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HOME FORECLOSURES: WILL VOLUNTARY MORTGAGE MODIFICATION HELP FAMILIES SAVE 

THEIR HOMES? (PART II) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

DECEMBER 11, 2009 

Serial No. 111–65 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

LUIS V. GUTIERREZ, Illinois 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

STEVE COHEN, Tennessee, Chairman 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

DANIEL MAFFEI, New York 

ZOE LOFGREN, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

JOHN CONYERS, JR., Michigan 

JUDY CHU, California 

TRENT FRANKS, Arizona 

JIM JORDAN, Ohio 

HOWARD COBLE, North Carolina 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

DECEMBER 11, 2009 

Page 

OPENING STATEMENTS 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Chairman, Subcommittee on Commercial and Administrative Law ........................................................................................................... 1 

The Honorable Trent Franks, a Representative in Congress from the State 

of Arizona, and Ranking Member, Subcommittee on Commercial and Administrative Law .................................................................................................. 2 

The Honorable William D. Delahunt, a Representative in Congress from 

the State of Massachusetts, and Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 3 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Ranking Member, Committee on the Judiciary ......................... 4 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 5 

The Honorable Robert C. ‘‘Bobby’’ Scott, a Representative in Congress from 

the State of Virginia, and Member, Subcommittee on Commercial and Administrative Law .................................................................................................. 7 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Commercial and Administrative Law .................................. 7 

WITNESSES 

Mr. Adam J. Levitin, Georgetown University Law Center 

Oral Testimony ..................................................................................................... 8 

Prepared Statement ............................................................................................. 11 

Ms. Faith Schwartz, Hope Now Alliance 

Oral Testimony ..................................................................................................... 25 

Prepared Statement ............................................................................................. 27 

Ms. Margery E. Golant, Golant & Golant, P.A. 

Oral Testimony ..................................................................................................... 45 

Prepared Statement ............................................................................................. 47 

Mr. Henry E. Hildebrand, III, National Association of Chapter 13 Trustees 

Oral Testimony ..................................................................................................... 67 

Prepared Statement ............................................................................................. 69 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Post-Hearing Questions from Adam J. Levitin, Georgetown University Law Center .............................................................................................. 102 

Response to Post-Hearing Questions from Faith Schwartz, HOPE NOW Alliance ....................................................................................................................... 105

Response to Post-Hearing Questions from Margery E. Golant, Golant & 

Golant, P.A. .......................................................................................................... 108 

Response to Post-Hearing Questions from Henry E. Hildebrand, III, National 

Association of Chapter 13 Trustees .................................................................... 113 

(1) 

HOME FORECLOSURES: WILL VOLUNTARY 

MORTGAGE MODIFICATION HELP FAMILIES 

SAVE THEIR HOMES? (PART II) 

FRIDAY, DECEMBER 11, 2009 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 11:41 a.m., in 

room 2141, Rayburn House Office Building, the Honorable Steve 

Cohen (Chairman of the Subcommittee) presiding. 

Present: Representatives Cohen, Conyers, Delahunt, Johnson, 

Scott, Chu, Franks, Smith, Jordan, and Coble. 

Staff Present: (Majority) James Park, Counsel; Adam Russell, 

Professional Staff Member; and (Minority) Zachary Somers, Counsel. 

Mr. COHEN. This hearing of the Judiciary Committee, Subcommittee on Commercial and Administrative Law, will now come 

to order. 

Without objection, the Chair will be authorized to declare a recess to the hearing. And I will now recognize myself for a short 

statement. 

Today’s hearing is part two of our examination of the voluntary 

mortgage modification efforts, with particular focus on the effectiveness of the Treasury Department’s Home Affordable Modification Program, or HAMP. And I say effectiveness or ineffectiveness, 

which is something to be determined. 

For me, the foreclosure crisis particularly hits home. In a survey 

of the top 100 metro areas, my home City of Memphis ranks 18th 

in the number of foreclosures. And in my town hall meetings, more 

people call me and talk to me about their personal foreclosures 

than anyplace else. Tonight, of course, is the first night of Hanukkah, and without a house, there is no place to put a menorah, so 

it is particularly relevant that we start today. 

In a comparison of States, my home state of Tennessee routinely 

ranks among the top States in the number of foreclosures. Mr. 

Hildebrand surely knows, as the Chapter 13 trustee from Nashville, one of our witnesses, the extent of the foreclosure crisis is 

such that even some middle-class areas are affected by growing 

foreclosure numbers. The foreclosure crisis extends well beyond 

subprime mortgages. 

2 

With unemployment at 10 percent, many responsible homeowners find themselves on the brink of losing their homes through 

no cause of their own. It could be medical bills that forced them 

into bankruptcy. It could be just being laid off because of the economy and the previous Administration’s failure to regulate that. 

So, back in July, we heard testimony that raised concerns about 

the effectiveness of the HAMP program. That was in July. And so 

far, government’s efforts at helping families avoid losing their 

homes appears not to be working effectively. Some of my colleagues 

and I suspect that this is because the government’s efforts have focused almost exclusively on encouraging mortgage lenders and 

servicers to voluntarily modify mortgage terms for distressed borrowers. It might be the same as encouraging President Karzai to 

root out corruption. Evidence suggests that encouraging voluntary 

modifications alone is at best minimally effective at helping financially struggling borrowers stay in their homes. 

I recognize that HAMP at 9 months of age is still relatively new, 

but I am deeply troubled by continuing reports in the media and 

from the Congressional Oversight Panel, suggesting the HAMP 

program is simply ineffective in stemming home foreclosures. Certainly my constituents think it is ineffective because they are not 

getting help, and they have tried. 

This Congress has acted earlier. I cosponsored and helped champion Chairman Conyers’s bill, H.R. 1106, the Helping Families 

Save Their Homes Act of 2009, which, among other things, would 

have given authority to bankruptcy judges to modify debtors’ mortgage terms in bankruptcy, including a reduction of the mortgage 

principal amount. I also sponsored Chairman Conyers’ amendment 

to the financial regulatory reform legislation now being considered 

on the House floor and debated this morning. This amendment contains language that is substantially identical to the judicial mortgage modification authority of H.R. 1106. 

In my view, this provision would have substantially and effectively reduced the number of foreclosures. Unfortunately, this provision has not yet been signed into law, as it hasn’t been passed 

by the Senate. Adopting this provision would help to strengthen 

any program to encourage voluntary mortgage modifications by 

loan servicers. You need a hammer to make the anvil work. 

I thank the witnesses for appearing today, and I look forward to 

their testimony. I now recognize my colleague from the State that 

gave us our Christmas tree, Mr. Franks, the distinguished Ranking 

Member of the Subcommittee, for his opening remarks. 

Mr. FRANKS. Well, thank you, Mr. Chairman. 

And thank all of you for being here. 

Mr. Chairman, undoubtedly the foreclosure crisis is one of the 

biggest issues facing America, but this Committee’s jurisdiction to 

address the crisis is largely limited to modifying the Bankruptcy 

Code. As I have maintained ever since this issue was raised by the 

majority, I truly believe that allowing mortgage cramdown in bankruptcy poses a major threat to the housing sector and the overall 

economy. 

It is completely unfair to future borrowers. It harms lenders and 

investors. And it undermines the stability necessary for recovery. 

As we have seen, such a proposal does not meet the threshold of 

3 

support needed to pass the U.S. Senate. This is important, because 

the uncertainty that cramdown will create for mortgage originators 

is exactly what the housing sector does not need in the currently 

volatile housing market. Now allowing cramdown would simply be 

a continuation of the heavy-handed government interference in the 

housing and lending markets that got us into this precarious predicament in the first place. 

As we know, the political housing establishment, in the name of 

increasing home ownership, significantly contributed to the current 

crisis. This was accomplished through the intentional weakening of 

traditional mortgage lending standards. These weakened underwriting standards were encouraged by the Community Reinvestment Act mandated by Congress and spurred on by Fannie Mae 

and Freddie Mac. 

Now, simply, Mr. Chairman, what I see happening here as my 

friends on the left worked so hard to coerce banks into changing 

their lending practices and even to making loans that were untenable, now we see them coming forward and suggesting that those 

banks should now make those loans that failed because of the interference as free as they possibly can. And it is a recipe that cannot stand. 

I hope it is not lost on my friends in the majority that the lesson 

of the foreclosure crisis is not that we need more government intervention, but that we need less. Allowing mortgage cramdown in 

bankruptcy would simply be an extension of the failed government 

interference in the housing sector of the past. 

Of course, according to the title of today’s hearing, we are not 

here to discuss mortgage bankruptcy cramdown. We are here to 

discuss voluntary loan modifications. And although voluntary loan 

modification efforts have not been perfect, I would submit the evidence demonstrates that lenders and servicers are making an effort 

to keep borrowers in their homes. There have been over 650,000 

trial mortgage modifications under the Administration’s Home Affordable Modification Program and over 5 million as part of the 

HOPE Now Alliance. 

Lenders and servicers continue to work every day to keep as 

many homeowners in their homes as possible. But, Mr. Chairman, 

their efforts are stifled and complicated by how poorly underwritten many of these loans really are and, more importantly, by 

an unemployment rate that continues to hover at or above 10 percent. As we all know, if a homeowner loses their job, it makes it 

difficult or almost impossible to repay any type of debt. 

So, Mr. Chairman, I guess at this point, I just look forward to 

the witnesses’ testimony and hope that they can provide some positive suggestions, apart from bankruptcy cramdown, for how we can 

improve voluntary modification efforts. 

And I thank the Chairman and yield back. 

Mr. COHEN. Thank you, Mr. Franks. 

I now recognize the next gentleman in order, which would be the 

esteemed Vice Chair who just determined that he would like to 

make a statement on this issue. 

Mr. DELAHUNT. I will be very brief. 

My friend from Arizona, the distinguished Ranking Member, referenced his understanding of how we arrived here in these very, 

4 

very dire reality in terms of the housing market, and I could not 

disagree with him more. 

And I think the facts are that, if one examines mortgages issued 

pursuant to the Community Reinvestment Act, that it is surprisingly a performance, in terms of foreclosures and troubled mortgages, that I only wish was true of the entire mortgage industry. 

The foreclosure rate is miniscule compared to the mortgages that 

were issued by, if you will, the unregulated market. So that is what 

the facts are. 

. But I think that is going to be determined at some future time 

by the commission that is independent, that is bipartisan in nature, that will review how we actually got here. We didn’t get here 

because of government. We got here because government didn’t do 

its job. That is how we got here, at least it didn’t do its job until 

the election in 2009 and the inauguration of President Obama. 

Now we are cleaning up the mess of government that did not pay 

attention to its responsibilities. 

So it isn’t about government overregulating. It is government abdicating its responsibility to supervise and ensure that the marketplace works, and works fairly, and is not susceptible and vulnerable to basically scam artists that actually have put us into this position. 

Now, he is concerned about cramdowns. It is interesting that, if 

it is a business property, you can do a cramdown, but you can’t do 

it if it is a private home. You know, I wonder how that happened. 

It would be interesting to go back and look at the legislative history, Mr. Chairman, to see how that was achieved. But it’s okay 

to do it for investment properties, for second homes, for cars, for 

boats, for every asset but the home that somebody lives in with 

their family. I just would like to see the consumer treated fairly. 

That is all. 

Every marketplace has its rules, and that is what I hope we can 

achieve and do what we did before, and have the Senate finally 

wake up. Because, unfortunately, despite good intentions, the voluntary programs don’t seem to be working. And I know people are 

making an effort to do what is right. But, you know, I think if we 

continue to go the route of a voluntary program, we are just going 

to extend the pain. The pain will be extended. And you know what 

is going to happen, we are never going to get out of this housing 

slump. We are going to continue to see lower and lower prices and 

additional foreclosures. And if that is what the minority party 

wants, that is what is going to happen. 

With that, I yield back. 

Mr. COHEN. Thank you, sir. 

I now recognize the distinguished Ranking Member of the full 

Committee who represents the district which my predecessor, Mr. 

Crockett, went to defend and gave his life for. 

Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. We won’t go into the details as to why one of your distant predecessors moved to Texas, 

but we appreciate at least the correlation between the two States. 

We all hope that voluntary loan modifications can help pull 

America’s homeowners out of the foreclosure crisis. Unfortunately, 

modification efforts are being made more difficult by continuing 

5 

high unemployment, which is not being reduced by the Administration’s economic policies. 

