mortgage term reporting are helping homeowners. 

We strongly recommend several additional efforts. Local city, 

township, and county government agencies need to be more concerned with the foreclosure rates in our communities, because of 

the effect on government costs, tax revenue losses, and reduced 

valuation of properties. Federal and State funding for community 

outreach and education programs need to be funneled down to local 

agencies. 

County governments need to expend public funds for consumer 

awareness programs. Financial literacy programs for young adults 

need to be funded and become a criterion of classwork in our educational system so they can develop a strong sense of ownership in 

the next generation of home buyers. 

53 

Again, thank you for this opportunity to discuss the local housing 

conditions and the real estate market in Lorain County. Your attention to this unfortunate situation is commendable. The Lorain 

County Association of Realtors’ leadership and members look forward to working with you to provide solutions. 

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

326 of the appendix.] 

Chairwoman WATERS. Thank you. 

Next is Lou Tisler. 

STATEMENT OF LOU TISLER, NEIGHBORHOOD HOUSING 

SERVICES OF GREATER CLEVELAND 

Mr. TISLER. Good morning, Chairwoman Waters, and members of 

the subcommittee. My name is Lou Tisler, and I am the executive 

director of Neighborhood Housing Services of Greater Cleveland. 

I am honored to be speaking to our congressional friends and allies who are battling this crisis. No Federal agency has taken the 

time to absorb the testimony of this panel. 

Neighborhood Housing Services of Greater Cleveland is a not-forprofit community development corporation incorporated in 1975 

with a mission to provide programs and services for achieving, preserving, and sustaining the American dream of homeownership. 

Our footprint is Cuyahoga and Lorain Counties for all our housing 

programs, and includes Erie and Heron Counties for our foreclosure prevention programs. 

As one of the charter organizations in NeighborWorks America, 

a network of excellence consisting of 236 organizations working in 

4,400 urban, suburban, and rural communities, in economic and 

community development across the Nation. We are also a national 

board member of the National NeighborWorks Association, and I 

would like to thank the chairwoman for her leadership and commitment to neighborhood stabilization. 

Impact—the preceding panel spoke eloquently and succinctly to 

the issue, but I would just bring one more study to bear. According 

to Rebuild Ohio’s February 2008 report, $60 million and counting 

is the cost of vacant and abandoned properties in the State. There 

are over 25,000 vacant and abandoned properties in eight cities, 

Lima, Columbus, Springfield, Toledo, and Zanesville—$15 million 

in additional houses and additional city services and $49 million in 

cumulative loss and property tax revenues for local governments 

and schools and counties. 

Adding to this impact, the continued stream of requests to the 

County Treasurer’s Office for property reassessment, which will 

continue to impact exponentially the lost property tax revenues 

that provide funding for city services to help educational systems. 

As a State with one of the highest rates of mortgage defaults in 

the Nation, Ohio is facing a grim future for the vitality of its communities. My written testimony provides numerous statistics from 

many sources, including the Mortgage Bankers Association, on the 

causes and effects of this crisis on Ohio versus the rest of the Nation. 

To be brief on the positives, which are fairly familiar to all, lack 

of financial education exasperated with predatory lending, loss of 

54 

unemployment and underemployment uninsured medical costs, and 

loss of spouse. 

What are the programs that are being undertaken by NHS of 

Greater Cleveland? Local efforts: From a local perspective, NHSGC 

is involved in the Cuyahoga County foreclosure prevention program 

started by Cuyahoga County Treasurer Jim Rokakis and Director 

Paul Oyaski through our Cuyahoga County Department of Development. 

This program institutes United Way’s two-for-one call for help 

line that acts as a feeder system to the organization for public prevention counseling services and programs. The measure of effectiveness of this outreach is that NHSGC is the top performer of all 

agencies participating in this foreclosure program in mortgage foreclosure assistance, predatory lending assistance, mortgage payment 

assistance, and total agency referrals. Statistics on these measures 

are included in my written testimony. 

NHSGC has one of the most informative and useful Web sites at 

www.nhscleveland.org with regards to foreclosure information and 

prevention. NHSGC receives over 800 new visitors per week—the 

majority of those new visits to the foreclosure prevention area of 

our Web site. 

NHSGC utilizes relationships with over 20 community development corporations in the City of Cleveland to provide common 

ground, grass-roots outreach to residents of the City of Cleveland. 

NHSGC also works with the Cleveland City Council to disseminate 

information to provide yet another outlet for NHSGC programs and 

services. 

NHSGC continues to play a leadership role in the Ohio Home 

Rescue Fund, NeighborWorks Ohio Coalition, including 12 organizations across the State of Ohio. NHSGC is the administrator of 

the $4.6 million of mortgage assistance funds or rescue funds, implementing, assisting, and providing direction to agencies across 

the State. These funds were provided by the Ohio Department of 

Development and the Ohio Housing Finance Agency. 

Strategically placed, Ohio’s nonprofit organizations have been 

collaborating independently with public and private funders, lenders, and nonprofit practitioners, to develop and implement both the 

strategies to reduce the incidence of foreclosures for the past 10 

years. 

The Ohio Foreclosure Action Initiative Organization began marketing this program through public service announcements, billboard advertising, public postering, large distributions of literature 

drops, community and grassroots meetings, special events, etc. We 

are also involved in a National Ad Council campaign promoting 

homeownership preservation foundations, credit counseling resource center, or CCRC, or hotline 888–995–HOPE. 

As a member of Governor Strickland’s Foreclosure Task Force, 

many of our recommendations have been instituted as others have 

previously testified. Also, the State of Ohio recently initiated the 

Save the Dream hotline, 888–404–4674. This number, instituted 

across the State of Ohio, is a major means for connecting homeowners to over 41 agencies’ foreclosure prevention programs and 

services. 

55 

The success of a statewide program is measured in many different ways. The total number of clients counseled in Ohio through 

the CCRC hotline, the Ohio Foreclosure Prevention Initiative 2006, 

was 3,972 residents of Ohio. This program is represented by many 

organizations counseling over 1,022 residents. 

For the calendar year of 2007, there were 28,000 calls made to 

the hotline from Ohio, making Ohio the 3rd greatest user of the 

hotline in the United States, behind California and Florida. A 

breakdown of the call volume for the period of the delinquencies is 

contained in the written testimony. 

Nationwide efforts: From a national perspective, NHSGC is part 

of NeighborWorks America, and a grantee of the NeighborWorks 

Center for Foreclosure Solutions, a participant in the branding organization of the National Ad Council campaign, as well as having 

a position on the National NeighborWorks Association Board. 

To assist homeowners in distress throughout the county, 

NeighborWorks, in cooperation with the Ad Council, has embarked 

on a public awareness campaign for a toll-free hotline. In additional to the national campaign, NeighborWorks is supporting the 

local implementation of foreclosure prevention strategies to turn 

greater attention to focus on hot spots. 

There was also—has made a Fiscal Year 2008 Consolidated Appropriations Act to administer the National Foreclosure Mitigation 

Counseling Program. These funds are targeted to provide foreclosure mitigation and counseling help to eliminate foreclosures 

and help those across the country. 

If I could, I would like to move quickly to what Federal legislative and regulatory reforms are needed. One — 

Chairwoman WATERS. I am sorry. I can’t let you get into it at 

this moment. 

