AG Coakley Highlights Efforts to Address Foreclosure Crisis
Urges Fannie Mae And Freddie Mac To Engage In Principal Reductions That Have Worked In Massachusetts And Across Country To Keep People In Homes And Assist Economic Recovery; Releases Report Offering a Transparent Record Of Steps Taken To Assist Massachusetts Homeowners Since 2007
BOSTON – On the second anniversary of the first-in-the-nation foreclosure prevention program HomeCorps, Attorney General Martha Coakley once again urged Fannie Mae and Freddie Mac to engage in principal reduction as a means to keeping people in their homes. AG Coakley also released the report Rebuilding the Commonwealth: Recovering from the Foreclosure Crisis and Setting the Foundation for Future Success, offering a transparent record of the actions taken during the crisis and documenting the ways more than $850 million was recovered and provided to Massachusetts homeowners and investors since 2007.
“Addressing this foreclosure crisis was a key to not only helping thousands of families stay in their homes, but to restoring a healthy economy for everyone,” AG Coakley said. “Our office has worked hard to be a voice for homeowners who were treated so unfairly by these big banks, and there is still much work left to be done. That is why we are continuing to urge Fannie Mae and Freddie Mac to engage in principal reductions that we have seen work so well for families in Massachusetts and across the country.”
As shown in the report, several actions taken by the Attorney General’s Office against Wall Street firms such as Morgan Stanley and Goldman Sacks, as well as with the five major banks through the National Mortgage Settlement, have accounted for a large portion of the more than $850 million in relief for Massachusetts borrowers and investors secured since 2007.
Launched in April 2012 using funds from the National Mortgage Settlement (NMS), HomeCorps is the first program of its kind launched by an Attorney General in the country. It offers assistance and a loan modification specialist to assist every distressed borrower. As part of the program, the AG’s Office established a HomeCorps hotline that provides a loan modification expert to assist every borrower facing foreclosure deal directly with the banks.
As of March 31, HomeCorps alone has helped secure approximately 2,300 permanent loan modifications and more than $63 million in principal reduction for homeowners.
As the report documents, in the first week after its launch, the HomeCorps hotline (617-573-5333) received a staggering 1,100 calls. The hotline has now received nearly 25,000 calls in the first two years of operation. The HomeCorps team has prevented more than 1,000 foreclosure auctions, allowing time to modify a loan, resolve outstanding issues or refer homeowners to other support services and stabilize their housing situation.
HomeCorps also distributed millions of dollars from the settlement to legal assistance, borrower assistance, and to important community-based programs working on the ground to help rebound from the foreclosure crisis.
Since 2012, AG Coakley has pushed for the use of principal reduction as a critical foreclosure prevention tool by the government sponsored mortgage servicers Fannie and Freddie, both of which were taken over by the Federal Housing Finance Agency (FHFA) in September 2008. AG Coakley was joined by 10 other Attorneys General urging Fannie and Freddie to use the key foreclosure prevention tool in an April 2012 letter to Acting FHFA Director Edward DeMarco.
In a March 2013 letter to the President stating that Fannie and Freddie were an “obstacle to progress,” the AG was joined by eight other Attorneys General in calling for a new, permanent director of FHFA to replace DeMarco who was steadfast in his refusal to use principal reductions.
Even with new leadership, Fannie and Freddie have still failed to use principal forgiveness as a means of keeping people in their homes. On the second anniversary of HomeCorps, a program that has shown the important benefits of principal reduction to help homeowners and economic progress, AG Coakley is once again urging them to take action.