[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                    PROTECTING HOMEOWNERS DURING THE
                    PANDEMIC: OVERSIGHT OF MORTGAGE
                       SERVICERS' IMPLEMENTATION.
                            OF THE CARES ACT

=======================================================================

                            VIRTUAL HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                           AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 16, 2020

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-104
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
43-341 PDF                  WASHINGTON : 2021                     
          
--------------------------------------------------------------------------------------


                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             ANN WAGNER, Missouri
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
DENNY HECK, Washington               TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
BEN McADAMS, Utah                    LANCE GOODEN, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
              Subcommittee on Oversight and Investigations

                        AL GREEN, Texas Chairman

JOYCE BEATTY, Ohio                   ANDY BARR, Kentucky, Ranking 
STEPHEN F. LYNCH, Massachusetts          Member
NYDIA M. VELAZQUEZ, New York         LEE M. ZELDIN, New York, Vice 
ED PERLMUTTER, Colorado                  Ranking Member
RASHIDA TLAIB, Michigan              BARRY LOUDERMILK, Georgia
SEAN CASTEN, Illinois                WARREN DAVIDSON, Ohio
MADELEINE DEAN, Pennsylvania         JOHN ROSE, Tennessee
SYLVIA GARCIA, Texas                 WILLIAM TIMMONS, South Carolina
DEAN PHILLIPS, Minnesota             VAN TAYLOR, Texas
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    July 16, 2020................................................     1
Appendix:
    July 16, 2020................................................    33

                               WITNESSES
                        Thursday, July 16, 2020

Cohen, Alys, Staff Attorney, National Consumer Law Center (NCLC).     5
DeMarco, Edward J., President, Housing Policy Council (HPC)......    10
Griffin, Marcia, Founder and President, HomeFree-USA.............     7
Williams, Donnell, President, National Association of Real Estate 
  Brokers (NAREB)................................................     8

                                APPENDIX

Prepared statements:
    Cohen, Alys..................................................    34
    DeMarco, Edward J............................................    64
    Griffin, Marcia..............................................    72
    Williams, Donnell............................................    81

              Additional Material Submitted for the Record

Green, Hon. Al:
    Temporary Hardship Forbearance Plan Agreement................    84
    Written statement of the Mortgage Bankers Association........    85

 
                    PROTECTING HOMEOWNERS DURING THE
                    PANDEMIC: OVERSIGHT OF MORTGAGE
                       SERVICERS' IMPLEMENTATION
                            OF THE CARES ACT