Mr. TISLER. Okay. Thank you very much. 

[The prepared statement of Mr. Tisler can be found on page 403 

of the appendix.] 

Chairwoman WATERS. Thank you. And you can submit your total 

testimony for the record. 

Mrs. TUBBS JONES. Madam Chairwoman, for the record, Councilman Roosevelt from Ward 10 is here. 

Chairwoman WATERS. Welcome. Thank you. 

Mr. Kramer, director and chief counsel, The Housing Advocates. 

STATEMENT OF EDWARD G. KRAMER, DIRECTOR AND CHIEF 

COUNSEL, THE HOUSING ADVOCATES 

Mr. KRAMER. I want to thank you, Chairwoman Maxine Waters, 

and the members of the subcommittee, especially my Congresswoman, Stephanie Tubbs Jones, and her staff for their untiring efforts to promote affordable housing and assist our clients to fight 

housing injustice caused by predatory lending. 

Housing Advocates was organized in June of 1975 to offer minorities and the poor an opportunity for housing justice. And for 

over 33 years now our organizations have provided a lifeline to 

thousands of people who have no other place to turn without the 

assistance of our staff. 

More than a decade ago, Councilman Frank Jackson issued 

warnings of the dangers posed by subprime mortgage schemes that 

56 

were beginning to prey upon Cleveland neighborhoods. If his warnings had been heeded, much of the damage that we have heard 

today would not have occurred. 

Let me talk to you about the five questions that you invited us 

to discuss. The first, the Congressional Joint Economic Committee 

estimates that Ohio can expect another 82,000 home foreclosures 

between now and the end of 2009, with more than $3.7 billion in 

losses. 

And let me put a face on this large number. You in Washington 

listen to billions of dollars. It is hard for me to imagine. Let me 

tell you about one client who is actually Councilman Holt’s constituent, a 70-year old woman who lives in Cleveland’s east side at 

East 147th Street, and has lived in that house for 38 years. In 

2005, she took out a new refinancing of her home. The value of 

that home was $89,000 in 2005; 7 weeks ago, the bank and Housing Advocates agreed to a new appraisal. The appraisal came back 

at $31,000. That means that in 3 years, that house is now worth 

only 35 percent. 

We talk about the losses of wealth. This is the human tragedy. 

The billions of dollars we cannot understand, but this woman 

whom—the house is well-maintained. Her street has so many foreclosures the appraiser said he could find no comparable houses except sheriff sales. That is why it is $31,000. That is the face that 

we, on the trenches, live with. Frank and the other people who are 

testifying see every day, that we need immediate action, not only 

from Congress but also from the Administration, which hopefully 

will hear of this hearing and the tragedy. 

Housing Advocates has provided, in the last 5 years, 163 educational outreach programs, most from the Homeowner’s Assistance 

Program, which the City of Cleveland has funded thanks to Frank 

Jackson and Jay Westbrook, and the other council members. 

Currently we receive phone calls from the Homeowner’s Assistance Program, and we have been assisting 242 victims of predatory 

lending through this program alone. In addition, we do a predatory 

lending counseling program through Cuyahoga County, and 

through Homeowner’s Assistance, we resolved 19 cases through litigation in the last 5 years. And we have saved consumers 

$668,133.37 through this litigation program. 

Three years ago, the Fannie Mae program had a pilot program 

here, which Congresswoman Stephanie Tubbs Jones was at the 

press conference. The Housing Advocates helped eliminate loans 

that are predatory, where Fannie Mae agreed to lower—have no 

credit scores and lower other criteria if Housing Advocates’ staff 

would assist in counseling these individuals. 

We had four lending partners that assisted us, who became our 

own loan committee, where we would present this information to 

refinance predatory loans. Huntington Bank, Amtrust Bank, Dollar 

Bank, and Fifth Third Bank have been our lending partners. We 

have been able to refinance 17 loans and save $1.2 million to consumers through this refinancing program. 

Putting several of them that were in bankruptcies, many of them 

were in foreclosures, they are now saved and these homes are 

saved. We have an Emergency Mortgage Assistance Program which 

provides for up to $2,500 of emergency mortgage assistance to help 

57 

prevent people from becoming homeless. We also have, under this 

program, rental and utility assistance where we can provide up to 

$1,000 to individuals who have their utilities being threatened to 

be cut off. 

Let me tell you my experience with predatory lending. Predatory 

lending has contributed greatly to this problem that we are hearing 

about today. Yes, economic problems certainly played its part. But 

what we are seeing here is in many cases predatory lending, as 

Congressman Kucinich says, is just a cleverly fashioned form of 

housing discrimination. 

Let me ask you to consider urging Fannie Mae to expand this 

pilot program that we have told you about. We have been successful here in Cleveland, thanks to the efforts of our staff and also 

Mayor Jackson. This would be something that could be done immediately. They have the authority. 

I would urge you to take a look at the information I have given 

in my full text. This program can be expanded nationwide. 

I thank you very much for the opportunity to present this testimony. 

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

360 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Mr. Ford. 

STATEMENT OF FRANK FORD, SENIOR VICE PRESIDENT FOR 

RESEARCH AND DEVELOPMENT, NEIGHBORHOOD 

PROGRESS, INC. 

Mr. FORD. Yes. Madam Chairwoman, and members of the subcommittee, thank you for the opportunity to come forward and testify today. I am going to focus my remarks on two topics: the impact of this problem; and the recommendations for Federal, regulatory, or legislative action. 

I dread the thought of the chairwoman’s gavel coming down. At 

the risk of that, I am going to depart just briefly from my remarks 

to take issue with one of my fellow panelists at the far right, my 

right, probably on the left from you, but—and that is Mr. Van 

Buskirk, whose opening remarks stated that the foreclosures derived from Ohio’s economy. 

There is no question that is a factor, but let me just point out 

a statistic. In Cuyahoga County, in 1993, the unemployment rate 

peaked at 7 percent. It went down by 1995 and hovered at 4 percent in 1995 to 2000. Yet, as that chart shows right over there on 

the right, foreclosures doubled in that same period. There is no way 

that you can explain this by saying that the economy caused this 

problem. It is a contributing factor, but the underlying problem is 

irresponsible underwriting and investing by lenders. 

I would like to talk about impact. The analogy of Hurricane 

Katrina, others have talked about the tsunami wave, I personally 

like the tsunami wave, because tsunami wave has the wave—the 

initial wave, then it recedes and comes back. 

And I actually think that there are three to five waves, and three 

of them I anticipate—I suggest that we haven’t quite seen them 

yet. The first one is the individual impact on borrowers losing their 

homes. The second is the impact on the neighbors, which has been 

58 

talked about quite eloquently by other people, loss of property 

value, the costs to the city to board-up properties. 

There are three waves that I think are just emerging now, and 

Tony Brancatelli did reference this. The third one would be this 

emerging culture of flippers and speculators, which many of them 

are just forming their business enterprises just in the last few 

months. 

And this sign over here, I am going to put that up. 

Mr. KRAMER. I did. 

Mr. FORD. Oh, thank you. That is a great prop. I get to point to 

it. 

But what we are foreseeing is an emergence of something that 

we haven’t seen for 20 or 30 years, and that is land contrasts, 

which are definitely not good for low- and moderate-income people. 