In contrast to these voluntary modification efforts, today the 

House is considering an amendment to H.R. 4173 that gives bankruptcy judges broad discretion to rewrite and cram down mortgages 

in bankruptcy. 

The bankruptcy amendment to H.R. 4173 not only fails to solve 

the foreclosure crisis, but also makes the crisis deeper, longer, and 

wider. Allowing bankruptcy courts to modify home mortgages will 

have adverse consequences for all, while providing little real relief 

to distressed borrowers. 

Bankruptcy cramdown will invariably lead to higher interest 

rates and less generous borrowing terms for future borrowers. 

Unemployment has been a driving factor behind most foreclosures. But because individuals without regular income may not 

file for bankruptcy under Chapter 13, cramdown will do nothing for 

those most in need of relief, the unemployed. 

Additionally, many borrowers walk away from their homes, not 

because they can’t afford their monthly payments but because their 

homes are mortgaged for more than they are worth. These borrowers should live with the responsibility for their decisions, not 

receive bailouts from bankruptcy courts. 

Allowing relief through the bankruptcy system merely transfers 

the cost of bad financial decisions to prospective home buyers who 

will find it much harder to get a mortgage. Rather than revitalizing 

the housing sector, this will prolong the housing recession. 

Furthermore, we must not forget that cramdown will not only 

impact lenders but investors as well. These investors often include 

pension funds representing the retirement savings of millions of 

people. We should not pass the cost of irresponsible borrowing and 

lending off on current and future retirees. 

Considering that cramdown will produce only modest results at 

best, it is regrettable that the House is once again considering 

cramdown. We need to do everything we can to help solve the foreclosure crisis, but we must avoid measures like cramdown that 

punish the successful, tax the responsible, and hold no one accountable. Hopefully, the House will reject the cramdown amendment to 

H.R. 4173, just as the Senate wisely rejected cramdown earlier this 

year. 

I hope the witnesses can provide us with some positive suggestions for improving voluntary mortgage modification programs, 

suggestions that are not dependent on enactment of cramdown. 

However, I don’t believe that we will truly get out of this crisis 

until we focus our efforts on legislation that effectively improves 

the economy, creates jobs, and revitalizes the housing market. 

Thank you, Mr. Chairman. I yield back. 

Mr. COHEN. Thank you, Mr. Smith. I now recognize the gentleman from Georgia, the Committee Chair of the Antitrust Committee and Courts. 

Mr. JOHNSON. Thank you, Mr. Chairman, for holding this important hearing on the Home Affordable Modification Program. It is 

ironic that the banking industry that made so much money based 

on these mortgage-backed securities that they both sold and purchased, that they would—I mean, they made a lot of money. When 

6 

things got bad for them, they got a government bailout. When they 

got the bailout, when they got the money, they failed and refused 

to use it to help folks on Main Street with issues such as foreclosure relief, and instead used it in part for obscene bonuses for 

work that was supposed to be meritorious but actually put us in 

the shape where the citizens had to bail them out. 

And it is ironic that the Representatives in Congress who care 

more about the banking industry than they do about the people 

that they represent; it is ironic that—it is really an irony, you 

know, they will not support bankruptcy judges being able to restructure loans on the debtor’s primary residence. The banking industry is fighting right now with our TARP money to oppose that. 

Why they are doing it, I don’t know, but money, they say money 

is the root of all evil. 

But, today, we will explore the viability of HAMP, Home Affordable Modification Program, and we will explore whether voluntary 

mortgage modification is a viable way to keep families in their 

homes. There are many who say that it is viable, but it is not being 

exercised in good faith by the banks. And it is, this modification, 

mortgage modification is of extreme importance in today’s economy. 

Currently, our Nation is experiencing a major mortgage foreclosure 

crisis, and many families are struggling to make ends meet. 

For homeowners who are struggling with their mortgage, a foreclosure can be devastating, impacting your credit, impacting your 

ability to obtain new employment if you have lost your job, and it 

has so many negative side effects. And foreclosure not only affects 

the family who owned the house, but also the neighborhood surrounding the house, bringing down the value of the surrounding 

houses, creating places where criminals and criminal conduct could 

take place, and just making the neighborhood look as if no one 

cares about it. And it is a psychological problem that ensues in people in the neighborhoods where there is large foreclosure activity, 

and it is just not good for people, and it is not good for America 

for us to—and for the banking industry and their supporters, to not 

want to take meaningful action to help the folks who are struggling 

on Main Street. 

HAMP was intended to help homeowners modify their mortgage 

payments to make them more affordable and avoid foreclosure. It 

was designed to strengthen the housing market and stabilize the 

overall economy. It has been alleged that HAMP is a failure and 

has failed to help the majority of distressed homeowners modify 

their mortgages and stay in their homes. I am deeply concerned 

about these most serious allegations, and I am glad, Mr. Chairman, 

that you have called a hearing on this particular issue. If those allegations of ineffectiveness of HAMP are true, then Congress 

should act to ensure that HAMP is restructured to fulfill its intended and very needed purpose. 

I thank the Chairman once again, and I look forward to hearing 

from our witnesses today, and I yield back. 

Mr. COHEN. Thank you, Mr. Johnson. 

Does Mr. Coble, the gentleman from North Carolina desire— 

thank you, sir. 

I now recognize the gentleman from Virginia, the honorable Mr. 

Scott, Chairman of the Crime Subcommittee. 

7 

Mr. SCOTT. Thank you, Mr. Chairman. And, as they say, I will 

be brief. 

There are two issues that I think are important. The first deals 

with the fact that many people are what is called upside down in 

their mortgages, where they owe more than the house is worth. In 

situations where there is secured collateral and the value is less 

than the debt, the property is liquidated; the secured creditor gets 

what is achieved from a distress sale, which is usually lower, 

minus expenses, and that is all they get. 

There is an option to what is called cramdown; that is, you can 

reaffirm the debt at the value of the property. That is virtually always a better deal for the creditor because he is going to end up 

getting more than he would have in the distressed sale minus the 

expenses. And so that the so-called cramdown is available in bankruptcy except for home mortgages. We need to find out why that 

exception is there and whether that is an appropriate exception. 

The other—and whether or not that is a deterrent to modifications. 

The other is whether or not there are some disadvantages in accounting for modifications, because I understand that there may be 

a situation where, if you agree—if a bank agrees to a modification, 

they have to realize the loss, which they didn’t have to do before 

they agreed to a modification, which negatively affects their earnings. And there may be a situation where it affects their balance 

sheet, where the modification gives them less capital, less lending 

authority. So whether there are disadvantages in the accounting 

system, disincentives in the accounting system to agreeing to modifications, and also to why and certainly the reason why we 

shouldn’t have cramdown, whether or not that would be an incentive to modification. 

So I will looking at those two issues, Mr. Chairman. And I thank 

you for holding the hearing. 

Mr. COHEN. Thank you, sir. 

I would now like to recognize the distinguished Chairman of the 

Committee, the champion of cramdown, the champion of the people, the dispossessed, those in need of help, those who are calling 

and needing support to live the American way of life, the distinguished gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman. I think you should remain Chairman in the next Congress as well. So ordered. 

This is important to us because, as you are going to testify, the 

subprime mortgage debacle was what triggered the financial place 

that we find ourselves in not nationally but globally as well, because they chopped up all those mortgages, rebundled them, and 

sent them out all over the country to all the markets and all over 

the world. 

Now, our Judiciary Committee, and I think everybody here on 

the Subcommittee, supported a simple solution since we have jurisdiction of bankruptcy to allow the primary home, as Chairman 

Scott was referring to, to be able to be adjusted where there was 

fairness and a just cause for doing it. We passed it in the House. 

The Senate, as usual, they weren’t able to shut off the filibusters, 

so the bill was withdrawn, and so we are working again. 

8 

I just left a press conference of the Congressional Black Caucus, 

and that is what we were talking about; how do we create jobs and 

ease this crisis that we are in? 

I would like to hear from all of you about the sad fact that coming out of an economic downturn, getting the jobs rate up is the 

toughest single thing that we have to do. And so I am proud of the 

Chairman for holding the hearing, and I look forward to your testimony. Thank you. 

Mr. COHEN. Thank you, Mr. Chairman. 

I would now like to thank everybody for their statements. 

Without objection, other Members’ opening statements will be included in the record. 

Mr. COHEN. I am pleased to introduce our witnesses, and we do 

them in the order of their testimony. First, thank you all for participating. Without objection, your written statements will be 

placed in the record. I ask you to limit your oral remarks to 5 minutes. Note that we have a lighting system that starts with a green 

light. After 4 minutes, it turns yellow, which means you have got 

a minute to go. At red, it is 5 minutes, and you should be finished 

or in the process of being finished. 

After each witness has presented his or her testimony, Subcommittee Members will be permitted to ask questions, again, 

theoretically subject to the 5-minute limit. 

Our first witness is Mr. Adam Levitin. Professor Levitin specializes in bankruptcy and commercial law. Before joining the Georgetown faculty, he practiced in the business finance and restructuring 

department of Weil, Gotshal & Manges limited liability partnership 

in New York. He also served as special counsel for mortgage affairs 

for the Congressional Oversight Panel. 

His research focuses on financial institutions, the role of the consumer and business credit economy, credit card regulation, mortgage lending, identity theft, deficit DIP financing, and debtor in 

possession financing and bankruptcy claims trading. Thank you for 

coming, Professor Levitin, and will you proceed with your testimony. 

TESTIMONY OF ADAM J. LEVITIN, 

GEORGETOWN UNIVERSITY LAW CENTER 

Mr. LEVITIN. Mr. Chairman, Ranking Member Franks, and Members of the Committee, good morning. 

My name is Adam Levitin. I am the associate professor of law 

at Georgetown University Law Center. I also serve as special counsel to the Congressional Oversight Panel for the Troubled Asset Relief Program and am the Robert Zinman Resident Scholar at the 

American Bankruptcy Institute. The views I express today are my 

own. 

We are now over 2 years into our foreclosure crisis, unequaled 

since the Great Depression. The picture is grim. Mortgage foreclosure rates are at four and a half times their historic level. Over 

2 million American families have already lost their homes in foreclosure sales. Millions more will over the next few years. The cornerstone of Federal efforts to mitigate the foreclosure crisis is the 

Home Affordable Modification Program, or HAMP. 

9 

HAMP provides taxpayer-funded incentive payments to mortgage 

servicers, lenders, and homeowners to facilitate standardized loan 

modifications. A HAMP modification involves an initial trial modification period, after which the modification converts to what is 

termed a permanent status, even though permanent modification is 

actually only a 5-year, after which monthly payments increase. 

In order for a HAMP modification to avert, rather than merely 

delay foreclosure, three things are necessary. First, a trial modification must be commenced. Second, the trial modification must 

convert to so-called permanent status. And, third, the permanently 

modified loan must not redefault. 

HAMP has had some success at the first stage. There has been 

around 1 million trial modifications offered to borrowers, and 

around 70 percent have resulted in trial modifications commencing. 

Commencing the trial modification is easy, though. It can be done 

on a no-doc, a verbal basis. Even so, there was a sharp decline in 

the monthly number of new HAMP trials commenced in November, 

suggesting that monthly enrollment in the program might have already peaked. 

Unfortunately, exceedingly few trial modifications have converted 

to permanent status. Data released yesterday by Treasury indicates that 9 months into HAMP, there are but 31,382 permanent 

modifications. Treasury has predicted a 50 to 75 percent conversion 

rate, but the Congressional Oversight Panel reported that as of the 

end of October, less than 5 percent were converting to permanent 

status by the end of the standard 3-month trial period. 

HAMP’s trial to permanent conversion rate has improved in recent months, but it is still at a pathetically low level, suggesting 

that the total number of permanent modifications produced by 

HAMP will be quite limited, and certainly not enough to have a noticeable impact on the foreclosure crisis. Conversion from trial to 

permanent status, however, is not the only obstacle for HAMP 

modification to be successful. The modified loan must also continue 

to perform. 

It is too early to say much about redefaults on permanent HAMP 

modifications, but Treasury’s own baseline prediction is that 40 

percent will redefault within the first 5 years. I think that is optimistic, unfortunately. The closest structural analog to HAMP modified loans are the exotic subprime loans that we saw in recent 

years. 