                              ----------                              


                        Thursday, July 16, 2020

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 12:02 p.m., 
via Webex, Hon. Al Green [chairman of the subcommittee] 
presiding.
    Members present: Representatives Green, Beatty, Lynch, 
Velazquez, Perlmutter, Tlaib, Casten, Dean, Garcia of Texas; 
Barr, Zeldin, Rose, Timmons, and Taylor.
    Ex officio present: Representative Waters.
    Chairman Green. Thank you very much everyone. I am Al 
Green, the Chair of the Subcommittee on Oversight and 
Investigations. I would like to call the hearing to order at 
this time, and I would like to, if I may, give just a brief 
overview of what you can expect. We have called the hearing to 
order. There will be an opening statement of the Chair; an 
opening statement of the ranking member; an opening statement 
from the Chair of the full Financial Services Committee, 
Chairwoman Waters; witnesses will be introduced; witnesses will 
give their opening statements; and then we will have Q&A of 
witnesses, followed by adjournment.
    The title of today's hearing is, ``Protecting Homeowners 
During the Pandemic: Oversight of Mortgage Servicers' 
Implementation of the CARES Act.''
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Also, without 
objection, members of the full Financial Services Committee who 
are not members of this subcommittee may participate in today's 
hearing for the purposes of making an opening statement and 
questioning the witnesses.
    Members are reminded to keep their video function on at all 
times, even when they are not being recognized by the Chair. 
Members are also reminded that they are responsible for muting 
and unmuting themselves. I think this is something that is 
worthy of repeating, because I have made the mistake of not 
honoring this responsibility. I hope that I don't make that 
mistake today. Members are also reminded that they are 
responsible for muting and unmuting themselves, and to mute 
themselves after they have finished speaking.
    Consistent with the regulations accompanying H. Res. 965, 
staff will mute Members and witnesses, as appropriate, only 
when they are not being recognized by the Chair, to avoid 
inadvertent background noise. Members are reminded that all 
House rules relating to order and decorum apply to this remote 
hearing.
    The Chair now recognizes himself for 4 minutes for an 
opening statement.
    Let me start by thanking the Chair of the full Financial 
Services Committee, Chairwoman Waters. It is always an honor to 
serve under your leadership, Madam Chairwoman. I would also 
like to thank the ranking member for the participation that he 
has brought to this hearing, and I would like to also thank the 
staff for the hard work that you have done in obtaining some 
4,000 pages of servicer documents, including policies, 
procedures, and data on the largest 11 servicers, and their 
findings that include the fact that over 2 million forbearance 
requests have been approved by these 11 servicers between March 
27th and June 30th of 2020.
    But we have also found some other things that are causing a 
bit of consternation. Often, servicers fail to provide the 
borrowers with the 180-day forbearance that has been set in the 
Coronavirus Aid, Relief, and Economic Security (CARES) Act. Too 
often, borrowers were given but 90 days. I have some evidence 
of this failure to comply that I shall share with you. This 
evidence is something that emanates from a request by a 
constituent. One of my constituents has brought to the 
attention of our office, this document that is titled, 
``Temporary Hardship Forbearance Plan Agreement.''
    I won't go through it in its entirety, but the important 
points are these, that this borrower faced a hardship and has 
had payments deferred for three of the payments that are due, 
three payments. And the amount due is going to be in the final 
analysis at the end of the deferment period, the amount due for 
all payments within that deferment period and any late fees 
that may have accrued from other sources of payments not being 
made timely. The point is this, as it reads in this document, 
the amount due on the next payment due date, which was 3 months 
away from the date that the deferment period started, includes 
the amount of payments being deferred under the plan. Well, 
this is 90 days of deferments, not the anticipated 180 days 
that the CARES Act affords borrowers. In fact, many of the 
borrowers are not made aware of this.
    And we find, pursuant to some of the testimony that you 
will hear today, that many of these borrowers who are accorded 
this 90-day period, as opposed to the 180 days, are borrowers 
of color. It seems that this is, like many other things, having 
a disproportionate impact on persons of color, which causes me 
a good deal of consternation, I might add.
    I would also say that this program that we established in 
Congress has been received by the persons who are charged with 
according these first agreements, these servicers--it has been 
received by them as an honor system. We never intended for this 
to be an honor system that would allow them to decide whether 
or not they would accord persons the 180 days initially, with 
the opportunity to extend for an additional 180 days. It was my 
intent that borrowers would acquire the 180 days, and then they 
could opt to have an additional 180 days. The remedy, it seems 
to be, that of having to file a lawsuit, litigation, to have to 
go out and hire a lawyer, and to have to take this to court, to 
have some period of time that might go beyond the period of 
time, quite frankly, that you anticipate having your 
forbearance.
    So, I am very much concerned about this. And my hope is 
that we can get a means by which we can deal with this honor 
system and bring this under the auspices of a situation such 
that they will have to comply as opposed to choosing whether or 
not they will comply.
    With this having been said, it is my honor now to recognize 
the ranking member of the subcommittee, Mr. Barr, for a 5-
minute opening statement.
    Mr. Barr. Thank you, Chairman Green. It's good to see you 
and all of our colleagues. And to our witnesses, thank you 
again for joining us virtually for today's hearing. The 
coronavirus pandemic and the associated government-imposed 
shutdown of the economy disrupted the lives and livelihoods of 
citizens across our country. Businesses shut down. Unemployment 
skyrocketed. Workers who remain employed face uncertain 
prospects for their long-term stability, and families are at 
risk of losing their homes.
    As you all know, Congress passed and the President signed 
into law the CARES Act, which helped individuals and small 
businesses by creating forbearance options for struggling 
homeowners. At the peak, approximately 4.7 million families 
were in forbearance. Many more families would undoubtedly have 