And I can talk more about that later. So that is the third wave. 

The fourth one would be something that was referenced also and 

I want to reinforce it—that property taxes are assessed on a 3-year 

basis. We have not yet seen the property tax assessments that are 

going to hit Tioga County. There is going to be a devastating loss 

to school revenue, police and fire, municipalities. That is another 

wave that is going to hit us that really hasn’t hit us yet. 

The final one is one which I hope doesn’t hit us, but there is a 

lot of talk about tightening up credit standards, and there should 

be a tightening up of credit standards, but not an overtightening 

to where people who do deserve credit can’t get it. I am a little concerned about an overtightening where we go back to a form of redlining. 

Now, in terms of recommendations, I have three categories: Federal action for preventing; Federal action for reclaiming and restoring property; and this one I just mentioned, what do we do about 

the credit markets going forward to make sure that people have access to credit. 

In terms of prevention, I am going to put forward two things 

which I know are controversial, and it may not even be within your 

power to do them, but I think it is important to put them on the 

table. The first one is a moratorium on foreclosures. Now, that 

would appear to be extreme and maybe even unconstitutional, but 

in 1934, the U.S. Supreme Court upheld the State of Minnesota’s 

foreclosure moratorium. And I can get you the cite for that case if 

you need it. 

The second would be a freeze on the resetting of adjustable rate 

mortgages. There is probably no other single effect, no other single 

cause that is greater to trigger a foreclosure than an adjustable 

rate kicking in and a payment going from $800 a month to $1,200 

a month. 

The third category of action that could be taken—and I think 

this is reasonably within the realm of the Federal Government to 

do—we have four regulatory agencies that regulate lenders: the 

Federal Reserve; the Comptroller of the Currency; the FDIC; and 

the Office of Thrift Supervision. These lenders could be using their 

authority to compel. And I like the fact that—I think it was Chris 

Warren who used the word ‘‘compel.’’ Not just encourage loan modifications, but to use their position to try to compel lenders to consider loan modifications. 

59 

And I want to—this may surprise some people, but I want to 

commend Countrywide for entering into the agreement they did 

with ESOP. I think that exactly what Mr. Gross talked about is 

what we need, and I like the fact that he said, ‘‘We don’t do—when 

we count a loan modification, it is not a deed in lieu. The family 

stays in the home.’’ That is what we should be aiming for, and trying to get other lenders to do that. 

The question was asked by the chairwoman, I think, earlier, or 

maybe it was Representative Kaptur, are the servicers doing 

enough? I would say no, not nearly enough. There are some high 

points. I would, again, say that Countrywide has responded. But I 

think we need more leaning by our regulators on lenders and whatever we can do to lean on services to do more workouts. 

In terms of reclamation, the cleanup is going to be extraordinary. 

There is demolition. The City of Cleveland estimates that the 

10,000— 

Mr. KRAMER. So that is the gap? 

Mr. FORD. I was going to say, it sounded a little different than 

I was expecting. 

[Laughter] 

[The prepared statement of Mr. Ford can be found on page 309 

of the appendix.] 

Mrs. TUBBS JONES. [presiding] We will try and give you a little 

more time as we go through the process. 

Madam Chairwoman has stepped out for a moment, so I am stepping in as the Chair, and I am going to go to the first question by 

my colleague. But before I do that, I would ask unanimous consent 

to have a statement by the Court of Common Pleas for submission 

to the record on the foreclosure problems and solutions. They are 

going to open their mediation program beginning June 24th. Where 

are the folks from the court mediation program? Stand up if you 

have any questions. 

And then, for the record, this is a copy of a lawsuit against various lenders that was filed. Let me give it back to you. 

At this point, I would call upon Congressman Wilson to do his 

questioning. 

Mr. WILSON. Thank you. The first question is to you, Mr. Tisler. 

I wanted to hear the rest of what you had to say. I know you can’t 

do it in this timeframe, but let me ask you this: Is Senate bill 185 

working in Ohio? Is it helping? 

Mr. TISLER. I think, Congressman, that we are glad that it was 

passed and that it is better than nothing. But I think that there 

are a lot of things that we are taking out of that—that good compromise that should have been. So I think that it is the right way 

to go. It is starting to get everybody to recognize what a predatory 

loan is, or at least what 185 says it is, and to really bring some 

lenders back to earth. But I think that it didn’t go as far as it 

should have. 

Mr. WILSON. Thank you. Can I ask another question? 

Mrs. TUBBS JONES. Sure. 

Mr. WILSON. Mr. Van Buskirk, are we better off today in the way 

we are doing prime lending, or are we better off to go back to the 

days where the banker, who is the customer, he insists on a perVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
60 

centage down, versus the way we have gone—what has brought us 

to this home foreclosure situation that we are in? 

Mr. TISLER. Representative Wilson, that is a complex question. 

The good part of what happened in the U.S. housing market over 

the last 10 years was that we recognized the relatively simple lesson for investment in money from around the world flowing into it. 

It did make it possible for many more Americans than had historically been the case, to afford homes; most of them are still in those 

homes. 

One of the issues we are dealing with now in credit crunch, credit scams. Most of those sources of mortgages to the United States 

no longer exist. We talk about when we get back to normal. Part 

of the question is: what will be normal? I think part of the issue 

is Congress is coming up with a set of new guidelines that fit 

assures the investors into these loans that they are buying at very 

low rates into. 

We tend to damn investors. Many of them were people of mutual 

funds during the Foreclosure Prevention Task Force. The public 

numbers have stayed—the employees realized that they were investors, because most of the public pension funds, in fact, are impacted by these subprime mortgages. Why? Because rating agencies said they were very safe, and they couldn’t see through the 

numbers. 

So I think that one of the keys is getting back to a point where 

appropriately underwritten mortgages, loaned under fair and equitable lending standards, can be funded, both nationally and again 

internationally. 

When we saw the explosion and the change talked about earlier 

among the FDIC-insured institutions, well, the good news for the 

consumer is that there are tens of thousands of choices, good 

choices and some of them are bad choices. We talked about financial literacy and people being able to choose. We don’t want to go 

back to the old days, because that—there was too little money 

available for mortgages and it cost too much. But we have to find 

a new world where the lending is prudent. It is fair, it is available 

to anybody who has a reasonable probability of being able to pay 

it back. 

Chairwoman WATERS. Thank you. 

Mr. Gross, one question for you, if I may. In your testimony, Mr. 

Gross, you said 718 percent jump in loan modification plans. Can 

you explain to me more in detail what that means? 

Mr. GROSS. It means that in prior periods, back in the last 2 or 

3 years, the general type of loan modification was one where the 

borrower was already in his home, the reason for default had now 

been cured, and if unemployed now they are employed again, making a fresh start. The modification would mean that any arrears 

would have been capitalized at a principal balance and reamortized 

over the remaining term of the loan, which would have resulted in 

a very small increase in their monthly payment. 

In the past year, with credit and all the initiatives, and ASF 

guidance that we have gotten from the American Securitization 

Forum, where we have now gotten into a more proactive modifications where we have extended someone’s start rates, for hybrid numerical growth, those a year ago did not exist. So now we are able 

61 

to do those types of modifications, and as Countrywide is making 

clear, we are doing tens of thousands of loans on a monthly basis. 