To be fair, the monthly payments on HAMP modified loans are 

far more affordable, but both HAMP mods and subprime loans feature below-market introductory rates that step up over time, balloon payments, and extremely high loan-to-value ratios. Indeed, 

HAMP loans actually look worse than some subprime loans because of their deep level of negative equity, typically around 124 

percent loan-to-value ratio. The sustainability of HAMP modifications, therefore, is highly suspect. 

Taken as a whole, low conversion rates and high expected redefault rates suggest that the success rate for HAMP modifications 

will be exceedingly low. Even based on Treasury’s own assumptions, there will only be a 20 to 30 percent success rate, which will 

mean that current trial modifications would yield less than 250,000 

permanent modifications. That is a drop in the bucket relative to 

10 

foreclosures. HAMP is, unfortunately, incapable of producing the 

volume of modifications necessary to have a macro-economic impact, even if it does help individual borrowers. 

Treasury seems to believe that HAMP can be corrected through 

some technical fixes and moral suasion. I hope that is correct, but 

I would submit that the program is fundamentally incapable of 

helping a substantial number of homeowners faced with foreclosure. What is more, homeowners cannot wait 6 months to find 

out if Treasury has finally gotten it right this time. 

The mortgage industry has had multiple bites at the apple to get 

voluntary modification and refinancing programs working: private 

modifications, the Hope Now Alliance, the FHA-secure refinancing 

program, HOPE for Homeowners Refinancing Program, and now 

HAMP. All of these programs rely on voluntary mortgage servicer 

cooperation for success, and none has done the job. For a variety 

of reasons, including limited capacity, skewed incentives, and contractual restrictions, mortgage servicers are either unable or unwilling to perform sustainable modifications in sufficient volume. 

I would urge Congress to consider modification possibilities that 

do not rely on servicer participation. It is time to try something 

else. HAMP is not working. 

[The prepared statement of Mr. Levitin follows:] 

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Mr. COHEN. Thank you, Professor. 

Our second witness is Ms. Faith Schwartz. Ms. Schwartz is the 

executive director of HOPE NOW Alliance, a coalition of Nationwide servicers, lenders, investors, counselors, and other mortgage 

market participants working together to help homeowners in distress. Previously she served as HOPE NOW’s project manager. 

Prior to joining HOPE NOW, she was senior vice president of EnVerDate Aug 31 2005 11:09 Mar 30, 2010 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 H:\WORK\COMM\121109\53948.000 HJUD1 PsN: 53948

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terprise Risk and Public Affairs at Option One Mortgage Corporation, a subsidiary of H&R Block, Inc., and worked Not Walk to the 

Courthouse With You, or something to that effect. Ms. Schwartz 

has also served as the chair of the Mortgage Banking Association’s 

Nonconforming Credit Committee in both 2005 and in 1996. And 

she was director of sales national lending for Freddie Mac. 

Ms. Schwartz, welcome. And you may begin your testimony. 

TESTIMONY OF FAITH SCHWARTZ, HOPE NOW ALLIANCE 

Ms. SCHWARTZ. Thank you. Good morning, Chairman Cohen, 

Ranking Member Franks, and Members of the Subcommittee. 

My name is Faith Schwartz, and I am the executive director of 

the HOPE NOW Alliance, and I appreciate the opportunity to appear before you today to discuss the loss mitigation efforts under 

way. 

HOPE NOW is a broadbased industry, a nonprofit alliance working to reach and help as many homeowners as possible stay in 

their homes. Many HOPE NOW servicers are participating in 

HAMP. The Alliance is continuing to work with the GSEs and the 

Administration in implementing and improving the HAMP program. HAMP is an important tool to prevent foreclosures. 

HOPE NOW servicers are providing other modifications and 

workout solutions for homeowners who do not qualify for HAMP. 

Also, HOPE NOW members are continuing outreach events for borrowers who have special—and we also have a new Web tool to better assist homeowners in applying for HAMP. 

The current economic conditions are having a detrimental impact 

on homeowners and their ability to receive a loan modification. 

HOPE NOW and its members are working hard to help as many 

borrowers as possible. Unemployment continues to be our biggest 

challenge, and we are working with the industry and regulators on 

a solution to assist homeowners who want to stay in their homes 

while they look for reemployment. 

First, I want to clarify that HAMP is not a voluntary program. 

Servicers are required to evaluate all Fannie and Freddie Mac 

loans for HAMP eligibility. Further, once a servicer signs up for 

HAMP, there is a legal contractual agreement between the servicer 

and the Administration requiring that all loans be reviewed for 

HAMP eligibility before going to foreclosure. 

On average, over 20,000 trial modifications are being made every 

week, and a total of 728,000 have been reported thus far of trial 

modifications. And all of those people are making lower payments 

every month, substantially lower payments. 

The key focus is now turning these trial modifications into permanent modifications. Servicers are doing everything possible to 

gather the required documentation from borrowers to make the 

modification permanent. We have suggested to Treasury some improvements to make this process easier, of which I might highlight 

later in the testimony. 

HAMP is not the only useful tool that servicers are using to help 

borrowers. In 2009 alone, 2.6 million homeowners received a nonHAMP mortgage workout which prevented foreclosures. Since mid2007, that number is 5.8 million homeowners. There are a variety 

of tools available to help distressed homeowners, including loan 

26 

modifications, repayment plans, extended forbearance and, if none 

of them work, deed in lieu and short sale. We encourage Treasury 

to report on non-HAMP workouts in addition to HAMP workouts 

to give a more complete picture of what is going on under way and 

show the true number of homeowners being assisted and avoiding 

foreclosure. 

Since March 2008, HOPE NOW has held 55 local outreach 

events, helping 50,000 homeowners with the assistance of the Federal Reserve, banks, municipal government agencies, and other 

support, homeowners are given an opportunity to meet with a 

servicer or counselor to get help. We are planning at least 30 more 

in 2010. Additionally, we continue to support the Homeowners 

Preservation Foundation’s Hotline, (888) 995-HOPE, 24 hours a 

day, 7 days a week, 365 days a year. 

Finally, HOPE NOW has launched a Web portal, HOPE Loan 

Port, with six housing counseling agencies and six Nationwide 

servicers and a mortgage insurer. HOPE Loan Port counselors can 

submit borrowers’ applications to HAMP, including full financial 

data and all necessary documentation directly to the servicer. This 

provides better communication among servicers, counselors, and 

homeowners, and eliminates the lost documentation issue. The objective is to scale this to market. 

For loans in bankruptcy, HOPE NOW is working with servicers, 

bankruptcy attorneys, and Treasury in creating a loan workout solution for homeowners in bankruptcy, and I anticipate there will be 

progress made on this issue, which needs to address a best practice 

for modifications of loans already in bankruptcy. 

There are ongoing issues and struggles with the HAMP program 

as has been noted. We are working on many of these, and I would 

like to highlight a few that we have recommended to Treasury. One 

is to streamline the HAMP documentation. The documentation requirements of HAMP should strike a balance of being less extensive but maintain the integrity of modifications. Document collection and perfection is often the cause of delays in turning trial 

mods to permanent mods. We believe Treasury should eliminate 

the requirement of tax returns for wage earners, and allow the use 

of most recent W-2 or two recent pay stubs. Some servicers do estimate an uptake of 20 to 30 percent of permanent mods. 

Another example is to revise the redefault assumptions in HAMP 

NPV model. The net present value methods should be updated to 

reflect the positive impact of a trial performance and income 

verification. Servicer data indicates that borrowers who are successful in completing 3-month trial mods have significantly better 

performance than those who don’t. With these changes, we anticipate the improvement on redefaults could include more borrowers, 

and you could get a better pick-up on productivity on loans. 

In conclusion, HOPE NOW and its members are dedicated to implementing HAMP, providing solutions to those not eligible for 

HAMP, and reaching and assisting as many distressed homeowners 

as possible. Servicers continue to expand capacity, increase efficiency, and enhance execution on loan modifications, and I am certainly willing to keep you all informed of that progress. Thanks for 

the opportunity to testify. 

[The prepared statement of Ms. Schwartz follows:] 

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PREPARED STATEMENT OF FAITH SCHWARTZ


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Mr. COHEN. Thank you, Ms. Schwartz. I appreciate your testimony. 

And our next witness will be Ms. Golant. Ms. Golant is a former 

assistant general counsel for—our third witness is Ms. Marjorie 

Golant. Yeah. Okay. But she is still a former assistant. Whatever. 

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Golant currently represents borrowers and financial service litigation, defensive foreclosure and firm litigation and bankruptcy mitigation. She handles issues of securitization and structured finance 

issues, predatory lending, predatory servicing in truth lending, 

Florida Consumer Collection Practice Act and fair debt collection 

practices. Former assistant general counsel for Ocwen Financial, 

the second largest U.S. Subprime mortgage servicer, and head of 

the residential litigation subgroup, which managed all litigative 

mortgages and an approximately 500,000 loan U.S. Portfolio. 

Former district court magistrate judge in Pennsylvania. 

Judge, would you proceed with your testimony. 

TESTIMONY OF MARGERY E. GOLANT, GOLANT & GOLANT, P.A. 

Ms. GOLANT. Thank you, Mr. Chairman, Ranking Member 

Franks, and Members of the Subcommittee, I appreciate your inviting me. Thank you for inviting me to testify regarding my work 

helping families facing foreclosure. 

My testimony is based upon my work for these families and also 

my earlier work on quote/unquote the other side. In addition to my 

work for the servicer, I also worked at two foreclosure law firms 

prior to that, so I really can see this from both sides. I want to tell 

you what the foreclosure crisis currently means for real people. 

The current efforts are not enough. I work on Main Street; I defend homeowners whose goal is to try to save their homes. These 

people are not wise guys who gambled with unaffordable mortgages. Most are ordinary hardworking Americans. Due to circumstances beyond their control, they fell into a pit of quicksand 

and now cannot get out. They are frightened, desperate, and losing 

hope. 

Most of us do not realize that if a borrower becomes more than 

60 days delinquent, the servicer thereafter rejects any subsequent 

mortgage payments unless at the same time the borrower cures the 

default. So even if people manage to get a new job, get back on 

their feet, they are still not allowed to resume making payments, 

even if they want to and are able to. The result is that they then 

often become trapped in the foreclosure spiral, although many 

would gladly resume making full or partial payment. 

When they come to me, they are terrified. They have tried to 

gain entry into HAMP, tried to work with their servicers, submitted financials, and even in desperation fell victim to loan modification scammers, often the same mortgage brokers that got them 

into this situation in the first place. All became my clients when, 

despite their efforts, foreclosure was filed anyway, forcing them to 

face the fact that the loss of their home was imminent and that 

they were helpless to stop it. 

I set out to try to find them leverage. This is difficult, since our 

system currently affords them none. Generally, it is only when I 

back the plaintiff into an untenable foreclosure case that any sort 

of potential concession emerges. I also make a formal motion asking the court to require the servicer to accept a HAMP application. 

Opposing counsel usually fights fiercely against this, although my 

clients were clearly qualified for HAMP and had tried for months 

to get into it. 

46 

To date, I have filed approximately 60 of these motions. In only 

two of the cases, foreclosure counsel sent me HAMP application 

packets. All others were contested. Where hearings have occurred, 

all but one of the judges granted my motion. However, not one of 

my clients who got into a trial mod has to date received a permanent mod, even after exceeding the 3-month trial period, submitting all required documentation, and making all payments. 

I take issue with any claims that the foreclosure crisis is improving. It is not so. Most troublesome is that the owners of many of 

these foreclosed homes could and would have made payments had 

there been simply a way to get there. 

HAMP and purely voluntary programs of course do exist, but do 

not do enough or work fast enough to change the landscape significantly. The real problems are that the mortgage industry players 

lack the ability, the authority, and the wherewithal to really solve 

this mess, and there is no time to create something totally new, 

such as HAMP, and have it move quickly enough. Structural hurdles make it virtually impossible for the voluntary programs to 

work on any sort of meaningful scale quickly. Something must be 

done to resolve this problem. What has been done so far has not 

worked in quantity and cannot work fast enough to turn the tide. 

Allowing bankruptcy judges to construct judicial modifications of 

these mortgages should be given a chance. I commend you, Mr. 