lost their homes or struggled to make payments, if not for the 
swift and decisive response from Congress and the 
Administration: the implementation of the Paycheck Protection 
Program (PPP); economic impact payments; the Federal Reserve 
Lending Facilities under 13-3, which opened credit markets; and 
other assistance programs under the CARES Act, which made it 
easier for homeowners to pay their mortgages, for families to 
stay in their homes, and for small businesses to build a bridge 
to the other side of the crisis.
    Fortunately, we have seen the number of mortgages in 
forbearance decrease since the peak, declining a full 13 
percent since May. However, we are not out of the woods yet. 
There are still millions of homeowners facing hardship and 
requiring additional assistance.
    I hope to learn from our witnesses today what may be 
helpful next steps as Congress contemplates additional 
legislation. The far-reaching aid to American homeowners was a 
collaborative effort between Congress, the Administration 
regulators, and the private sector.
    It is important to note that while the CARES Act mandates 
that servicers of federally-backed mortgages offer a 
forbearance option to borrowers, that same requirement is not 
in place for loans held in portfolio or in private label 
securities. Despite the absence of this mandate, however, 
servicers of those non-federally-backed loans stepped up during 
this crisis and offered similar forbearance terms for their 
borrowers to those mandated under CARES. This shows that, in 
times of crisis, the government and the private sector can work 
together, and that the private sector has acted responsibly in 
the interest of homeowners without having government mandates 
imposed on them.
    Unfortunately, my colleagues on the other side of the aisle 
believe that a top-down mandate on all servicers would be more 
effective. The partisan Health and Economic Recovery Omnibus 
Emergency Solutions (HEROES) Act included a mandate for 
automatic forbearance for all borrowers struggling to pay their 
mortgages. Not only does this mandate appear unnecessary given 
the market dynamics we have seen to date, but it actually has 
the potential to further disadvantage borrowers by limiting 
their options.
    On May 4th, Chairwoman Waters and Chairman Green sent 
letters to some of the largest mortgage servicers requesting 
information about their interaction with customers following 
the passage of the CARES Act. The implication of the letter was 
that mortgage servicers skirted their responsibilities under 
the CARES Act or somehow profited by steering their customers 
into forbearances that were not in the best interest of the 
borrower.
    The data that the Majority received in response to their 
letter told a very different story, and demonstrated that 
servicers are working well with borrowers in their times of 
greatest need. This is a hearing in search of a problem. Now, 
that is not to say that there weren't some hiccups along the 
way. There were understandable growing pains and bumps in the 
road as servicers staffed up call centers, updated websites, 
and implemented the necessary technology to help their 
customers.
    However, given the scope and scale of the forbearance 
request and the short timeframe to implement new processes, the 
servicers overall should be commended on their treatment of 
borrowers in a time of crisis. And I think the creditors, the 
mortgage creditors and the servicers have learned from 
experience that the expense of foreclosure and repossessing 
these properties is not in anyone's best interest. Keeping 
homeowners in their homes is in the best interest of all 
involved, particularly those struggling Americans who need 
help.
    I look forward to further exploring how servicers work with 
their customers, the efficacy of the CARES Act provisions in 
keeping families in their homes, and what additional actions 
may be required by Congress in potential areas of improvement 
in the servicer-borrower relationship. And, again, I thank all 
of you for being here today, and I thank Chairman Green and 
Chairwoman Waters for holding this hearing. I yield back.
    Chairman Green. Mr. Barr yields back. The Chair now 
recognizes the Chair of the full Financial Services Committee, 
the gentlewoman from California, the Honorable Chairwoman 
Waters, for 1 minute.
    Chairwoman Waters. Thank you.
    Mr. Chairman, I am so appreciative of you for holding this 
hearing this morning. As I took my seat, I heard you read 
something where there appeared to be a demand from a servicer, 
from an institution that was a demand for what would be 
considered a full payment for the months that have been missed. 
I just wanted to make sure that what I heard you saying was 
that someone had been demanded to pay the full amount of the 
missed payments that was about 4 months' past due. Is that 
correct?
    Chairman Green. Three months of forbearance, yes, ma'am, 
and it would be payable upon the end of the 3-month period.
    Chairwoman Waters. Thank you very much. I wanted to make 
sure that I had the information correct.
    Mr. Chairman and members, this is precisely what we want to 
avoid. As a matter of fact, I have to say to Mr. Barr, the 
experience that we had started in 2004 with the foreclosures 
that took place, with the exotic products that were placed on 
the market, with all of what caused us to experience disaster 
in our communities because of these unprecedented foreclosures 
leads us to understand what we must do to avoid homeowners 
losing their homes.
    I understand that my time is up. But Mr. Chairman, I want 
to thank you for the hearing. And I am absolutely committed to 
the proposition that this will not happen, that we are going to 
have a credible forbearance situation for our homeowners that 
will not cause them to lose their homes. I yield back the 
balance of my time.
    Chairman Green. The chairwoman yields back. At this time, I 
would like to introduce our witnesses and thank them for coming 
and being a part of this hearing.
    We have with us today: Alys Cohen, a staff attorney for the 
National Consumer Law Center; Marcia Griffin, founder and 
president of HomeFree-USA; Donnell Williams, president of the 
National Association of Real Estate Brokers; and Ed DeMarco, 
president of the Housing Policy Council.
    Welcome, again. Thank you for being with us virtually. You 
will each be recognized for 5 minutes to give an oral 
presentation of your written testimony. A chime will go off at 
the end of your time, and I would ask that you respect the 
members' and other witnesses' time by wrapping up your oral 
testimony. And without objection, your written statements will 
be made a part of the record.
    Once the witnesses finish their testimony, each member will 
have 5 minutes to ask questions.
    With that, Ms. Cohen, you are now recognized for 5 minutes.