Mr. WILSON. Thank you. 

Madam Chairwoman, I yield back the balance of my time. 

Chairwoman WATERS. Thank you very much. 

Marcy Kaptur. 

Ms. KAPTUR. Thank you, Madam Chairwoman. I would like to 

ask unanimous consent to place in the record three excellent articles—one from The New York Times and two from The Washington 

Post—dealing with this mortgage crisis. 

Chairwoman WATERS. Without objection, it is so ordered. 

Ms. KAPTUR. I thank the Chair very much. 

Number two, I would like to just inform those who are on the 

panel and in the audience that the poster to your right tracks the 

rise in foreclosures in Ohio from 1994 to 2007, reflecting the roughly 80,000 foreclosures last year. And the poster to the immediate 

right, the number of foreclosures we had in the State last year, 

each red dot representing 10 foreclosures. 

I wanted to also thank Countrywide’s representative, Mr. Gross, 

for having people over in the adjoining room today, and the other 

modes of instrumentality that have shown a presence here today. 

We all live in this country, I think, and most of us live in this 

State. And we have to work through this together and it’s not easy. 

I am also fairly convinced that many people who got caught up 

in this weren’t the ones who came up with it; they came along for 

the ride. That doesn’t mean they are totally guiltless, but I think 

they have responsibility. So we thank you for being here today. 

Mr. Van Buskirk, I am just going to focus this question to you. 

I think Ohio has a really important role to play in getting our Nation back on the right track. And I think in my very long career 

in the Congress, when I first arrived we had agricultural bankruptcies all over the country. Ohio had very few of those, because 

our farmers didn’t overextend themselves. They were responsible, 

they were conservative, they didn’t over-borrow. It was an anomaly 

in the Nation. 

When we had all the problems with thrifts back in the 1980’s, 

if you look at California, Arizona, Florida, or Texas, Ohio really— 

you know, we had some in there that weren’t so good, but nothing 

like the washout that happened in the rest of the country. I see 

John Floyd sitting out there in the audience from the Ohio Credit 

Union League. But for the State charters, we have not had a bad 

record here with federally-regulated credit unions from this State. 

So I guess my message to you is that somehow America needs 

fiscal discipline again, and it needs to exert fiscal responsibility. 

We are $9.3 trillion in debt, headed to $10 trillion in the public sector, and it in the private sector, according to your own testimony, 

we are just bringing the money from everywhere else because we 

are not self-sufficient here at home. 

I think people like yourself, and your colleagues from Ohio, need 

to have louder voices at the Federal level for how this country can 

get back on track again, because we are merely emptying ourselves. And you say in your testimony how our public pension 

funds are now invaded by foreign money. 

62 

My friends, America has never really been here before. And part 

of this problem, a large part of this problem is that because we 

were broke, we should have been broke back in the 1990’s when 

we were growing a little bit and government was balancing the 

budget, we should have been more responsible fiscally in our private sector dealings. This is a private sector problem with a lack 

of public regulation. 

I just hope that—you say in your testimony here, non-bank brokers no longer have a real interest in the borrower’s ability to 

repay. I think Ohio—the people of Ohio have had a history of paying their own way and wanting America to be financially independent. And we have lost our way. And maybe with, present company excepted, the City of Los Angeles—maybe Ohio voices need to 

be a little bit stronger at the national level and not be afraid to 

have our country take the actions we need. 

I think Ohio’s experience has something to offer. The people in 

the financial centers in New York often look at us as flyover country, but our record is pretty good compared to other places in the 

country. So I think your testimony reveals the level of knowledge 

here that I think gives you special responsibility. 

And I guess my questioning really is only to say, ask yourself, 

what do you do with that knowledge now? Maybe you should play 

a little larger role before the committee. Maybe Ohio’s experience 

has something to teach the Nation in unwinding things so we can 

become fiscally solvent in the public and private sectors and stand 

on our own two feet again as a country. 

So I am impressed with your testimony, but don’t be afraid to 

draw from Ohio’s experience and take it to the country. We are 

hurting now, because we haven’t looked into all these deals from 

the coasts and internationally. Ohio should have been a larger 

voice in opposing all of that. So maybe now is the time to speak 

out. That is my comment, and I thank you for your efforts. 

Mr. VAN BUSKIRK. Congresswoman Kaptur, thank you. I agree 

with you. You mentioned very few insured depository failures in 

Ohio’s history compared to most other States, and that is true. But 

you remember in your early days of Congress, the home State failures. 

And I think there is something instructive from Ohio history to 

our current situation, because there was a group of savings and 

loans that were privately insured. Most had chosen private insurance to avoid the Federal regulator or the prudential regulator protecting the public’s interest. Then, when one of them made poor investments in the private insurance fund, it immediately became 

bankrupt and created a domino chain into some other States, other 

failures. 

Another thing, in terms of Chairman Frank just announced a series of hearings of oversight in terms of the regulatory structure. 

Regulatory structure on paper doesn’t look very pretty. The Comptroller of the Currency has created—the Federal Reserve created in 

1913 was never really meant to work with one another very well. 

We have a series of housing laws designed to protect consumers, 

but they have never really been looked at as a whole to make them 

work efficiently and effectively. 

63 

The Federal Reserve just announced some new rules dealing 

with—under the Home Equity Protection Act for high-cost loans. 

But it only has the authority, as I understand it, to deal with those 

high-cost loans. In principle, they are very simple. Focus on the 

disclosures to determine whether consumers learn from them what 

it is they need to know and make a prudent decision. 

So I think some streamlining of the process is an understanding 

to empower the consumer to make better decisions on these things 

is a lesson we need to learn here in Ohio. 

Ms. KAPTUR. I would say that, in terms of the home State situation relative to California or Texas and some of these other washouts we had, Ohio didn’t compare in terms of volume or impact 

downstream. We had some mergers, and so forth, but in terms of 

arguing that Ohio was equal to their situation, you would have— 

Mr. VAN BUSKIRK. No. In terms of assets or number of institutions, Ohio didn’t compare. But unlike some of those other areas, 

the problem here was a lack of financial regulation that allowed 

folks to abuse circumstances and do things that would—other kinds 

of financial institutions couldn’t really manage an appropriately 

regulated market. 

Ms. KAPTUR. I know that my time has expired, but I would just 

like to say in your testimony you also talk about the Office of 

Thrift Supervision. I have—I am withholding judgment on the Office of Thrift Supervision, because I am asking myself the question: 

what happened in Chicago, and what happened in Washington, 

that Superior Bank in the State of Illinois was not supervised? 

What went wrong? Why should I trust OTS again, if ever? What 

needs to be done to clean that up? 

Thank you. 

Chairwoman WATERS. Thank you very much. 

Congresswoman Tubbs Jones. 

Mrs. TUBBS JONES. Thank you, Madam Chairwoman. One of the 

things that we didn’t talk about earlier that we all need to factor 

into our discussion is the fact that it is important that predatory 

lending practices—a number of persons who qualify for prime loans 

were ushered into subprime loans because it was more financially 

viable—a financial gain for the lending institution. And we need to 

take a look at that also, because as a result of that a lot of people 

ended up in subprime that should never have been in subprime 

lending. 