Chairman, the full Judiciary Committee, and indeed the full House 

of Representatives for adopting legislation that would allow for 

mortgage modification in bankruptcy, and I appreciate your fighting spirit for pushing the bill again as an amendment to the financial services reg reform bill now being debated by Congress. 

Such an approach could and could immediately make a difference 

without a learning curve and without any cost to the taxpayers. 

Bankruptcy judges have extensive experience dealing with financial problems, and they are optimized for just such a function. 

Bankruptcy courts routinely resolve debt and delinquency issues. 

Judicial modification of many kinds of secured loans has been the 

norm in bankruptcy. The process is rigorous. Solutions are formulated wherein the best interest of the creditors are prioritized. The 

entire process is overseen by the Department of Justice. 

Because of the tangled web of interests and lack of authority to 

restructure the loans, servicers are unable to do it and are not 

vested with any other real option but to foreclose. We need something more. If bankruptcy courts are given the ability to address 

the problem, the results would be a rigorous yet fair solution that 

would in a significant number of cases provide mechanisms to save 

homes, and it would be immediate. Thank you very much for your 

time and attention. 

[The prepared statement of Ms. Golant follows:] 

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PREPARED STATEMENT OF MARGERY E. GOLANT


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Mr. COHEN. Thank you, Judge. I appreciate your testimony. 

Our final witness is Mr. Henry E., Hank, Hildebrand, III. Mr. 

Hildebrand has served as standing trustee for Chapter 13 matters 

in the Middle District of Tennessee since 1982, and as standing 

Chapter 12 trustee for that district since 1986. He has been a 

friend of mine since 1982, working closely with the Tennessee General Assembly on matters above and beyond these issues. Counsel 

of the national law firm of Lassiter, Tidwell, Davis, Keller & 

Hogan, and an honorary Kentucky colonel and Tennessee colonel. 

He is a fellow of the American College of Bankruptcy and serves 


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on its education committee. He is chairman of the Legislative and 

Legal Affairs Committee of the National Association of Chapter 13 

Trustees and the board of directors of that same group’s consumer 

bankruptcy education group. Adjunct faculty member at the National School of Law and St. Johns University School of Law and 

highly respected member of the National and Tennessee State community. 

Thank you, Mr. Hildebrand. Will you proceed with your testimony? 

TESTIMONY OF HENRY E. HILDEBRAND, III, 

NATIONAL ASSOCIATION OF CHAPTER 13 TRUSTEES 

Mr. HILDEBRAND. Thank you, Mr. Chairman. 

And thank you, Mr. Frank, Members of the Committee. 

I am delighted to appear here today on behalf of the National Association of Chapter 13 Trustees. There are about 212 Chapter 13 

trustees across the country who are charged with the responsibility 

of administrating the Chapter 13 program across the country. 

Chapter 13, of course, is the mechanism in bankruptcy whereby 

there is an administration of repayment in bankruptcy. Debts are 

actually paid back. We are now paying back approximately $6 billion a year of debt repayment through the Chapter 13 program. 

Traditionally, Chapter 13 has constituted the last resort of a borrower in which to save a home in which the mortgage is in default. 

It has provided the tools whereby that mortgage can be cured and 

payments can be maintained. And over the time that Chapter 13 

has been effective since 1979, millions of families have saved their 

homes through Chapter 13, curing defaults, maintaining mortgages, and getting themselves back on their feet. 

It is remarkably successful where I come from. It is remarkably 

successful across the country. But the Chapter 13 model in curing 

mortgage defaults and maintaining payments is based upon a 

mortgage model that is no longer a valid model. We have been inundated with and we are now facing what I call the exotic mortgage, the mortgage that doesn’t fit the natural, historical model of 

mortgages, and debtors, borrowers getting these mortgages not 

only didn’t understand what they were getting into, they fell into 

default not even knowing what the requirements were under their 

own mortgage. 

So the question is, does Chapter 13 from a model from 1979 provide the tools to be able to cure the problems that exist under these 

exotic mortgages? The Chapter 13 trustees are disappointed that 

the Senate didn’t agree with the House in providing a tool for dealing with the exotic mortgages in Chapter 13. Bankruptcy has been 

described as the last platform whereby you create a new dialogue 

between parties who can act in their own economic self-interest. 

As Professor Allen White’s study—and I know he testified before 

this Committee in the spring. He reviews these, and he points out 

that the economic interests would seem to point toward increased 

HAMP modifications. As he reported in a report I just got yesterday, mortgages in the pool he looked at, mortgage modifications result in a loss of approximately $12,000 per mortgage. In foreclosures, the loss is approximately $147,000 per foreclosure. That 

is not acting in your own economic self-interest. 

68 

Why? Well, risk is not connected with reward under these mortgages. The model simply does not work. Legal barriers exist between the servicing entity, the mortgage entity, and the entity that 

actually has the possibility of reward. 

So the HAMP programs you are seeing have been largely unsuccessful in dealing with the vast number of borrowers that are in 

default. It is not what we wanted. It is not what you wanted. It 

is not what Treasury wanted. But it is the truth; the HAMP system right now does not work. 

Can we make it work better? I hope so. And the trustees are certainly willing and participating now in processes where we can 

make this work better. Can it work better where borrowers are in 

bankruptcy? Remember, bankruptcy, they are there, many of them, 

in Chapter 13 in order to save their home. They already have the 

incentive to try and save their home. They want the house. They 

want the mortgage paid. They just need help doing it. Bankruptcy 

creates a system whereby documentation can be provided. Let’s 

change the HAMP program to allow the bankruptcy documentation 

to suffice instead of adding an additional layer. 

Does this mean that, because it didn’t work, that we stop on the 

process of trying to make HAMP better? No. We still need to do 

that. We need to make it work. So the trustees would encourage 

you to continue to look at the tools that can make Chapter 13 a 

better mechanism to cure defaults and get these mortgages back on 

track. If, as Representative Franks has pointed out, that 1106 is 

not the way you want to go, and I would agree, the trustees would 

agree that 1106 can be tweaked or can be improved. But it does 

recognize, as Mr. Scott had pointed out, that Chapter 13 recognizes 

that values for mortgages that are being cured are different than 

the distressed values that are facing in foreclosure. 

The second recommendation we would make, bring trustees and 

attorneys into the HAMP process. Do not exclude them. Do not ignore them. Encourage trustees and debtors attorneys to participate 

in the process. 

And, finally, we would recommend that if the HAMP process is 

stalled, doesn’t work, results in silence, create judicial review of the 

HAMP process. If the mortgage modification is not acceptable, at 

least take a look at allowing the judges to review the determinations made in the HAMP process. 

Thank you for the opportunity to be here, Mr. Chairman. And I 

am willing to answer any questions you may have. 

[The prepared statement of Mr. Hildebrand follows:] 

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Mr. COHEN. Thank you, Mr. Hildebrand. You have shown that 

you are as knowledgeable about preserving the use of and preservation of real assets as you are liquid assets. 

Mr. HILDEBRAND. Thank you, Mr. Chairman. 

Mr. COHEN. We now begin questioning. And I recognize myself 

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Ms. Schwartz, you are put in the somewhat difficult position of 

being the only person here that attempts to defend the HAMP program. Professor Levitin says it is a failure. Judge Golant apparently says something similar, and so does Mr. Hildebrand. They all 

have suggestions, like the cramdown provision. Tell me the things 

that they have said that you agree with. 

Ms. SCHWARTZ. Thank you for the question. 

Listen, I think we all get frustrated that we can’t see all of this 

wrapped up with a bow and finish every month at a greater number. But the truth is there are a lot of people paying $500 or $600 

less on a mortgage. In fact, 728,000 people. 

I think what the government has done through HAMP has put 

some uniformity into the program that there has not been across 

the market. I have been involved for 2 years, as you know, on this. 

So that is a good thing. Pull-through will be a good thing. Working 

with third parties will be a good thing. Time is of the essence. We 

all know that. There are 3.5 million people 60 days late on their 

mortgage. 

That said, what I agree with is that we should work on loans 

that are already in bankruptcy and figure out a way to help those 

people get modifications. That is something we are already working 

on with some of my colleagues at the table here with Treasury. 

Another issue is not one loan should go to foreclosure that hasn’t 

been reviewed for a HAMP mod or another mod. Because, let me 

assure you all, the loans that fail HAMP will get other mods, and 

they do, as do many other—— 

Mr. COHEN. Let me interrupt you slightly, because I know you 

have many other areas to go to that you want to agree with these 

folks. 

Judge, you are shaking your head. Tell me why. 

Ms. GOLANT. They are not getting reviewed. I only see people 

when they have tried their hearts out and have not gotten reviewed. They haven’t gotten any answer. And while they are still 

waiting for an answer, the process server shows up with a foreclosure complaint. Then they come to me. So I know they are not 

getting reviewed. 

Mr. COHEN. Ms. Schwartz. 

Ms. SCHWARTZ. Yes. So a requirement and a legal contract with 

the United States Government for everyone who has signed up for 

it is this loan will be reviewed for eligibility on a HAMP modification, and many others. 

The foreclosure—rate of foreclosures has gone down, the foreclosure sales, and there is this cue of people in waiting for sales 

while they are being reviewed for eligibility. And they haven’t all 

been timely reviewed, we all know that because we are seeing the 

numbers, but that is the process that has been prescribed, and it 

is the process within these organizations to do so. And maybe it is 

the lack of communication that is half of this. 

Mr. COHEN. Professor Golant, let me ask you this. The question 

on the cramdown, as the other side says, this will dry up the market and raise credit rates and all these things and make it more 

difficult for people to get mortgages if we do this. We allow family 

farms to have their conditions modified, homes modified, vacation 

82 

homes, yachts. Have you seen this in financing for yachts and vacation homes? 

Ms. GOLANT. No, Mr. Chairman. And in fact, the bill as I understand it is only for existing mortgages anyway. So it couldn’t possibly affect new finance. 

Mr. COHEN. Anybody else seeing a big problem in this country 

with financing yachts? 

Mr. HILDEBRAND. I serve as the Chapter 12 trustee in the middle 

district and have done that for 20 years. And in the context of 

farmers, they are allowed to do this. They are allowed to restructure their home mortgages or farm mortgages over the period of 

time longer than the 5-year term of the plan, and they have 

worked, and it has not caused farm credit to disappear. 

Mr. COHEN. Professor Levitin, you say it is a failure. Is there any 

way to cure HAMP. 

Mr. LEVITIN. Well, it depends on what you want HAMP to do. If 

you want HAMP to have a macroeconomic impact, I don’t think 

there is any way to fix it. 

That said, it doesn’t mean we should toss HAMP out. HAMP 

does help people. I mean, to the extent we can help any person who 

is in foreclosure, we should try to do it. And HAMP is helping some 

people, but it is just not ever going to produce the volume we need 

to keep up with foreclosures. 

Mr. COHEN. Does anybody know what percentage of people it is 

helping? Is it like 4 percent? 

Ms. Schwartz, do you have any idea? 

Ms. SCHWARTZ. Well, I think we don’t know that answer yet, because they are all in process, 60, 90, 120 days under the grace period of getting their final docs in. So that measurement is difficult 

to assess. 

Mr. JORDAN. Mr. Chairman? 

Mr. COHEN. Yes? 

Mr. JORDAN. Just in response to the question, we had a hearing 

in Cleveland this Monday with Mr. Kucinich on the Domestic Policy Subcommittee of OGR. Testimony from Ms. Caldwell from 

Treasury was 650,000 are in some type of preliminary modification 

trial phase. 

But, to date, my numbers that we got, confirmed by Ms. 

Caldwell, were 1,711 families in the HAMP program. That is all 

that have had their loans modified. 

Mr. COHEN. 1,711 out of 65,000? 

Mr. JORDAN. 650,000 are in the trial phase. 1,711 families have 

had their loans actually modified; that is it—permanent modification. It is that bad. 

Mr. COHEN. Thank you, Mr. Jordan. 

Ms. Schwartz? 

Ms. SCHWARTZ. I just actually had the number from the Treasury 

report that there are 31,000 permanent modifications. And, remember, you have to be 90-days current with full documentation to get 

permanent. There are a substantial number of people current on 

their payments but have not documented, just to keep the distinction. 

Mr. COHEN. Before I yield to the Ranking Member of the minority, Judge, do you have a response? 

