House Hearing: Preventing Home Mortgage Foreclosures

Banking executives faced both long winded and technically specific questions Wednesday, as several representatives of the home lending fiscal sat before members of the U.S. House of Representatives.

Of primary concern was the issue of standardization that would extend default requirements beyond those currently required of Fannie Mae and Freddie Mac. Homeowners may renegotiate their mortgage or request modification of their home loan only after they have missed three mortgage payments but have yet to file for chapter 7 or 13 bankruptcy.

The issue here is two fold. First, the inchoate manner in which some homeowners are currently receiving help via private banks needs standardization. Second, federal refinancing allows renegotiation after three late mortgage payments and that help, when it comes as all, is often too late.

Representative Jackie Speier (D-Ca, 12 District) noted the fallibility of a system that lets lenders off the hook: "When you don't have any skin in the game it's easy to conduct yourself in a risky and irresponsible manner." True that.