I want to give—just for the record, say with regard to Ed Kramer 

—Ed Kramer and I went to law school together, and we started out 

first landlord-tenant cases way back in the day. And I have to say 

that is truly where I began the process of being concerned about 

housing, and that was way back in the day. 

And I want to use my time to talk about these things, but also 

for a moment talk about the kind of litigation that you have been 

involved in and the problem with litigation in this particular predatory lending area. 

Mr. KRAMER. Well, the problem is there are very few attorneys 

who are capable and have the financial resources to go against 

major financial institutions in Wall Street. So the fact that the City 

of Cleveland, through Mayor Jackson, filed that lawsuit against the 

64 

Wall Street firms and the investment banks is very important, and 

we are supportive of the City. 

That is something that we hope other cities will do. And, in fact, 

the City of Baltimore has brought litigation. The Fair Housing Law 

gives standing to cities because, if the city has been injured—if you 

look at the—just the devaluation of property, and, therefore, property taxes, every city that has experienced devaluation has a fair 

housing claim for the next 2 years at least against these banks, but 

the clock is ticking. 

And we really have not seen what I thought—Baltimore and the 

City of Cleveland leading the way—other cities would join on. And 

so I was very happy to hear Representative Kaptur talk about encouraging other cities to look at this issue right now. 

Mrs. TUBBS JONES. Would the gentleman yield for just a second? 

I don’t know if it is possible before we leave town for that case to 

be xeroxed and distributed to the members. I would like to take 

that back to my community. Thank you. 

Chairwoman WATERS. We have—I will ask Congresswoman 

Stephanie Jones to lead us in the Congress— 

Mrs. TUBBS JONES. Will you get one of my staffers and tell them 

to come—one of my staffers and have him come in here, please? 

Chairwoman WATERS. Let me just say to Congresswoman Kaptur, what I would like us to do is to take our matter forward and 

give some national presence to this lawsuit. Then, in addition to 

that, I would like us to be in touch with the Conference of Mayors 

in the country, and disseminate the lawsuit to them so that we can 

create some momentum with other cities following this lawsuit. It 

sounds as though it is kind of could help us to move the courts in 

our direction. 

Thank you. 

Mr. KRAMER. I would also point to Exhibit 2 of my written testimony, which is an article that Marilyn Tobocman and I have written on fair housing laws as a weapon against predatory lending. It 

cites the principles about using the standing of cities to be able to 

sue predatory lenders, and that is with the materials that you 

would have, in my case. 

I do want to talk about this sign, which—you are seeing many 

of these signs popping up. It says, ‘‘Sale, $500 down, $350 a 

month.’’ What is happening here is this is like the third wave of 

the tsunami. The final devastation is just occurring, and we are the 

canaries. You know, we have already suffered through this predatory lending. 

The banks that have now gotten our property—10,000 vacant 

properties in the City of Cleveland alone—are not maintaining 

those properties. And now the City of Cleveland, through Judge 

Pianka, the City of Cleveland’s housing court judge, is trying to 

take them to task because as property owners they should be maintaining the property. They should be cutting the grass. They should 

be, maybe, boarding-up to make sure that house stays viable. They 

are not. 

So suddenly what is happening is we are handing these out-ofState companies—this one, for example, is assigned from Destiny 

Ventures. And Destiny Ventures are being given these homes, 

sometimes for $500 or $2,000, and they are selling them immeVerDate Aug 31 2005 17:13 Oct 17, 2008 Jkt 044185 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 K:\DOCS\44185.TXT TERRIE
65 

diately back—selling—they are renting illegally, 21-year leases, 

which are never reported, so it is illegal under Ohio law, by giving 

it to families. It is like poisoning them with candy. It is like Halloween. 

And these families are trying to desperately take often condemned property and bring them up, spending the last resources 

they have because this is their chance, they think, to own a home. 

But the lease itself is so adhesionary, it says that if you default at 

all, once, if you don’t make a payment, if you don’t bring this up 

to code within 3 months, they can take the property back and they 

can evict you. Now— 

Chairwoman WATERS. Would the gentleman yield for a moment? 

Would you repeat? Destiny Ventures? 

Mr. KRAMER. Destiny Ventures is in— 

Chairwoman WATERS. Where are they— 

Mr. KRAMER. Oklahoma, Texas also. This is—and they are totally 

undercapitalized. But what is happening now, banks that have financial resources that own these properties are now trying desperately to get rid of them because they know they could be held 

responsible by the city of Cleveland. 

Chairwoman WATERS. If the gentlemen would yield for a moment, I am basically very, very cautious about eminent domain. 

But the land use authority vested in the city council, I believe that 

a criteria could be developed so that you could use the eminent domain in some of these cases, or in many of these cases. 

Someone said here today that the banks or the lenders or the investors are anxious to do workouts because in the final analysis 

they could lose everything or they could save some of their investment with these modifications. But if you are telling me that you 

have, as he says, which we have heard over and over again, that 

are bringing down the value of other homes in the neighborhood, 

that are not kept up, that are being stripped, that are being used 

for criminal activity, it seems to me that is a good case for eminent 

domain. 

And if the cities get involved with establishing criteria for eminent domain, that if in fact the value of these properties has decreased significantly, then perhaps the city can end up, as I am trying to do with my—one of the pieces of legislation that I have for 

the cities to buy up these properties so that they can be rehabbed 

and placed on the market for low and moderate income people. 

Through eminent domain, you can get them all very, very cheap because the value of them has gone down. 

Perhaps the city ought to be a little bit more aggressive in exercising its authority to do some of this. So we would like to talk with 

you further because we are hearing something today that I always 

knew was going to happen if this situation persisted, but I didn’t 

know it was actually happening the way that you described. 

All right. We are going to move on so that we can get—were you 

finished? 

Mrs. TUBBS JONES. Yes, ma’am. 

Chairwoman WATERS. All right. Okay. We will move to Ms. Sutton. 

Ms. SUTTON. Thank you, Madam Chairwoman. 

66 

Ms. Guelker, thank you for coming in to testify about the good 

work that you are doing in Lorain County. You mentioned in your 

testimony short sales and they have been getting increased attention lately as an alternative to foreclosure. Can you just go into a 

little more detail about what short sales involve? And can you also 

explain how they might be beneficial to someone as an alternative 

to foreclosure? 

Ms. GUELKER. The lady who was at the end of the first panel, 

I think she explained it exactly. I can fax or scan or e-mail something eight or nine times. They don’t have it. They make a deal 

with an asset manager; a month later that deal is off the table. The 

homeowner—I can see why the homeowner gives up, walks away. 

It is very—they are made promises. They are trying and then 

somebody pulls the rug out. 

I mean, as a Realtor, I sit there and do it. I make the call. You 

follow up. One mortgage company wanted a $25,000 no interest for 

5 years to a guy getting out of jail. The guy didn’t have a job. Six 

months after trying to do a short sale, it went to sheriff’s sale in 

January. He’s still in the home because the bank still hasn’t paid 

the country. Kind of disturbing. And he was a good one. He kept 

the property cut, he made showings available, he was a good homeowner who was actually trying to work with them. 

Ms. SUTTON. Thank you. I am going to follow up with you a little 

bit after this and get some more information. 