83 

Ms. GOLANT. I do, your honor—I am sorry, Mr. Chairman—because—— 

Mr. COHEN. No, ‘‘your honor’’ works. I like that. 

Ms. GOLANT. Yes, your honor. I try to get people even to be allowed to apply for HAMP, because, despite the participation agreements, many servicers will not even allow it. So I have people that 

have also made their 3-month payments and they are still not getting permanent mods. 

But I am talking about people that can’t even get in the door. 

I don’t know why, but it is not that I am not trying. And when I 

try, I get resistance. I don’t get a package, ‘‘Here, send it in, and 

we will consider it.’’ I get a hearing in front of a judge, because 

they won’t agree. 

Mr. COHEN. Thank you. 

I now yield to the Ranking Member from Arizona, Mr. Franks. 

Mr. FRANKS. Well, thank you, Mr. Chairman. 

Mr. Chairman, let me just, if I could, begin by trying to clarify 

a couple of things. 

Related to the comparison on the Chapter 12, the family farm 

comparison, there were only 314 of those last year. So it is, kind 

of, not a really very good comparison. 

And I also wanted to just—because I understand that there is a 

partisan disagreement over how this challenge came into existence. 

But there are a lot of statements on the other side of the aisle that 

says that rebundling and all of these things that were done with 

the derivatives were the problem. 

But I just want to remind everyone, if the loans that were the 

fundamental matrix of those instruments, if the loans that made 

up those financial instruments had performed as one would have 

expected them normally to do so, none of this would have happened. All of the derivatives would have been fine. I am not suggesting it was a perfect system, but I am saying that the problem, 

the thing that caused this problem was that bad loans were made. 

And, certainly, the CRA put a great deal of pressure on banks 

to make bad loans. And banks, due to their own fault or due to the 

pressure that was in the system, kind of did away with the three 

main legs that hold up loans. One of those is income, one of those 

is credit history, and, of course, one of those is the collateral, how 

much money they put into the loan in the first place. And when 

you take those three things out, as a lot of that happened, that is 

what catalyzed this problem. 

And we should be, as a Congress, looking very hard on ways to 

prevent that again and at least to face that squarely. And I don’t 

really think it is a partisan issue, and, unfortunately, it has become that. But I don’t know what else we can do with that. 

Ms. Schwartz, I have been very obviously impressed with your 

testimony today. You note that there have been 680,000 trial modifications under HAMP. What does it take to convert a trial modification to a permanent modification? And what are the main impediments to making those conversions? 

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fication. It would be performance on pay history that gets them 

there, you know, some documentation like a hardship, maybe a pay 

stub, et cetera. 

This is more prescriptive. In fact, if you need a W-2 and tax returns and a 4506(t) and the hardship letter and the other documentation, if it is going back and forth with servicers, counselors, 

and the borrower 10 times on the same mortgage, it is very difficult to be efficient and effective. 

And with any government program, you are at risk of making a 

mistake, and no one wants total make a mistake if they put them 

into a mod. A lot of process and friction is in the system, understandably. These are taxpayer dollars. 

So that is the biggest difference, is documentation, streamlining, 

and trying to contact with the borrower that don’t return calls, and 

maybe 120 days later you start getting into the process. There are 

just all kinds of issues. 

Mr. FRANKS. Is there any way to eliminate some of these impediments without putting the program in the same kind of challenges 

that got us here? 

Ms. SCHWARTZ. Yes, sir. I mean, we do have some recommendations, and to the government, that we think there are ways to improve it. I don’t know that you are going to get the pull-through 

that everyone wants and expects for a program like this. And, 

again, unemployment is one the biggest drivers. Lack of income 

means you cannot modify a loan. 

Mr. FRANKS. I guess that is my question. How is unemployment 

affecting mortgage-modification efforts? And isn’t it, or is it, the 

single greatest impediment to these modifications? 

Ms. SCHWARTZ. I think it is one of the biggest ones, in that we 

are all in such a changing landscape that what was true 120 days 

before when you start the trial modification, a loss of income of one 

spouse, maybe overtime being cut changes the dynamics. And when 

the income documentation gets documented, it is different than 

what it was 90 days ago. 

And so this changing landscape, it is difficult to keep the process 

in place. And it is a threat, I think, to all of the good work going 

on with all parties, whether it is counselors, lawyers, and servicers. 

This changing landscape is clearly the issue. 

Mr. FRANKS. Mr. Chairman, I guess, with that, I will just suggest 

that one thing that we should be able to get together on on both 

sides of this aisle here is to recognize the importance of jobs and 

productivity to solving these problems. It is the only way home. 

And it is astonishing how a lot of the economists can talk in big 

words, but, fundamentally, the economy is about productivity, and 

that is measured in large part by jobs. And I hope that we can get 

together and face that. I don’t know if either side has the answer 

on how to fix it, but we should agree that that is a huge, huge 

issue. 

And I yield back. 

Mr. COHEN. Thank you, sir. 

I would now like to recognize Mr. Delahunt. Would you like to 

ask questions? Mr. Conyers passes, I believe. 

Mr. Conyers? 

Mr. CONYERS. No, I don’t pass. 

85 

Mr. COHEN. You don’t pass. You pass everything; you pass with 

honors. 

You are recognized, Mr. Conyers. 

Mr. CONYERS. You can’t Chair two Subcommittees at the same 

time. 

Let’s see what we are talking about here. This is, I won’t say a 

funny kind of hearing, but we have two witnesses that say everything is going along about as well as it can and two that are clearly 

dissatisfied. 

Now, my investigator tells me that the HOPE coalition is made 

up of community counselors, bankers, and mortgage company officials. True? 

Ms. SCHWARTZ. Yes, and investors and Freddie Mac and all the 

nonprofit, HUD-approved counseling agencies, that is correct. 

Mr. CONYERS. How many bankers? 

Ms. SCHWARTZ. Well, we have about 34 different servicing institutions. Many of the top banks are members of HOPE NOW. 

Mr. CONYERS. They are the ones that created the problem. 

Ms. SCHWARTZ. You know what, sir? They are the ones who need 

to get you out of this. You need to work with us—— 

Mr. CONYERS. Oh. Because they got us into this. 

Ms. SCHWARTZ. They are the ones in charge of executing modifications and helping borrowers through loss mitigation. And to not 

have them work through this to help get out of it would be a mistake. 

Mr. CONYERS. How many are there? 

Ms. SCHWARTZ. Pardon me? 

Mr. CONYERS. How many bankers are there, just roughly? 

Ms. SCHWARTZ. I just don’t know the breakout of who is—let me 

think. Maybe it is 18 out of 33 or something. I have to relook at 

that. 

Mr. CONYERS. Well, look at it, and we want to put it in the 

record. 

Ms. SCHWARTZ. Sure. Sure. 

Mr. CONYERS. What about mortgage company people? 

Ms. SCHWARTZ. So all of these institutions—— 

Mr. CONYERS. All of them are? Most of them are? 

Ms. SCHWARTZ. Well, I mean, we have the resources of people to 

work with us on all the Committees and help go to the outreach 

events and send teams of people to meet with borrowers. So there 

are all, kind of, walks of life within these companies. 

Mr. CONYERS. Yeah, how many? 

Ms. SCHWARTZ. Thousands, probably, working to help. I don’t understand the question perhaps. I apologize. 

Mr. CONYERS. That is all right. Well, that is a great acronym, 

HOPE. Reverend Jesse Jackson, ‘‘Keep hope alive.’’ 

How many people have you helped? 

Ms. SCHWARTZ. This year alone, the records on 40 million loans, 

which is the majority of the market share, indicates that 2.6 million people have had either modifications or repayment plans, in 

addition to the 700,000 government trial plans. 3.4 million people, 

while 700,000 went to actual foreclosure sale. Four times higher. 

Mr. CONYERS. What am I missing in this question, counsel? 

86 

What is the basis for saying—you are saying millions were saved. 

How can you identify who was prevented from foreclosure? The 

numbers you reveal are staggering and raise some questions. 

Ms. SCHWARTZ. Well, those are actually records we get on the 

data of people that are in repayment plans or actual modification, 

which is a structural change in a contract, and we have the government actual modification trials. And then foreclosure sales are 

records, and so we know how many go to actual sale. 

And there are a lot of people in between. There are millions of 

people whole need help, and we know that. So I am acknowledging 

that. What I am trying to share with you is data that is very strong 

data around this issue. 

Mr. CONYERS. Professor, help me out here. 

Mr. LEVITIN. Sure, Mr. Chairman. 

First, it is important to distinguish between the private modifications counted by HOPE NOW and private modifications and repayment plans that are included in Ms. Schwartz’s statistics and 

HAMP modifications. There have been, as Ms. Schwartz notes, several million repayment plans and private modifications. There are 

a couple of important things to note about those. 

First, we don’t know what the terms of any of those are. And the 

terms actually matter. A repayment plan can be a very helpful 

thing or it can be a useless thing, depending on its terms. So just 

looking at an absolute number doesn’t really tell us that much. 

Secondly, there is some element of double-counting in the repayment plans and modifications. Because often a borrower gets in a 

repayment plan and fails in the repayment plan and then gets a 

modification and maybe fails in that modification and gets another 

modification. And we don’t know how long, you know—how this 

string of events goes. 

But just looking at, sort of, the cumulative numbers from HOPE 

NOW compared with foreclosures is not the most meaningful comparison. Certainly, HOPE NOW and its members are trying to do 

various mitigation actions. How effective those are is another question entirely. 

Mr. CONYERS. Well, you know, this isn’t working out so well, 

Mrs. Schwartz. What is the problem here? What is the difference 

between what I asked you and what Professor Levitin responds? 

Does he understand this program fully? 

Ms. SCHWARTZ. He does. We have talked several times. 

And I think what is important here, sir, is—I know you are right, 

in that if 30 percent or 40 percent go back in default and you try 

another modification—for instance, maybe the HAMP modification—you know, that is another bite at the apple before you go to 

foreclosure. 

And what I would say with my numbers that are accurate is we 

count every foreclosure, so they would flow through our pipelines 

and show you what has happened. And, clearly, millions of people 

are not in the final stage of foreclosure over the efforts. That is 

clear. Two out of three don’t go to foreclosure, And that is historic 

in the last year, through these efforts. It used to be one out of two 

go to foreclosure. 

That said, more work needs to be done, I totally agree. But I 

would say that every loan should be reviewed for a workout alterVerDate Aug 31 2005 11:09 Mar 30, 2010 Jkt 000000 PO 00000 Frm 00090 Fmt 6633 Sfmt 6601 H:\WORK\COMM\121109\53948.000 HJUD1 PsN: 53948
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native. And that is the prescriptive legal agreement of what HAMP 

is. And after they have been exhausted, they go to foreclosure sale. 

And, you know, I would like to think that that is exactly what is 

happening, but I don’t know every answer on this one. 

Mr. CONYERS. Well, you say the mortgage bankers and the mortgage people are the ones that can help us get out of it. Who is it 

that helped us get into it? 

Ms. SCHWARTZ. Well, I think there are a lot of parties to all these 

transactions. We all know that. 

Mr. CONYERS. Yeah. But I am talking about these two groups. 

Ms. SCHWARTZ. We have counselors—— 

Mr. CONYERS. Don’t you want to blame the subprime mortgage 

thing as triggering this off? 

Ms. SCHWARTZ. You know what? Those have stabilized. We are 

into the prime—two to three times higher foreclosures on prime 

mortgages. 

Mr. CONYERS. Yeah, but I am talking about what started it. You 

shake your head. That means yes? 

Ms. SCHWARTZ. Yes, I think it started in the product of high-risk 

layering and subprime, and it has migrated to a different issue. 

Negative equity is now a big issue that hasn’t been discussed. That 

is another haunting issue, as is unemployment. So the nature of 

making a modification has changed. 

Mr. CONYERS. But the bankers and the mortgage people are the 

ones that gave out the subprime mortgages. 

Ms. SCHWARTZ. I am working with the loan servicers, sir, whose 

job is to—— 

Mr. CONYERS. I am not talking about that one guy. I am talking 

about the industry people. These are the guys that got us into this. 

Now, most people recognize and acknowledge that. This is a couple 

of years old now. So why are we going back and forth and modifying all of this? 