STATEMENT OF ALYS COHEN, STAFF ATTORNEY, NATIONAL CONSUMER LAW 
                         CENTER (NCLC)

    Ms. Cohen. Thank you very much, Chairman Green, Ranking 
Member Barr, and members of the subcommittee. Thank you for the 
opportunity to testify today. I am testifying on behalf of the 
low-income clients of the National Consumer Law Center, as well 
as 20 other consumer legal services and civil rights 
organizations. The unprecedented coronavirus pandemic has 
brought illness, death, unemployment, and greater economic 
insecurity to people across the country.
    Communities of color, particularly Black and Latinx people, 
have been especially hard hit. Preexisting inequalities are 
exacerbated by the current crisis, and Black and Latinx 
homeownership is imperiled.
    To mitigate some of the harm wrought by the pandemic, 
Congress must continue its vigilance in protecting homeowners, 
improve transparency for housing relief programs, increase its 
efforts to regulate and reform the mortgage servicing industry, 
and center relief for Black and Latinx homeowners. The Federal 
regulators must act as well, to prevent avoidable foreclosures 
and promote sustainable homeownership. Congress must pursue 
dedicated efforts to protect and expand Black and Latinx 
homeownership and pass additional measures, including 
collection of loan level borrower, loan performance, and lost 
mitigation data with free public reporting. Representative 
Porter's bill, H.R. 6835, is a good start on this. Expansion of 
CARES Act protections must include standardized forbearance for 
all mortgages, automatic forbearance for borrowers who have 
missed two payments or more, affordable repayment options for 
borrowers exiting forbearance plans who are seeking to resolve 
delinquencies that are available prior to foreclosure, written 
notice and in-language information for limited English 
proficient borrowers, a moratorium on negative credit 
reporting, targeted support for the hardest-hit communities, 
including funding for legal services, housing counseling, and 
cash assistance for delinquent borrowers, and measures to 
prevent neighborhood blight.
    Moreover, Federal regulators must increase oversight, 
ensure mortgage assistance meets the needs of diverse 
communities of homeowners, improve regulations, including 
recent CFPB rules that leave homeowners at risk, and consider 
future reforms in the mortgage servicing industry, aligning 
servicer incentives with those of homeowners and investors. We 
commend the regulatory extension of the foreclosure moratoria, 
FHA's recent announcement to expand lost mitigation options, 
and GSE expansion of post-forbearance options, but more is 
needed.
    Black and Latinx homeowners are more likely now than White 
homeowners to struggle paying their mortgage, seek assistance 
from their servicer, and miss payments instead of receiving 
forbearance. While all homeowners are more likely to report 
missing payments rather than deferring payments with their 
servicer, in the Census Bureau's Household Poll Survey at the 
end of June, 4 times as many Black homeowners recorded missing 
payments as compared to deferring payments. Among Hispanic or 
Latinx homeowners, and homeowners who identified as other or 
reported two or more races, there were 2 times as many 
homeowners reporting that they had missed payments as compared 
to deferring. Only about 1.4 times as many White homeowners 
report missing rather than deferring payments.
    How can we help homeowners who have not yet received 
assistance? And what can we do for the disproportionately large 
group of borrowers of color facing this challenge?
    While we focus today on efforts to contain the fallout from 
the pandemic, we should not lose sight of the fact that for 
many distressed borrowers, the mortgage servicing industry 
remains fundamentally broken. Our ability to prevent another 
great loss of homeownership for Black and Latinx families 
depends on our ability to have servicers see that performing 
default servicing well is in their interest as well as the 
interest of financially distressed homeowners and their 
communities and the economy.
    Our nation is facing unprecedented challenges that present 
us with a real chance to look at our priorities and assumptions 
and make material progress in how we measure success and 
inclusion. Thank you.
    [The prepared statement of Ms. Cohen can be found on page 
34 of the appendix.]
    Chairman Green. Thank you for your testimony, Ms. Cohen.
    Ms. Griffin, you are now recognized for 5 minutes.