Mr. Gross, you received some positive support here for 

Countrywide’s president, but, you know, earlier in the first panel, 

there was discussion about Countrywide. And maybe you can just 

tell me, how many loans does Countrywide have in the State of 

Ohio? 

Mr. GROSS. 256,000. 

Ms. SUTTON. Okay. Do you know how many of those 256,000 are 

subprime loans? 

Mr. GROSS. 7.4 percent. 

Ms. SUTTON. 7.4 percent. Do you know how many homes Countrywide foreclosed on in Ohio last month? 

Mr. GROSS. No, I am sorry. I do not have that information. 

Ms. SUTTON. How about the last year, 2007? 

Mr. GROSS. I don’t have in terms of—at the present time, approximately 2.04 percent of the loans in Ohio are in a foreclosure 

status, which means foreclosure is pending. Of those, we estimate 

normally that 50 to 60 percent of those properties will not complete 

the foreclosure process, and 40-plus percent will complete it. 

Chairwoman WATERS. Move the microphone up as close as you 

can. 

Mr. GROSS. Sorry. 

Ms. SUTTON. Okay. In your written testimony you say that you 

have assisted 26 borrowers who have sought help. 

Mr. GROSS. Through that one program. 

Ms. SUTTON. Right. Through Ohio Save the Dream Program, 

right? 

Mr. GROSS. That is correct. 

Ms. SUTTON. And what percentage of the—well, we can calculate 

that. That is a relatively small number. 

67 

Mr. GROSS. Again, that is just those borrowers who have approached us through that one program. 

Ms. KAPTUR. Will the gentlelady yield? 

Ms. SUTTON. Certainly. 

Ms. KAPTUR. Two percent of 276,000 is 5,520. 

Ms. SUTTON. Thank you. 

Mr. GROSS. In the foreclosure process, yes. 

Ms. SUTTON. Thank you, Representative Kaptur. 

Although you are here today, and I appreciate that, and the people are in the other room trying to work out loans, we have heard 

some of the testimony about how difficult this all seems to be when 

it is put into practice for people. I looked at the litany of interactions between, you know, our earlier witness when she was trying to help people, and it reminded me of looking at the process 

that vulnerable people who are trying to get their health care coverage go through, even when they have insurance, it’s just call 

after call after call, and when people are vulnerable, there are always those out there to take advantage. 

But I just have a question: Even though you are here, I didn’t 

see Countrywide on the list of loan servicers who signed a Compact 

to help Ohioans preserve homeownership. Why is that? 

Mr. GROSS. We have participated in the discussions regarding 

the Compact. Many times the overall principles that were in the 

Compact were ones that we subscribe to and had practiced for 

many years. Unfortunately for us, it was sort of the devil was in 

the details, which was for each one of those major points there 

were sub-bullets in there that we, quite frankly said, if it were just 

the six principles stated alone, we are fine. We could subscribe to 

that, as we have done in other States. 

But once you got into the details of exactly what was required, 

one of the challenges that we have is we service 9 million loans 

across the Nation. We absolutely cannot get into a circumstance 

where we have materially different requirements and standards 

that a location makes so that all loans in Ohio have to be serviced 

in a certain manner, which is different from Minnesota or Michigan. 

So for national servicers, which is why I think there were very 

few national servicers that subscribe to the Compact, this was a 

major problem. 

Ms. SUTTON. So it would be some things that are initiated on the 

Federal level so that you have— 

Mr. GROSS. Which we were one of the first subscribers to the 

Dodd principles. 

Ms. SUTTON. What exactly, just for clarification, what are the— 

what were the devilish details that kept you out? 

Mr. GROSS. I don’t recall what they were. I’ll have to follow up 

with you later. Blame it on age; I don’t remember. 

Ms. SUTTON. Thank you. I yield back. 

Chairwoman WATERS. Mr. Gross, are you a lawyer? 

Mr. GROSS. No, I am not. 

Chairwoman WATERS. Okay. Are you familiar with, I believe 

there are laws that cover the country with regard to paper, commercial paper, right? 

Mr. GROSS. Uniform commercial code. 

68 

Chairwoman WATERS. Uniform commercial code, right? 

Mr. GROSS. Yes. 

Chairwoman WATERS. So even though you are not a lawyer, you 

know what I am talking about, right? 

Mr. GROSS. A little bit. 

Chairwoman WATERS. Yes. But, so if we can have a uniform commercial code that addresses consumer paper, why couldn’t we do 

the same thing with mortgages? Because I was—the grief we were 

getting across the country from the national servicers that it is 

very hard to put credit—to describe what predatory lending is so 

you could regulate it, because lending is so different across the 

country. But if you have uniform commercial paper, you ought to 

be able to have uniform predatory lending laws, don’t you think? 

Mr. GROSS. I am betting that you could come up with a designation. 

Chairwoman WATERS. Okay. I thought so. 

Ms. SUTTON. Just one final question. 

Chairwoman WATERS. Yes. 

Ms. SUTTON. You said that you didn’t want to sign on to the 

Compact because it is difficult when you are dealing with other 

States if you agree here. Was there something in the compact that 

would not have been acceptable or a practice that you could have 

applied? 

Mr. GROSS. Not that I remember. 

Ms. SUTTON. Okay. 

Mr. GROSS. And I would note for the record that Countrywide 

does report all of our portfolio management loss mitigation statistics nationally, and we report them on a State level basis, so any 

State regulator who wants access to this information, it is led by 

an initiative from Ohio Attorney General Tom Miller, and they are 

all reported through Deputy Commissioner of Banking, Mark 

Pierce, in North Carolina. So our information on a State-level basis 

is available to any regulator. 

Ms. SUTTON. Thank you, Mr. Gross. 

Chairwoman WATERS. Thank you. 

Mrs. TUBBS JONES. Madam Chairwoman, I apologize. For the 

record, they are doing workout in the next room—Washington Mutual, Countrywide, National City, Freddie Mac, Litton Loan Service, Neighborhood Housing Services, Community Housing Solutions, the Housing Advocates, Legal Aid Society, the East Side Organizing Project, and ACORN. They are next door and available to 

help you do workouts. 

Chairwoman WATERS. All right. Thank you very much. I am supposed to spend my time now asking Mr. Gross and Mr. Van 

Buskirk about the affordability standards Countrywide and members of the Ohio Bankers League are using in their loss mitigation 

efforts with distressed borrowers. But I would like you to start to 

think about that while I—I guess offer a kind of apology and help 

to accept the blame for the situation we find ourselves in. 

Our regulators have already admitted in hearings that they 

dropped the ball, that they are responsible for this foreclosure 

event that we are in. Members of Congress, some of us, have certainly admitted that we dropped the ball on our oversight responsibility, and we did not require enough of our regulators so that they 

69 

were able to get away with not doing the kind of auditing and the 

kind of questioning of all these new and exotic products that were 

coming on the market, so that we could understand what was happening. 

But as I look here today, I see further responsibility can be 

taken. While I am very much aware that the economy certainly 

plays a role, when people lose their jobs and we have financial difficulties and cannot make our payments and we cannot take care 

of our mortgages. 

But, you know, and I am very close with the Realtors, but I am 

wondering if some of our Realtors were selling these properties 

that they did not wince at some of the products that were being 

offered to their clients and say, ‘‘I can’t do this. This just doesn’t 

seem right. I know that based on what I know about this client 

there is no way that this is going to work with the reset, given, you 

know, the amount of income that they have.’’ 