I am going to have, Ms. Schwartz, some additional questions for 

you to submit for the record because of the 5 minutes. And the 

Chairman has been generous. We need to go into this a little deeper. 

And I thank the gentleman. 

Mr. DELAHUNT. [Presiding.] Yeah, and I thank the Chairman of 

the full Committee. 

We have a series of votes. Let me inquire of the panel. I think 

this is an important hearing. It is my understanding that we are 

looking at probably a 45-minute recess. If you are willing to come 

back, I don’t want to encroach on your time, but I think this is an 

important hearing. It might only be one or two of us that come 

back, but I think hearing from you at this point with the kind of 

questions that are being posed by the Chairman of the full Committee, Mr. Conyers, is important. 

If it is a significant inconvenience, individuals, obviously the 

Chair, would not be in any way offended if you didn’t return. But 

it would be great to hear from you, because I think you all have 

so much to contribute. 

Can I have a show of hands if there is a genuine willingness to 

return around quarter of 2:00? 

Then that is what we will do. 

88 

Mr. SCOTT. Mr. Chairman? 

Mr. DELAHUNT. Yes, Mr. Scott? 

Mr. SCOTT. Could I be recognized? I just have a couple of questions that I would like to ask before we go. 

Mr. DELAHUNT. Of course. And what we will do, we will end up 

and give the remaining time, as much as he needs, to Mr. Scott. 

He won’t return, but I promise I will. And I know the Chairman 

of the Committee, Mr. Cohen, he will be here, because he, too, is 

a Kentucky colonel. 

And, with that, I will yield to the gentleman from Virginia. 

Mr. SCOTT. Thank you, Mr. Chairman. 

I wanted to ask Mr. Hildebrand, in a normal bankruptcy, if you 

have a yacht and it is upside-down and you owe more than the 

value of the yacht, what happens? 

Mr. HILDEBRAND. The implication in the question is, can bankruptcy judges, can a bankruptcy plan structure and recognize the 

economic reality that you mentioned in your opening remarks, that 

the collateral is the extent of the secured claim, whether it is a 

yacht or a piece of business equipment or whether it is an airplane 

for United Airlines or whether it is the plants for General Motors? 

Bankruptcy judges are entrusted with the ability to make these 

valuations, determine them for everything except the home mortgage. 

Mr. SCOTT. Okay. Now, on the yacht, you could reaffirm the debt, 

but you would only have to reaffirm the debt up to the value of the 

yacht, is that right? 

Mr. HILDEBRAND. If I could distinguish, reaffirmation would require a voluntary consent on both sides, pretty much like an agreement. On a plan, like a Chapter 11 plan, Chapter 12 plan, or Chapter 13 plan, it is the value you provide. And as long as the court 

determines that the value is fair and that it is a fair market value 

for whatever the collateral is, that is the extent of your secured 

claim that you must pay. 

Mr. SCOTT. Okay. Now, if the debtor wants to reaffirm, does he 

need permission from the creditor? 

Mr. HILDEBRAND. For a reaffirmation in a Chapter 7, yes, sir. 

Mr. SCOTT. What about a 13? 

Mr. HILDEBRAND. In a 13, no. That would be part of the plan 

process in the restructuring. 

Mr. SCOTT. Okay. So, in a 13, the debtor can say, ‘‘I want to reaffirm,’’ and the debt he has to reaffirm is the value of the yacht at 

that time? 

Mr. HILDEBRAND. The plan he proposes is whatever the value of 

the yacht is—— 

Mr. SCOTT. Right. And that is probably a better deal for the creditor, because it is not a distress sale minus expenses. 

Mr. HILDEBRAND. And as we have the amendments from 2005, 

it recognizes that the value we are giving this is not distressed 

value, wholesale value, auction value; it is retail value. 

Mr. SCOTT. Okay. Now, the reason that a person would reaffirm 

at a higher rate on a home is essentially not because a creditor 

would get any more in a liquidation, they would actually get less, 

but because he is over a barrel if he doesn’t reaffirm, he is homeless. Is that right? 

89 

Mr. HILDEBRAND. To the extent a borrower agrees to pay more 

than the economic dictates, the answer would be yes. 

Mr. SCOTT. Okay. Now, to take advantage of a debtor in that 

case, is that fair? 

Mr. HILDEBRAND. I am not sure I am the one to answer what is 

fair and not fair. 

Mr. SCOTT. Making them reaffirm to higher economic value than 

the creditor would be entitled to on liquidation because, if he 

doesn’t reaffirm, he is over a barrel. Either he reaffirms at the 

higher rate or he is homeless. 

Mr. HILDEBRAND. Traditionally, bankruptcy law has been created 

to be fair to the most people involved. And, in the context of putting one creditor entity, or any entity, having more clout, if you 

will, more ability to hold somebody over a barrel, that works to the 

detriment not simply of the borrower or the debtor, but all the 

other creditors in the case. 

Mr. SCOTT. I think I hear you saying that is not fair, which we 

would agree with. 

Mr. HILDEBRAND. I wouldn’t disagree with that. 

Mr. SCOTT. Mr. Chairman, I would ask all of the witnesses, because we don’t have time for a coherent answer, on accounting incentives and disincentives, whether or not the generally accepted— 

what is it, GATT?—generally accepted accounting practices give a 

disincentive to modifications or incentives to modifications. 

I understand there may be some realization problems that may 

affect the balance sheet and earnings that would give people a disincentive to modify. And if any of the witnesses can comment on 

that briefly or in writing, I would appreciate it. 

Mr. LEVITIN. Mr. Scott, I do not speak as an expert on accounting 

principals, but I can say this: Accounting principals are a disincentive for doing modifications that involve principal writedowns. Because when you write down principal, that immediately appears— 

that has a loss realization event on a balance sheet. Whereas if you 

lower interest rates, that does not affect how the loan appears on 

a balance sheet, even if they would have the same effect—— 

Mr. SCOTT. And all of that is artificial, because the fact that you 

modified doesn’t put you in any better position, because you are 

about to lose even more if you let the thing go into foreclosure. 

Mr. LEVITIN. That is correct. 

Mr. DELAHUNT. I have been notified by staff that, rather than 40 

minutes, it is closer to an hour and 15. Now, you know, I am sure 

that some of us are more than willing to come back around 2:15. 

If that presents a problem and you can’t make it, that is fine. I just 

think your testimony is that important, I will show up and we will 

have a conversation. 

And if anyone here is significantly inconvenienced or has anything else to do, like Christmas shopping or whatever, we understand. We don’t want to impose. But I think maybe Mr. Coble and 

maybe myself and I know the Chair of the Subcommittee will also 

return. 

So, why don’t we plan on seeing each other around 2:15, 2:20? 

There is a great cafeteria here. 

And we are in recess. 

[Recess.] 

90 

Mr. DELAHUNT. We are back in session. 

Let me extend my gratitude to this panel. Not only have you all 

made a contribution to the discourse, but you have established the 

fact that you have patience and can endure, which means that you 

would make fine Members of Congress, particularly in the Senate—or in the House, waiting for the Senate to do something. 

And I think we are going to be joined shortly by the Chair of the 

Subcommittee, Mr. Cohen, but let me proceed. And let me pose a 

hypothesis. I see clear problems in terms of utilizing voluntary 

modifications. I think it has been articulated by at least three of 

our panelists. Clearly, any particular program, no matter how wellintentioned, would have to be revamped, take into account all of 

what I believe to be obvious impediments to success. That requires 

a sustained effort and much consultation among the parties. 

I read something recently in the media about how the Treasury 

Department was going to shame those banks who were not or did 

not appear to be cooperating, in terms of helping to resolve this 

problem. I just don’t think that works. 

And it is not just bankers. I don’t want to particularly castigate 

anyone. I think it is just that there are different viewpoints, different obligations. Banks, other corporations, have a primary obligation to shareholders. There are obviously self-interests. Self-interest is not limited to lenders. It is not limited to politicians. It 

is not limited to professors or CEOs of nonprofits. It is what human 

nature is all about. But there needs to be a balance. 

Now, in terms of the voluntary programs, does this make sense: 

If there were—and this is the hypothesis—if there were authority 

conferred on the bankruptcy courts to reduce principal, in your individual judgments, would we find lenders moving more quickly to 

voluntary programs? 

Since you are shaking your head, Ms. Golant, let me begin asking you, am I anywhere in the ballpark? Would it provide leverage? 

Ms. GOLANT. Absolutely. Absolutely. And that is one of the huge 

issues now. And that is why when I get the plaintiff, the bank, in 

a jam in the foreclosure case, that for the first time gives the borrower leverage, then we get somewhere. 

Right now, other than in that very limited context, borrowers 

have no leverage. So, yes, the possibility of a judicial modification 

or of a Chapter 13 would certainly provide leverage. 

Mr. DELAHUNT. See, that is what my instinct tells me, and that, 

you know, programs like HAMP—and, you know, I appreciate the 

fact that there is substantial counseling going on through these 

programs. I think that is a positive. But I don’t think it gets us to 

the point where we are dealing with the issue. 

I think what we are doing by going the voluntary route is delaying—delaying the ultimate resolution. And we are just extending 

the pain and suffering and possibly and potentially exacerbating 

into a full-scale crisis that, at some point in time, could really do 

permanent and serious damage to not just real estate but to our 

overall economy. 

Mr. Hildebrand? 

Mr. HILDEBRAND. Mr. Chairman, I administer about 600 new 

Chapter 13 cases every month. And in each one of those cases, 

there is issues that deal with the valuation of collateral or the inVerDate Aug 31 2005 11:09 Mar 30, 2010 Jkt 000000 PO 00000 Frm 00094 Fmt 6633 Sfmt 6601 H:\WORK\COMM\121109\53948.000 HJUD1 PsN: 53948
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terest rate that is an appropriate interest rate, how much debtors 

have to pay back. And what we have seen is that only one or two 

or three maybe a month have actually litigated, because in the 

backstop or the backdrop of the fact that there is a judicial remedy, 

a judicial response, negotiations take place. 

So, as I said in my original testimony, bankruptcy creates a platform upon which there is negotiation, where parties can act in 

their own economic self-interest. 

So I totally agree with your hypothetical. And it is accurate that, 

whether it is a modification of the principal amount or whether it 

is a judicial backstop to the HAMP program, where if HAMP is silent or there is no response or the HAMP is somehow mysteriously 

denied, there is some judicial response to review it, to see exactly 

what is going on. 

And, in that context, which is not the same as the 1106 response, 

it is something different, which is should there be a judicial backstop, which is the purview of this Committee, and it would be appropriate. 

Mr. DELAHUNT. Would the two of you agree that it would make 

Ms. Schwartz’s program significantly more effective? 

Mr. HILDEBRAND. No question. 

Ms. GOLANT. Yes. 

Mr. DELAHUNT. And we would see data that, in a relatively short 

period of time, would reflect? 

Mr. HILDEBRAND. There is no question that, if a modification was 

requested and there is silence, then—and there is a backstop to 

that, whether it is a judicial review, then there would be a heavy 

incentive to participate in the HOPE program or the HAMP program by the servicers and by the investors. They will exercise that 

right, and it will facilitate a resolution to the process. 

Ms. GOLANT. And, in addition, Mr. Chairman, at this point, with 

the voluntary programs, there is no two-way dialogue, there is no 

balance of power. 

And that is why, when these voluntary modifications are proposed, many times borrowers will accept them even though they 

know they can’t pay them, because it is better than nothing, in 

their view. And there is no opportunity to negotiate at all, so it is 

take it or leave it. And they figure, well, we better take it or else 

we will lose our house. 

If there was a way to discuss and to have recourse to a judicial 

process, if need be, it would make a huge difference. 

Mr. DELAHUNT. Well, Ms. Schwartz, you are next. 

Ms. SCHWARTZ. My pleasure. 

Mr. DELAHUNT. And we have plenty of time. 

Ms. SCHWARTZ. Well, let me first—— 

Mr. DELAHUNT. So this is going to be much more of a conversation than is usually the case in a formal congressional hearing because of the fact that I now have the gavel. And I Chair the Europe 

Subcommittee on Foreign Affairs, and I describe it as ‘‘the Committee with no rules,’’ because I think it is much more important 

to be able to engage in a dialogue and fully flesh out these issues 

and see where there is agreement and see where there is consensus. 