 STATEMENT OF MARCIA GRIFFIN, FOUNDER AND PRESIDENT, HOMEFREE-
                              USA

    Ms. Griffin. Thank you very much. My name is Marcia 
Griffin, and I am president and founder of HomeFree-USA, a 
nationwide HUD-approved housing counseling organization. I 
appreciate this opportunity to appear before you to provide 
firsthand insight surrounding the plight of homeowners in this 
pandemic.
    Allow me to emphasize the importance of housing counseling 
organizations, which I like to call nonprofit homeownership 
providers. Court-approved housing counseling organizations like 
HomeFree-USA are mission-based entities created to provide 
everyday people with the tools they need to achieve and sustain 
their housing and homeownership goals. We help renters to 
become sustainable homeowners and help existing homeowners 
avoid mortgage delinquency and foreclosure. We are somewhat 
like marriage counselors--when a homeowner has unanswered 
questions, needs credit help, doesn't know what to do, doesn't 
understand the servicer's jargon, we bring them together with 
lenders and servicers to ensure that everyone is on the same 
page with the goal, of course, of finding a mortgage solution 
that works for both parties.
    According to the U.S. Congress Joint Economic Committee, 
the average foreclosure costs everyone $77,934. Lenders lose an 
average of between 12 and 19 percent of the home's value at 
foreclosure, and they spend about $50,000 in the process. If 
counselors are able to prevent foreclosure, the value to 
lenders, investors, and the country is enormous.
    So, what have we seen in the market today? Calls come in 
daily from homeowners who are exhausted, paralyzed by fear, 
COVID-sick, and have lost their jobs. Everyone is concerned 
that they will lose their home.
    First, in my work at HomeFree-USA, and with my colleagues 
at the National Housing Resource Center, we do believe that 
servicers have improved since the start of the pandemic. But 
many still need better-trained customer-facing employees. Some 
call center employees read scripts that they are not familiar 
with, don't have time to answer questions, and are just not 
familiar enough with the process or procedures to assist 
consumers.
    Second, counselors assist homeowners who are probably 
denied a forbearance. We have seen a troubling concentration of 
this issue with veterans' loans. We are seeing homeowners who 
may have recently completed a loan application, who have been 
denied, or borrowers who have just missed a payment in March or 
February,and they have also been denied.
    Furthermore, we help homeowners who have requested a 
forbearance but still have questions about whether it has been 
approved and how to plan ahead for repayment. There is a 
frustratingly large number of homeowners who are unemployed but 
are still being told that lump sum payments are due at the end 
of the forbearance. Other occurring issues are highlighted in 
my written testimony.
    Whether right or wrong, too many of our clients are 
unfamiliar with the terms in the servicer scripts. This only 
compounds the existing sense of distrust and fear of the 
banking industry. People of color are particularly vulnerable 
to this sense of distrust of lenders and servicers as a result 
of their most recent experience in the last housing crisis. 
People of color rely heavily on organizations like HomeFree-USA 
to advocate for them. What can be done? First, servicers do not 
have the capacity to handle individualized support of 
vulnerable homeowners. It is essential that housing counselors 
are supported so that we do not have to turn away a single 
consumer, thus freeing up servicers because we can handle the 
most challenging cases.
    Second, we feel that the Consumer Financial Protection 
Bureau (CFPB), the Federal Housing Finance Agency (FHFA), and 
HUD should be more solution-focused and proactive in their 
monitoring of repayment issues. We feel the Federal agencies 
should coordinate and should identify real-time solutions and 
actively update policies and procedures.
    Third, we need a streamlined loss mitigation loan procedure 
like we had with the Home Affordable Modification Program 
(HAMP). The biggest problem we have will be homeowners who 
return to work but have significantly reduced incomes. There 
will be a need for aggressive and affordable loan modifications 
for these borrowers. Housing counselors are capable of helping 
homeowners and servicers through these complicated processes.
    Last, more outreach is needed. Consumer awareness of 
options and processes need to be better distributed.
    I very much appreciate this opportunity to illuminate our 
concerns about COVID-related mortgage servicing, the importance 
of housing counseling intervention, and to sound the alarm that 
the worst is yet to home. HUD-approved counseling organizations 
can play a huge role in--
    Chairman Green. You will have to wrap up her testimony, 
please. You have exceeded your time.
    Ms. Griffin. Okay. Thank you.
    [The prepared statement of Ms. Griffin can be found on page 
72 of the appendix.]
    Chairman Green. Thank you for your testimony.
    Mr. Williams, you are now recognized for 5 minutes.

STATEMENT OF DONNELL WILLIAMS, PRESIDENT, NATIONAL ASSOCIATION 
                 OF REAL ESTATE BROKERS (NAREB)