I am also wondering when the Fed—the Home Loan Bank situation, you have participating banks that you give low-cost money to. 

I am wondering if—how many of those banks were predatory lending, and if there is something interesting—what was going on, and 

certainly with the Ohio Bankers Association, what kind of early-on 

discussion did the Association have about these products. 

And how many of the banks and the associations were involved 

with particularly mortgage brokers and bankers who were out 

there pushing these products with no responsibility? As a matter 

of fact, in the State of California, Countrywide—we had two ways 

by which brokers could be licensed. And Countrywide utilized the 

one where if they got their license, they could go out and hire people without those—those brokers being licensed. We are changing 

that in the legislation, but we literally had these mortgage folks 

working out of the backs of their cars with all kinds of utilization 

of these products and some fraud, etc. 

So I think that we all have to take some responsibility to work 

very, very hard. We owe an apology to the American people. And 

I really came here today quite upset, and I am trying to be calm 

and to contain myself because the latest news is this. Countrywide 

has something called Friends of Mozilo. The friends of the chairman or the CEO, the president, the founder, or whatever all those 

titles are at Countrywide Bank were people who got special rates 

and special considerations. And some of them are elected officials— 

Senator Dodd; Senator Conrad; Jim Johnson, who was the CEO of 

Fannie Mae; Donna Shalala, who was the head of Health and 

Human Services; Ambassador Holbrooke; and Alfonso Jackson, who 

was the Secretary of HUD—all were friends of Mozilo’s and got 

special consideration for their loans. 

Not only did they get a reduced interest rate, but some of them 

were able to borrow money above and beyond the standards of 

Countrywide, where they were lending for multiple units and properties that were not even supposed to be funded according to the 

criteria of Countrywide. And, of course, general shock that Jim 

Johnson, even while he was running Fannie Mae, was able to get 

a special loan and special consideration on multiple properties. 

And so, you know, the American people, and particularly the 

poorest and most vulnerable in our society who were being raped 

70 

with these predatory loans, added value products, and extraordinarily high interest rates and resets that are going to quadruple 

ought to be mad as hell at all of us about what is happening. And 

I do think that some of the people who testified here today talk 

about—we have to dig deeper. There is no way that we should 

allow, even with the sale—Countrywide can’t get off with the sale 

just to Bank of America. 

We have to dig deeper. We have to explore some of what Congresswoman Marcy Kaptur asked about, who started it, whether or 

not people conspired to target neighborhoods, on and on and on. So 

I just must say that because it is so uncomfortable as a public policymaker in the middle of Congress doing this work to keep discovering what we are discovering. 

This latest transfer with Mozilo with this little private banking 

that they were doing with professional people and the very people 

that we expected to protect the people of America were getting 

privileged loans is just unacceptable. And we are going to have to 

deal with this. 

Not only my committee but the entire Congress of the United 

States has to do this. We have to subpoena the people. And we 

have to join some lawsuits. Meanwhile, let me get back to the Bureau of Standards. 

Countrywide, you get beaten up a lot, but you ought to be beaten 

up. 

[Laughter] 

Chairwoman WATERS. I mean, you know, I thank you for being 

here today, but I don’t feel sorry for you at all. And if you end up 

getting hit hard, just grin and bear it, as you are doing, because 

you have become the poster child for what is wrong. I know 

Ameriquest and Century and some of the others that are out of 

business were just as bad as you are. Thank you for coming, and 

accepting the blows. 

Now tell me, about the affordability standards in Countrywide 

and also I will get back to the rivers of the Ohio. Use it in your 

loss mitigation efforts. Is that understandable? Do I have— 

Mr. GROSS. Yes, ma’am. 

Chairwoman WATERS. —to be more specific than that? 

Mr. GROSS. No, that’s very specific. 

Chairwoman WATERS. All right. 

Mr. GROSS. When we are gathering financial information from a 

customer today— 

Chairwoman WATERS. Would you speak up so everybody can 

hear you? 

Mr. GROSS. Yes. When we are gathering information from the 

homeowner regarding their income and expenses, which would be 

gross income versus their expenses, we will use two traditional ratios, one which is called the monthly housing expense, which is 

principal, interest, taxes, and insurance, which is typically going to 

fall somewhere in the 33 to 38 percent of a person’s or a household’s gross monthly income. 

The second ratio is the total monthly obligations, which includes 

the monthly housing expense and all other obligations they might 

have, which depending upon the homeowner and what area of the 

71 

Nation they live in, that would probably cap out somewhere in the 

45 to 50 percent of the household’s gross monthly income. 

Chairwoman WATERS. You have strict standards on affordability 

for loss mitigation efforts. That may for example require better 

than $200 in residential income left over after a borrower’s household expenses, including payments on all secured and unsecured 

debt are taken into account. And that requires 20 percent residual 

income per person. Under the same analysis, VA and FHA also imposed similar standards on services of the loans that they guarantee. 

Mr. GROSS. Yes. And the final item that I was going to mention 

was we would generally try to leave approximately somewhere between $75 to $100 net disposable income per household member. 

Chairwoman WATERS. What do you mean you ‘‘try?’’ Is that a 

standard or not? 

Mr. GROSS. It is a guideline. 

Chairwoman WATERS. So it could or could not be the case? 

Mr. GROSS. Yes. It would be the standard. What I outlined to you 

before was generally that we would be in compliance with the same 

thing that either Fannie Mae or Freddie Mac outlines. 

Chairwoman WATERS. Well, let me just ask this so I know. The 

more I learn about servicing and servicers, the more fascinated I 

am. Countrywide services its own loans. Is that correct? 

Mr. GROSS. We service loans for Countrywide’s mortgage business, yes. 

Chairwoman WATERS. And who else do you service? 

Mr. GROSS. Fannie Mae, Freddie Mac, and privately issued securities, some whole loan owners. 

Chairwoman WATERS. So you make a lot of money? You are a big 

servicer? 

Mr. GROSS. Yes, we are. 

Chairwoman WATERS. And many of the loans that were initiated 

by Countrywide were purchased on the secondary market by 

Fannie Mae and Freddie Mac. Is that correct? 

Mr. GROSS. That is correct. 

Chairwoman WATERS. So there is a little professional relationship going on here? They have to be the same loans that— 

Mr. GROSS. We sell loans to Fannie Mae, Freddie Mac, and other 

investors. And they hire us to service those loans on their behalf. 

Chairwoman WATERS. Very interesting. Very, very interesting. 

Now let me ask one more question: In the servicing of loans, do you 

contract out your servicing to anybody? 

Mr. GROSS. Generally speaking, no. 

Chairwoman WATERS. Not generally. Do you contract out your 

services to anybody? 

Mr. GROSS. There are certain isolated— 

Chairwoman WATERS. No. Do you contract out— 

Mr. GROSS. Yes. 

Chairwoman WATERS. —your services? Whom do you contract 

out to? 

Mr. GROSS. It depends upon the— 

Chairwoman WATERS. Just give me the name of one or two of the 

other servicers you contract out to. 

Mr. GROSS. Oh, other servicers? 

72 

Chairwoman WATERS. Yes. 