92 

I think it is clear you know where I am coming from. But that 

does not, in any way, mean that I don’t appreciate the value of voluntary programs, particularly counseling aspects. 

And, if you will, think of it in this way: Oftentimes, courts will 

refer matters for mediation, and those mediators oftentimes have 

demonstrable effect on serious problems, because it keeps the court 

calendars somewhat unclogged and it doesn’t, in any way, like I 

say, diminish the significance. It just creates a different role for 

voluntary modification programs. 

Ms. Schwartz? 

Ms. SCHWARTZ. Well, thank you very much. 

You know, the way I think about it—and I really have spent 

time, frankly, with foreclosure attorneys, bankruptcy attorneys, all 

the nonprofit counselors, the bankers, the servicers. I feel like I 

have spent a lot of time on this. 

But I do need to reiterate: First, there is a requirement for banks 

who have signed up with the United States Treasury and have 

loans that are owned by Fannie Mae and Freddie Mac, it is a requirement, as their job, as servicers, to go to HAMP. 

If it does not comply, and they can still be NPV positive to their 

investor—— 

Mr. DELAHUNT. NPV means what now? 

Ms. SCHWARTZ. Net present value test, which is the unfortunate 

cold calculation of either a foreclosure is preferred or a modification 

and workout. And we heard today that modifications are far better 

for investors than are foreclosures, certainly in this market. 

And so, whether they are redefaulting or not because of unemployment and other burdensome issues in the economy, those are 

requirements of the contracts they have in place with many parties 

and the United States Government. 

And the reason I say that is, when I hear ‘‘voluntary,’’ it makes 

me kind of crazy, because the agreements for people to look 

through loans are to work on an NPV test before and after to assess if they go to foreclosure. Those are the facts. 

Mr. DELAHUNT. We are going save you for cleanup, Professor 

Levitin. 

Ms. SCHWARTZ. No, no. He will clean up. We are cleaning up offline, too. But I don’t—— 

Mr. DELAHUNT. But let me interrupt, because, you know, I hear 

what you are saying, and I am sure that is true. But how many 

individuals who find themselves in foreclosure proceedings are 

aware of that contract? 

It is like, when you talk about the credit card contract, there is 

nobody in this room that has ever read their credit card contract. 

I mean, I think we are asking too much of people. 

And, you know, what agency is policing, monitoring the contracts? 

Ms. SCHWARTZ. It is also the communication with the homeowner. So an honest conflict is there are State laws that govern the 

foreclosure process. Remember, I earlier said two-thirds of the people that start that process have not gone to foreclosure and they 

get worked out. But it is cumbersome that people are working on 

modifications and going down the route of foreclosure. That happens a lot, because the State laws govern timelines, et cetera, on 

93 

foreclosure versus the workouts. Some of the workouts do not pass 

the testing—and the rigorous testing—that goes on. 

But I might also add, many people make 30 to 40 attempts to 

reach the homeowner—FedExes, calls, door-knockers—and don’t 

have any communication sometimes until after the foreclosure 

process. Again, those are pretty good facts on the grounds of what 

attempts have been made. But we should do better at measuring 

that to understand where the breakdown is for the borrowers who 

call in and—— 

Mr. DELAHUNT. I am not going to dispute that. I guess my position is, we don’t have time. 

Ms. SCHWARTZ. I know. It is tough. 

Mr. DELAHUNT. Really, I don’t think the American public is 

aware nor Members of Congress are aware that, given the data 

that I see in terms of the increasing numbers of foreclosures, that 

time is of the essence here. 

If we continue to drag this out and attempt to perfect all of the 

pieces of the programs that, again, I am sure are worthy, we are 

going to find ourselves in a real serious, severe crisis. Because we 

don’t have anybody—we get together like this, and we have a conversation, and, you know, Chairman Cohen and I are going to be 

on a plane going back to our respective districts, you will be going 

back to your offices, and everybody here will feel that it has been 

a good discussion. But we need action now. 

And I get very frustrated because I understand the banks have 

their role, but, in the end, it is self-defeating, I think, for the lenders, as well. Because God forbid they have a total collapse on the 

real estate market, we are going to be back to where we were in 

September of 2008. I can see that as a real possibility. And there 

are no more bailouts coming from this Congress. That ain’t gonna 

happen. It is just not going to happen. 

Again, I am thinking of, you know, the authority to reduce principal as a mechanism to—when you have everybody’s feet to the 

fire, you have the servicer out there, and it is somebody else’s problem, and it is the lender and the investor. And, you know, how do 

you find where the mortgage is, because it has been securitized and 

it is off in some, you know, Never Never Land anywhere. And you 

are making calls, and the robocall comes and you are afraid it is 

the creditor so you don’t pick up the phone. 

I mean, these are very real, human responses. And unless you 

get—and these trustees are good. We have a good bankruptcy system in this country. And I dare say, Mr. Hildebrand and his colleagues are not out to punish people, including all the stakeholders. 

As he said in part of his statement, you know, we want to be fair. 

We understand that bankruptcy is incorporated into the Constitution by the Founders to give people a chance, but at the same time 

there is a balance to ensure that the investor and the lender, you 

know, be treated fairly and equitably, as well. 

I just think that we have gone down a road that could very well 

bring us back even to a more dangerous and risky situation than 

what we were looking at better than a year ago. And here we are 

today with, you know—and I really wanted to come back, and I appreciate the four of you indulging me, because I want to get it on 

the record. Because, God forbid, but if I am correct and my inVerDate Aug 31 2005 11:09 Mar 30, 2010 Jkt 000000 PO 00000 Frm 00097 Fmt 6633 Sfmt 6601 H:\WORK\COMM\121109\53948.000 HJUD1 PsN: 53948
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stincts are accurate, I want to be able to refer to this record and 

say, ‘‘I told you so. I told you so.’’ 

And all I hear is it is the CRA and Fannie Mae and Freddie Mac 

and all of this and that government is the problem. Well, you 

know, it might be a—I am not suggesting that government is the 

answer, but a bankruptcy court system that has evolved from our 

Constitution has proven to be a very effective instrument of helping 

people and, at the same time, being fair and equitable. 

That is my concern. I want your program to work. I really do. 

But I think you need a little bit of a hammer hanging out there. 

Ms. SCHWARTZ. Two things. I just want to be very clear. HOPE 

NOW doesn’t, you know, really go on or off for what legislation 

should pass. We work with all the rules and the tools that are in 

the arsenal. So, today, HAMP is a dominant part of what we do. 

If it fails HAMP, we do other mods, et cetera. 

My personal background is a capital market background for the 

first 15 to 18 years of my career. And what I would just share is 

today we have a broken market still. And the mortgage-backed security market and the trading market and the government is, fortunately for all of us, investing in those. 

What I do know is, I don’t know what a bankruptcy on a first 

lien mortgage would mean to the markets, but our markets aren’t 

even acting yet in a functional way. There are no global investors. 

And, even in the United States, it is the government buying our 

assets. 

So I don’t know what bankruptcy would do. I just don’t have 

enough data to know that. I worry about that. 

Mr. DELAHUNT. Okay, but here is my guess. And I have listened 

to a lot of experts, and you know what I have discovered? Everybody is guessing. Okay? There really aren’t any experts. 

Ms. SCHWARTZ. I worry that that could be an issue. 

Mr. DELAHUNT. But I think that the major concern I have is 

timeliness. Okay? And I don’t see leverage to create the dynamic 

necessary to resolve the problem. 

I am not an advocate, you know, to go into a situation with guns 

blazing and, you know, tear down the markets. I think you are correct. I don’t see, right now, a rational market. And until it hits bottom—and that is, I think, why people are hesitant, because they 

don’t think it has hit bottom. 

And I think I agree with my Republican colleagues; it isn’t about 

subprime now, it is about unemployment. But, you know, there is 

this chicken and egg argument, too. If you go underwater, then you 

lose your house and people are holding back in terms of expenditures, you create more joblessness. You create this vicious cycle. 

And I don’t know. Again, I am not saying it is a panacea, you 

know, to cram down authority. But I am saying it is a significant— 

and it is not even a tool. I would like to think that the voluntary 

modification programs would work if you just had that sitting over 

on the side. 

Ms. GOLANT. It would help. 

Mr. DELAHUNT. Professor Levitin, am I making any sense to you? 

Mr. LEVITIN. Perfect sense. This is—— 

Mr. DELAHUNT. You must agree with me then. 

95 

Mr. LEVITIN. Of course. This is, should we approach this with a 

stick or a carrot or both? Treasury’s approach has been to offer a 

carrot; taxpayer-funded incentives paid to servicers, to lenders, and 

in some cases to homeowners, to encourage HAMP modifications. 

A carrot is a good way of encouraging behavior. But when it is 

combined with a stick, it is likely to be much more effective. Take 

the carrot, and, if you don’t, out comes the stick. And bankruptcy 

would be the stick. 

There are a few things that Ms. Schwartz said that I want to 

comment on, not so much to disagree with her but just to expand 

on her comments. 

Ms. Schwartz rightly noted that servicers who sign up for 

HAMP—and it is largely voluntary, whether they sign up for 

HAMP—that servicers who sign up for HAMP are then under a 

contractual obligation. They have a contract with Fannie Mae, as 

Treasury’s agent, that they will operate under the terms of the program. 

It is worth noting, though, you know, what is the penalty for a 

servicer that fails to do this? Well, the only thing that is in that 

servicer participation agreement is regular contractual rights; that 

if Treasury thinks a servicer isn’t complying with the servicing contract, isn’t giving a proper review to a borrowers’ cases, then Treasury’s only real remedy is to take the servicer to court and sue 

them. And I think that is credibly unlikely. And, frankly, what 

would the damages be to Treasury? The servicer might even be 

saving Treasury money if the lender—— 

Mr. DELAHUNT. Is that accurate, Ms. Schwartz? 

Ms. GOLANT. Yes. 

Mr. DELAHUNT. Is that really the remedy? 

Ms. SCHWARTZ. I haven’t read all the legal terms of the contract, 

but I know banks take seriously a contract with the United States. 

Mr. DELAHUNT. I am sure they do. And I am sure they don’t 

want that on their record. But I would know, if I am a banker and 

I want to keep my balance sheet looking well and be able to hold 

those assets so that, you know, when I have to report to stockholders—and I know how the bureaucracy moves and how often I 

am going to get sued. I might take the risk of not disregarding my 

contractual obligations, but really not giving it my all either, if it 

didn’t suit my self-interest. 

I mean, again, I like to put these things in terms that I can understand. And the government doesn’t have enough lawyers, you 

know, to bring those kind of suits. 

Go ahead, Professor. 

Mr. LEVITIN. I want to be clear that I am not alleging any actual 

bad faith. 

Mr. DELAHUNT. No, I understand. Nor am I. 

Mr. LEVITIN. But this is a program with very limited oversight, 

and that is just the nature. If you are trying to modify tens of thousands of loans, that there is limited—without tremendous staffing, 

you can’t do serious oversight. And, in that space where you don’t 

have a lot of oversight and where servicers may have incentives not 

to do the modifications, it wouldn’t be surprising if we saw 

servicers dragging their feet. 

96 

Treasury is making incentive payments to servicers. It is far 

from clear, though, whether the incentive payments are enough to 

make this work. 

Mr. DELAHUNT. Well, see, that is my point, too. You know, I look at the numbers, it is $1,000. And I am the servicer; let’s say I am 

the guy on the phone. I don’t mean the servicer, the corporate entity. But if I am the guy on the phone—and how is he getting paid? 

Is it a commission? 

Ms. GOLANT. Probably. 

Mr. DELAHUNT. What is my piece of the $1,000, or am I just a 

straight salary? Again, I know how it—and maybe I am wrong, but 

I just think of human nature. 

And when we talk about how we got here, I can remember talking to mortgage brokers, and I say, why the subprime? And the answer was very simple. Well, the subprime because, you know, the 

salesman that was out there pitching the mortgage—because I saw 

these numbers, and I presume that you wouldn’t have any great 

disagreement, but 70 percent of those that took a subprime loan 

could have qualified for the traditional 30-year fixed rate, which 

they might have been able to sustain. 

I said, how did that happen? Because I am naive; I don’t really know. Well, because they got $13,000 commission for pushing the 

subprime rather than the $3,000 that they would have got for the 

traditional. And then you get loosey-goosey with the underwriting 

standards, and you get into—you know, it was the wild West. 