    Mr. Williams. Chairman Green, Ranking Member Barr, 
Chairwoman Waters, and distinguished members of the 
subcommittee, thank you for the opportunity to testify today to 
discuss the importance of protecting homeowners, especially 
during these difficult times. I also want to thank Chairwoman 
Maxine Waters for calling this hearing.
    My time is Donnell Williams. I serve as president of the 
National Association of Real Estate Brokers, the country's 
oldest and largest Black real estate trade association. Founded 
in 1947, our mission, democracy in housing, has guided our 
efforts to ensure fair housing practices in neighborhoods 
across the country, especially in communities of color. I am 
also the owner of Destiny Realty, a brokerage firm 
headquartered in Morristown, New Jersey.
    COVID-19 is disproportionately affecting Black homeowners. 
It is well-documented that the COVID-19 pandemic has had a 
crushing and devastating effect on Black homeowners and caused 
mass unemployment, putting a deep economic strain on many Black 
borrowers who have worked hard to achieve the American Dream of 
homeownership. As of mid-June 2020, probably 24 percent of 
Black homeowners reported some difficulty making their mortgage 
payments, compared to White homeowners. There is a 13 percent 
gap between Black homeowners and White homeowners receiving 
forbearance under Section 4022 of the CARES Act, which allows 
borrowers to apply for a forbearance period of up to 360 days.
    Solutions: In order to address the challenges facing Black 
homeowners as a result of the pandemic, it is imperative that 
Congress take action to ensure that congressional and 
governmental efforts to maintain homeownership are equitable 
and include Black homeowners. We urge Congress to take the 
following actions. One, allocate specific funds targeted to the 
preservation of Black homeownership.
    Two, provide assistance for mortgage borrowers not covered 
by the CARES Act. Private mortgage lenders must be required to 
offer government-supported forbearance to their borrowers 
comparable to the treatment of government-supported mortgage 
loans.
    Three, require FHA and all servicers to notify borrowers in 
all communications, including mail, electronic communication, 
and phone calls, of their rights to apply for forbearance. 
Require all servicers to have dedicated toll-free lines, 
staffed with representatives who are knowledgeable about their 
forbearance procedures.
    Four, create a large-scale public affairs initiative. The 
Federal Government is allocating resources to building public 
awareness around the health risks associated with COVID-19. 
Similar efforts should be made to inform borrowers of their 
rights.
    Five, ensure that FHA borrowers and GSE borrowers continue 
to have the same access to mortgage forbearance protections, 
financial relief, and assistance.
    In conclusion, the National Association of Real Estate 
Brokers, whose members are known as REALTISTs, since its 
inception has stood with democracy in housing, and we look to 
the guardians of the communities we serve. We will continue to 
advocate for the preservation and sustainability of 
homeownership for Black Americans and all Americans. The 
REALTIST organizations are the trusted advisers of our 
community and the conscience of the real estate industry. And 
we need Congress to align with NAREB'S declaration of a cease-
and-desist on the decline of Black ownership.
    Thank you for the opportunity to testify before the 
subcommittee today, and I will be glad to answer any questions. 
Thank you.
    [The prepared statement of Mr. Williams can be found on 
page 81 of the appendix.]
    Chairman Green. Thank you very much for your testimony, Mr. 
Williams.
    Mr. DeMarco, you are now recognized for 5 minutes.

   STATEMENT OF EDWARD J. DEMARCO, PRESIDENT, HOUSING POLICY 
                         COUNCIL (HPC)