Mr. GROSS. No, we do not. We service all of the loans on behalf— 

Chairwoman WATERS. Well, what were you referring to? 

Mr. GROSS. I was referring to we may hire an outside firm to assist us in certain aspects of servicing the loan. 

Chairwoman WATERS. Don’t go do that with me. 

Mr. GROSS. Well, that is the answer to the question. 

Chairwoman WATERS. Well, the answer to the question is you do 

contract out. Do you hire any offshore? And I have to put it in a 

way that you don’t— 

Mr. GROSS. Yes, we do them offshore. 

Chairwoman WATERS. You have offshore people who help you 

with some of the aspects of the servicing— 

Mr. GROSS. Yes. 

Chairwoman WATERS. —that you are alluding to now in 

nuancing on me. Where are those offshore contractors that help 

you with some aspects of the servicing? Who are they? 

Mr. GROSS. They are employees of Countrywide. And they are in 

India and Costa Rica. 

Chairwoman WATERS. India and Costa Rica? 

Mr. GROSS. Yes. 

Chairwoman WATERS. And what percentage of the servicing done 

out in India and Costa Rica are modifications or— 

Mr. GROSS. None. 

Chairwoman WATERS. None? 

Mr. GROSS. None. 

Chairwoman WATERS. So what do they do for you? 

Mr. GROSS. Mainly office functions during off-hours because they 

are— 

Chairwoman WATERS. So they answer their telephone, maybe. 

And what do they do for you? 

Mr. GROSS. On very infrequent occasions, yes, we do have a telephone staff there that is handled primarily for customer service-oriented discussions. 

Chairwoman WATERS. So what does one in India do for an American homeowner in Ohio? 

Mr. GROSS. Most typically the type of calls that they would get 

would be a homeowner calling in to say, ‘‘I’m going to make my 

June 1st payment on June 23rd.’’ And we would note that, and we 

would say, ‘‘Thank you.’’ 

Chairwoman WATERS. Well, let me just say this: In addition to 

some of the things that we are trying to get into for that is to make 

sure that no part of your business—we talked about offshore. I alluded to it. I think they should be out. I think all brokers should 

be licensed in Ohio. 

One of the things I think we ought to do is we ought to prevent 

and outlaw offshore contracting for any services. American taxpayers, particularly with these predatory loans and these resets, 

are paying high interest rates. And there is enough money in there 

for you to hire people from these communities. If you have legitimate jobs, they deserve to have them. 

But it is an insult, really, to talk about your hiring people offshore to have a piece of paper with 10 responses to questions where 

someone says, ‘‘I am behind in my loan,’’ and all they say is, ‘‘Yes,’’ 

73 

or they can say, ‘‘I want this loan to be repaid. I will catch up. I 

cannot pay for 10 days,’’ and a paper to tell them ‘‘Yes’’ or ‘‘No.’’ 

‘‘Yes, you may do that,’’ or ‘‘No, you may not do that.’’ That is absolutely outrageous. And that is why we are so upset with Countrywide for so many things. 

I am not going to go any further with questioning, Mr. Gross. I 

just want to say to you I thank all of you for being here, despite 

the fact that you are going to feel a little bit burned when you 

leave here today. I contained myself a lot better than I thought I 

could, but I thank you all for participating. 

I would like to thank all of the nonprofits and organizations that 

are attempting to help in so many ways. I liked some of what I 

heard. We are going to take some of that into consideration to see 

how we can better help you. I liked some of the information I heard 

about what HUD can possibly be doing. And, again, we have a lot 

of work to do. There is no end in sight on these foreclosures. You 

would think they would be winding down by now, but they are not. 

So, with that, yes? 

Mrs. TUBBS JONES. I would like to introduce one more person 

who has come into the hearing. It is our newest councilwoman in 

the City of Cleveland, Mamie Mitchell. She has the Ward 5. Thank 

you, Councilwoman. 

Chairwoman WATERS. Thank you. 

Mrs. TUBBS JONES. Let me ask all of the folks who are participating here to please thank my colleague, the Chair of the Housing 

and Community Opportunity Subcommittee of the Financial Services Committee, Congresswoman Maxine Waters, for convening this 

hearing. 

Chairwoman WATERS. Thank you very much. 

Mrs. TUBBS JONES. Let me thank the key member of the Ohio 

delegation, Marcy Kaptur, for joining us today. 

Let me thank my colleagues Charlie Wilson and my sister in 

Ohio, other sister in Ohio, Congresswoman Betty Sutton, for being 

here. 

Chairwoman WATERS. Thank you. 

Ms. KAPTUR. Madam Chairwoman, I apologize — 

Chairwoman WATERS. Absolutely. 

Ms. KAPTUR. I just wanted to say to Congresswoman Tubbs 

Jones, thank you, and thank you to your wonderful, wonderful 

staff. It is a reflection of all you do for us here, including Cleveland 

State University. And I want to thank Betty Sutton, one of our 

crackerjack Congresswomen but also a crackerjack lawyer. So I am 

glad she is here today. And I know this is the beginning of a whole 

new day. 

Thank you again, Chairwoman Waters. I leave today with better 

spirits than I came. Sometimes it is very frustrating working in 

Washington. Today I saw America the way it should be. It was a 

very respectful discussion regarding the points of view from people 

from all walks of life here. And we all learned together to try to 

help our country. This would not have been possible without this 

chairwoman setting the tone and coming out here, allowing us to 

face you directly, and to us. This is the way America should look. 

Thank you. 

74 

Chairwoman WATERS. You are certainly welcome. And I would 

like to thank all of our members who are present here today. This 

Ohio delegation has been fantastic in coming to organize this hearing that we had today. And, again, I would like to thank the staff 

from my office and from all of your offices who worked on this. 

I thank you so much for your presence. There are times when I 

hold hearings where I am the only one there because members are 

so busy and they have so many people at them and so many issues 

to deal with. But you have certainly demonstrated your concern 

about this issue of foreclosures in your State, and I am very appreciative of it. 

We have learned a lot here today. And we will work together to 

organize time on the Floor so that everybody understands what 

took place here today and to give some exposure to Washington. 

And so this has been very, very helpful to all of us. 

Again, let me thank all of those individuals representing the institutions that are in the other room doing workouts. We are going 

to do follow-up on those. I have asked all of the citizens who are 

involved in trying to work out some kind of form, a release, so that 

we could get the information because I don’t want anybody sending 

me back a form that they did 10 workouts. 

I want the names of the workouts, and I will call each one of the 

persons who is supposedly backed up. And I am going to find out 

what happened with them. And if, in fact, a workout is not a workout, then I am going to get back to the institution that claimed it 

was a workout. 

Without objection, let me just enter into the record written submissions from the following organizations: Policy Matters Ohio; 

Ohio Credit Union; United Way; the Poverty Center at Case Western Reserve University; Lake County Fair Housing Resource Center; Cynthia Dayton, City Manager; Rashad Young of the Lake 

County ERMA, E-R-M-A, Program, submitted by Representative 

LaTourette; and a statement from Mayor Marcie L. Fudge from 

Warrensville, Ohio. 

With that, this hearing is adjourned. Thank you. 

[Whereupon, at 1:55 p.m., the hearing was adjourned.] 

(75) 

A P P E N D I X 

June 16, 2008 

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