And that is why I take offense when I hear it is the Community 

Reinvestment Act that did this. That is baloney. That has no data 

at all to support it. It just doesn’t. But we hear it because we want 

it to be that way because government is bad. Government had 

nothing to do with that. It is human nature. And you have to, kind 

of, keep our demons from surfacing and hurt the community at 

large. That is my sense of government. 

I mean, I am a free-market guy. I am a capitalist. 

Yes, you are not recognized yet, because Mr. Levitin had his 

hand raised. 

Mr. LEVITIN. I will gladly cede to Mr. Cohen. 

Mr. COHEN. Thank you. And I appreciate that, Professor Levitin. 

Machiavelli a long time ago said, power is taken, not given. Chairman Delahunt, example one. 

You know, this has been a good discussion. It is an excellent discussion. The problem is, the House just voted down the cramdown 

provision as an amendment to the Wall Street bill we had. The 

Senate has never passed it. 

And the problem is, you know, you are right about government 

and the problems and there wasn’t regulation and all these things. 

But if we can’t get 218 votes—well, we get 218 in the House and 

we passed it once. But if the Senate can’t pass it, we have to have 

something else to help people. And that is the reality. 

And that is just the same thing as the public option. If there 

aren’t the votes for public option in the Senate, the House, as good 

as we can be and Florence Nightingale wanting to be, you got to 

do something else. 

And that is—you have got to deal with the Senate. We need a 

unicameral legislature, we really do, and it would be on this camVerDate Aug 31 2005 11:09 Mar 30, 2010 Jkt 000000 PO 00000 Frm 00100 Fmt 6633 Sfmt 6601 H:\WORK\COMM\121109\53948.000 HJUD1 PsN: 53948
97 

eral. But, you know, it’s a mess. How would you recommend we go 

about that. 

Mr. DELAHUNT. [Presiding.] Well, I would like to propose to the 

four of you, because the Chairman is correct. I was disappointed in 

the vote, but I—— 

Mr. COHEN. You rallied. 

Mr. DELAHUNT. I am sorry? 

Mr. COHEN. You rallied and came back to Chair the Committee. 

Mr. DELAHUNT. But I came back. And I am very disappointed. 

And I think it says something about our system, our political system and how, you know, how there are powerful interests that oftentimes, I believe, don’t really understand their own interests in 

the long term. You know, they see it in a very short window. Got 

to keep those balance sheets there. We don’t want to do this. And 

I understand that, and I am not being critical of their self-interest, 

because that is their obligation. 

At the same time, in terms of their long-term benefit, it would 

be ideal to clean up this mess before the mess continues to exacerbate and brings down those big banks one more time, because I 

don’t know how the Chairman feels, but I know that the bailout 

time is over. If they want the market to function in a way where 

there is no government support, intervention, regulation, they will 

discover it if there is another September of 2008; it will be a debacle, because there is no political will in the United States Congress 

that I can discern on either side of the aisle for any continued support. 

If it gets bad again, let’s be clear, those that killed that legislation today, killed that amendment, are the ones that are going to 

be responsible. And let them face the American people and say, 

well, we thought it, you know, we thought it was in the long-term 

best interest of the market. There is really no data anywhere that 

indicates that interest rates will rise. That is baloney. That is just 

the short-term view. I like to think that it is our responsibility here 

in the Congress to take a long-term view and try to understand 

what the best interest of our free-market economy is so that we 

have, at the end of the day, a functioning, functional capitalistic 

system. 

But my question is, how do we give Ms. Schwartz the leverage, 

if we can’t get the bill through so that the voluntary modification 

programs work, without going through all of the bureaucratic, you 

know, gyrations that we no longer have time for? You know, maybe 

we should lock the four of you in a room someplace and tell you 

to come up with some answers and come back so that we can satisfy those powerful interests on Wall Street so that we can save 

Wall Street from itself and save the American economy. 

Professor. 

Mr. LEVITIN. There are some steps that can be taken definitely 

to improve the HAMP program, and I think a few of those would 

be, firstly, greater transparency, both on the overall, sort of the 

macro level of the program; the data the Treasury has been releasing has not been particularly granular. It makes it hard for any 

kind of real outside analysis. But also, on the borrowers side, that 

the Treasury has not released publicly the details of its net present 

value calculation, that if I am a borrower and looking to get a 

98 

HAMP modification, I should be able to have, go to a Web site, 

plug in my data and see the net present value calculation and how 

it weighs out. There is a fear that if that is made public that would 

allow for the system to be gamed. 

Mr. DELAHUNT. Do you all, everybody feel that is a thoughtful 

suggestion? 

Ms. Schwartz, you are the minority witness here, so you have got 

to—— 

Ms. SCHWARTZ. Okay. Well, I think more improvements can be 

done to the NPV test, and I believe there is going to be a transparent test put out in the new year. So I think more can be done 

there. I can’t speak to whether it is consumer facing, or there is 

a double check that no one was out of, no one did anything wrong. 

Mr. DELAHUNT. How do we give you, let me start with you, Ms. 

Schwartz. How do we give you real clout? 

Ms. SCHWARTZ. Well, I don’t know, but I—— 

Mr. LEVITIN. I will make a suggestion. 

Mr. DELAHUNT. Okay. 

Mr. LEVITIN. Treasury needs a club to go with the carrot. And 

if bankruptcy isn’t to be that club, then some sort of very concrete, 

monetary penalty to be imposed on servicers for violations of the 

terms of the HAMP servicer participation agreement. 

Mr. DELAHUNT. But can they really enforce it? Do they have the 

compliance team that can enforce it? 

Ms. GOLANT. Even as it currently stands, Mr. Chairman, there 

are—borrowers, do not have the ability as the intended third party 

beneficiaries of these contracts, to come into court, they would be 

willing to, and enforce for Treasury. 

But, several times, it has been attempted. In fact, there is a new 

class action that has just been filed in the last few weeks where 

that is exactly what borrowers are trying to do. But the courts 

don’t understand why borrowers can stand in the shoes of Treasury. So so far that has not been available. But because, without 

some sort of balance of power, there is just no way to get the 

wheels turning. That is what is missing is enforceability, accountability and leverage. 

Mr. DELAHUNT. Ms. Schwartz, let me ask you outright, what do 

you think about the cramdown issue? 

Ms. SCHWARTZ. You know, I am not going to say. 

Mr. DELAHUNT. You are not going to venture an opinion. 

Ms. SCHWARTZ. I mean, I will tell you, I have empathy for all 

sides of this. You know I do. I would work around the clock to stop 

foreclosure. 

Mr. DELAHUNT. And let me say that I really respect and appreciate what you are doing. 

Ms. SCHWARTZ. You know, the uncertainty is concerning that 

someone from my background, and I see a broken market, and I 

just worry that that just keeps it broken for longer. 

I think our job is a couple of things. Why aren’t we figuring it 

out a product to help the unemployed? You know, that could be 30 

percent or 40 percent of this problem so that it is in front of the 

HAMP mod. We have some kind of program to slow down the required payments and then slowly get into partial payments to get 

to a HAMP mod once they are back on their feet and re-employed. 

99 

That is what we should be talking about. Let’s talk about making 

sure no borrower goes to foreclosures without a review for HAMP 

mods. I agree. We are all in violent agreement. 

Ms. GOLANT. But they do. 

Ms. SCHWARTZ. I hear you, but since I don’t know those metrics, 

it is hard for me to respond to that because I see the metrics of 

all the people getting workouts, some in process, and all the ones 

who didn’t go to foreclosure because they are in the process of review. So I am sure you are right. But let’s get to the more detail 

and facts and then proper controls into place so that doesn’t happen. 

Mr. DELAHUNT. But see, I agree with you. But I don’t think we 

have the time. 

Ms. SCHWARTZ. Well, we should go in a room and figure that out. 

Mr. DELAHUNT. I mean that respectfully. And I just think that 

we need that, and I don’t even want to use the word stick, but I 

want to have that option available to leverage so that the kind of 

suggestions and recommendations that you make, because I know 

how slow the decision-making process is, whether it is here in the 

U.S. Congress or in any agency or bureaucracy, and there is interagency review and all of that other stuff, that we are going to find 

ourselves next September looking like it is 2008 rather than 2010. 

That is my fear. 

Mr. HILDEBRAND. Mr. Chairman, there is a vast gulf between 

where the law is now, where mortgages cannot be modified at all 

except for curing a default and maintaining payments, and the proposal that just got defeated, which is to allow cramdowns and restructuring, to allow some kind of modification that may not involve evaluation of the mortgage, fees and costs and interest adjustments, and things that are within the HAMP model that could 

be done, that are not cramming down the mortgage if that is not 

a political option. So those options need to be, I would suggest, 

should be addressed, should be discussed, which is why the suggestion of having a backstop, a judicial backstop to a HAMP program 

that may not be working fast enough will certainly speed it up. 

Mr. DELAHUNT. Who would administer the judicial backstop? 

Could the bankruptcy courts do that? 

What do you think of that, Ms. Schwartz. 

Ms. SCHWARTZ. I don’t feel like I am expert enough to have an 

opinion. 

Mr. DELAHUNT. Everybody has got an opinion now. Come on. 

Ms. SCHWARTZ. I mean, I think that we have enough rules in 

place to make sure we are doing the right thing, and we need to 

measure the outcomes where it is being violated. 

Ms. GOLANT. There are no enforcement mechanisms, though. 

Ms. SCHWARTZ. Well, I don’t know. I think the FBI, the Freddie 

Mac compliance unit, the Inspector General and SIGTARP are all 

pretty powerful. 

Mr. HILDEBRAND. Mr. Chairman, I would ask, where do I go 

when I see a debtor across the table from me that has not heard 

from the HAMP request, over 30 days or 60 days or 90 days, hasn’t 

even heard, where do I go to say they are not doing what they say 

they are going to do, or not contractually obligated to do, so that 

this family has a shot, anyway, to stay in their house? Where do 

100 

I go? And there is no place that we can go. I will agree with Ms. 

Schwartz though—— 

Mr. DELAHUNT. That is a concern. 

Ms. SCHWARTZ. We need to have a place for them to go. I totally 

agree. The hotline takes complaints for Treasury, for Fannie Mae 

and Freddie Mac for anyone who is falling out. 

Mr. DELAHUNT. You know what? The four of you are as good as 

it gets, okay? How about helping us and come up with a concept 

or a mechanism to do that back up. And let’s not create a new bureaucracy. Let’s give some sort of additional authority to the trustees or whatever. I mean, I am just really, really concerned about 

this. And I am going to turn the gavel back to the real Chair of 

the Commercial and Administrative Law Subcommittee, Mr. Steve 

Cohen of Tennessee. 

Mr. COHEN. [Presiding.] I thank the distinguished gentleman 

from Massachusetts and the vice Chair for that discussion that he 

led and for the time he spent and for his many good works and 

years of service to the Bay State, as well as the United States. And 

he got back here quicker than I did. I am sure he was disappointed, 

as I was. I was very disappointed at the vote today. And there were 

a series of votes I was disappointed in. Sarbanes/Oxley wasn’t extended to be fully implemented. And the cramdown provision, so to 

speak, mortgage modifications, wasn’t passed. But we passed the 

bill. But that is—you don’t get everything. You don’t get some 

things. But I appreciate you all being here, and if you all could 

work together to bring something to us to consider, because it looks 

like we are not going to have—although sometimes you can put 

these provisions on other bills that look like they are alien, but 

that is the only way you can sometimes get good alien projects to 

become law. So this system sometimes has a method to its madness. 

I thank each of you for your time you have taken to be witnesses 

for this testimony today. Without objection, Members will have 5 

legislative days to submit any additional written questions which 

we will forward to the witnesses and ask you to answer as promptly as you can. They will be made a part of the record. 

Without objection, the record will remain open for 5 legislative 

days for the submission of any other additional material. And, 

again, I thank everyone for their time and patience. 

I wish everybody a Happy Hanukkah, a Merry Christmas, a 

Happy Kwanzaa and any other holidays that you may hold dear 

and near. This hearing of the Subcommittee on Commercial and 

Administrative Law is adjourned. 

[Whereupon, at 3:11 p.m., the Subcommittee was adjourned.] 

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