    Mr. DeMarco. Chairman Green, Ranking Member Barr, 
Chairwoman Waters, and members of the subcommittee, thank you 
for inviting me to testify on how mortgage servicers are 
responding to the challenges facing homeowners because of the 
novel coronavirus.
    Many homeowners are in deep economic distress resulting 
directly or indirectly from the pandemic. Also, while anyone is 
vulnerable to the virus, the health and economic costs have 
disproportionately affected communities of color and lower-
income households.
    From the outset of this emergency, Housing Policy Council 
members and other mortgage servicers have been committed to 
keeping individual borrowers and families in their homes.
    My written statement covers four topics, which I will 
briefly summarize here. First, the challenges facing homeowners 
today are not the result of poor underwriting standards or 
inappropriate business practices. This pandemic is a national 
health crisis, and the steps taken to combat it had enormous 
economic consequences.
    In response, HPC members and other mortgage servicers have 
shifted virtually all of their operations out of call centers 
and office buildings to their own homes, and trained their 
staffs remotely in modified technology and managed the enormous 
inflow of borrower inquiries. They have set up automated online 
tools for borrowers to educate themselves and request payment 
relief. They began offering homeowners forbearance options 
before the passage of the CARES Act. And they have extended 
forbearance to homeowners who do not have federally-backed 
mortgages. They have executed against an evolving series of 
programming and regulatory announcements from various Federal 
programs and agencies.
    By late May, just 2 months since enactment of the CARES 
Act, nearly 4.8 households were on a forbearance plan. That 
total has declined 13 percent since then. According to Black 
Knight Financial Services, by late May, 12.3 percent of FHA and 
VA loans were in forbearance, and 7.1 percent of GSE loans were 
in forbearance. Servicers of these loans are required by the 
CARES Act to offer forbearance to a customer who asks for it 
claiming a COVID-19 economic hardship. Yet, for non-federally-
backed mortgages, 9.6 percent of such loans were also waived 
forbearance by late May. These include bank portfolio loans and 
loans in private label securities. This is a clear situation 
that bank portfolio lenders and other investors have also 
responded without a Federal directive, providing borrower 
payment relief at an even greater rate than we see for GSE 
loans.
    Second, I want to acknowledge the partnerships and 
information sharing that has marked the last 4 months. Not only 
has the industry been trying to work together to develop best 
practices, we have been joined in partnerships with numerous 
other organizations and stakeholders, as well as numerous 
government agencies and regulators. These partnerships 
demonstrate a level of common concern for the families whose 
financial situations have been disrupted by this national 
health emergency. I believe it is because of this communication 
and coordination that relief has been provided to so many so 
quickly.
    Transitioning from forbearance to a longer-term solution 
requires dedicated efforts from the borrower and servicer to 
ensure the best resolution. The sooner a borrower begins 
repaying their mortgage, the sooner he or she resumes the 
wealth-building opportunity that homeownership provides. When a 
borrower is ready to resume monthly payments, borrower contact 
with their servicer is critical to achieve a seamless 
transition and to ensure their certainty among all the parties 
regarding the repayment of the forborne amount. The options 
available are dependent on several factors, some unique to the 
loan program and some based on the borrower's own 
circumstances. Generally, the options include a short-term 
repayment plan, repayment at the end of the loan term, or a 
longer-term repayment by adding the outstanding payments into 
the loan balance and modifying the loan.
    With the forbearance provisions in the CARES Act, Congress 
has already taken the cornerstone action to assist borrowers 
and servicers. We recognize that the pandemic has negatively 
affected many consumers and communities and that some of the 
beneficial stimulus provided under the CARES Act is coming to 
an end. Thus, we support additional measures by the Congress to 
provide fiscal stimulus to hard-hit consumers and communities. 
Thank you for inviting me to participate today.
    [The prepared statement of Mr. DeMarco can be found on page 
64 of the appendix.]
    Chairman Green. Thank you for your testimony, Mr. DeMarco.
    I now recognize the gentlewoman from California, the Chair 
of the Full Committee, Chairwoman Waters, for 5 minutes for 
questions.
    Chairwoman Waters. Thank you very much, Chairman Green. And 
I would like to thank all of our witnesses who are here today. 
I know of their worth, I have worked with them over the years, 
and they have been counseling and helping our homeowners, and I 
am very, very pleased that they are all here this morning.
    But here is what I would like to do. I would like to find 
out, and I will ask each of our witnesses, in the time that I 
have, whether or not the language in the HEROES Act is doing 
exactly what we need it to do. We know that we are provided the 
right to request and receive forbearance for our homeowners on 
their mortgage payments for up to 6 months, with the option to 
extend for an additional 6 months, for a total of one year. I 
think there was some information shared with us that homeowners 
don't necessarily know this. What can we do to make sure that 
servicers share this information? And I would also like to 
know, should there be additional language about loan 
modification for forbearance?
    So, let me ask each of our witnesses to share with me 
whether or not they think it is sufficient.
    Let me start with Marcia Griffin, whom I have met with for 
so many years. Thank you, Marcia.
    Ms. Griffin. Wonderful. Thank you. Housing counseling 
organizations definitely support the HEROES Act. This is great 
progress. It also really helps to sort of rein in some of the 
issues that we are seeing with private, non-Federal loans. We 
are very, very appreciative of the suggestion of support, 
supplemental support for housing counseling. It is very, very 
much needed.
    The focus on repayments and forbearances is good. And we 
should certainly continue. We have spoken about our views on 
the HEROES Act, also, in our written testimony. So, we are just 
applauding you.
    Chairwoman Waters. I want to make sure I get to the other 
two witnesses. National Consumer Law Center staff attorney, Ms. 
Cohen, do you think that we need additional information 
following the 1-year forbearance?
    Ms. Cohen. Thank you for your question, Chairwoman Waters, 
and for being at the hearing today. Your question sounds like 
it is focusing primarily on this question of whether people 
need more than one year of forbearance?
    Chairwoman Waters. Yes.
    Ms. Cohen. First of all, the HEROES Act has a lot of 
excellent provisions in it, and we hope to see the Senate take 
up something like that, look at those issues, and find a way to 
get something done.
    With regard to your specific question, as you heard Dr. 
DeMarco, people need to transition from forbearance to 
repayment. And so what we would like to see is legislation and 
programming to help people get into repayment. Now, of course, 
if the financial situation in the country goes on in an 
unexpected way, we may need to reevaluate that. But at this 
point, what we would like to see and what is in the HEROES Act 
and could be in Senate legislation is more affordable post-
forbearance repayment options that are mandatory.
    Chairwoman Waters. Very good. I think we are talking about 
the same thing, when you talk about repayment options after the 
forbearance period.
    Let me ask Donnell Williams, president, National 
Association of Real Estate Brokers. I have worked with the 
REALTORS, just reconsolidated in L.A., and I appreciate your 
work so much. What do you think--you have given us some advice, 
and you have pointed out a few things that you think we can do 
additionally. Of those four or five things that you pointed 
out, which stands out most in your mind that we should do to 
make sure that this forbearance and loan modification process 
works?
    Mr. Williams. I think that the servicers need to get the 
information about the borrowers' rights out to the community 
and to the borrowers. That can be done by mail--they are not 
getting this information or trusting this information in any 
other kind of way. If it doesn't come through the REALTOR 
organization, and it does come through the mail, that would be 
great through email and what have you. We also need to have 
data collection. But servicers need to supply this information, 
this data to the CFPB and to Congress.
    I just had a borrower in Irvington, New Jersey, and another 
one in Morris Township, New Jersey, tell me their servicer, 
like Congressman Green said, only gave them 3 months, and that 
the whole balance would be due in 90 days.
    Chairwoman Waters. Well, let me stop you. Do you think we 
should have some penalties for servicers who violate the law 
that we have in the HEROES Act, and require lump sum payments 
like that?
    Mr. Williams. I do believe so. They are roadblocking. They 
are stopping. They are clogging it up so that we can't have 
progress.
    Chairwoman Waters. Well, I thank you for your testimony 
here today.
    And thank you, Mr. Green. I yield back the balance of my 
time.
    Chairman Green. The gentlelady yields back.
    The ranking member of the subcommittee, Mr. Barr, is 
recognized for 5 minutes for questions.
    Mr. Barr. Thank you, Mr. Chairman. And thank you to all our 
witnesses for your testimony, which was, obviously, very 
powerful testimony about the vulnerability of homeowners at 
this time. And if I may just offer one comment or observation 
about the testimony of all of our witnesses, it just speaks to 
the very important need for us to avoid any future shutdowns of 
the economy. Of course, we need to practice hygiene and mask-
wearing and all of the things to prevent the spread of the 
virus, but particularly for minority borrowers, based on the 
testimony that so many have offered here today, it just speaks 
to the importance of getting people back to work so that they 
can provide for their families and meet those payment 
obligations.
    Let me start with a question for Dr. DeMarco about the non-
federally-backed mortgages. I think your testimony was that for 
those non-government-backed mortgages, those borrowers are 
actually experiencing a higher forbearance rate than federally-
backed mortgages.
    Dr. DeMarco, what does that tell you about the marketplace 
and how the marketplace is responding without the HEROES Act?
    Mr. DeMarco. I think it is telling us a couple of things. I 
think it is telling us that what was in the CARES Act, the 
forbearance provisions in the CARES Act that had been 
implemented for federally-backed mortgages is a sound approach 
to dealing with this kind of situation, and that servicers that 
are not required under the CARES Act to provide this support 
are still utilizing those same tools to assist their customers 
in non-federally-backed mortgages.
    I think that servicers recognize in this situation that 
payment forbearance is an appropriate response to assist their 
borrowers, and, in fact, they are doing that, whether required 
by the CARES Act or not. So, this has really developed as a 
best practice that it is being utilized by servicers of non-
federally-backed mortgages, very effectively, and as you noted 
and as I noted, at a greater rate than we see in the GSEs now.
    Mr. Barr. The HEROES Act, which, as you know, passed 
without any Republican support, contains some new parameters 
around options for homeowners experiencing difficulties. But 
apparently, the authors of the HEROES Act believe that 
instituting mandatory automatic forbearance for all borrowers 
and limiting loan modification options would benefit borrowers.
    Dr. DeMarco, how would these proposed sections of the 
HEROES Act impact a servicer's ability to work with their 
customer, and would they actually help or hurt American 
families trying to stay in their homes? And in the context of 
answering that question, could you talk about the importance of 
communication between servicers and borrowers?
    Mr. DeMarco. That is actually where I was going to start. I 
understand the intention behind wanting to create an automatic 
forbearance opportunity for borrowers. But there is actually, I 
suggest, something more important here that actually comes out 
of the work that Congress did in the Dodd-Frank Act and has 
been implemented since by the CFPB, but it was also part of the 
development servicer practice as a result of the Great 
Recession.
    Now, there is the importance of timely communication 
between a servicer and their customer, if the customer is 
having problems paying their mortgage. So we don't want to wait 
60 days and say, ``Oh, well, we haven't had a check come in; we 
put them on forbearance.'' Servicers have to be and should want 
to be in contact with their customers before you get to 60 
days, and want to understand what is the customer's situation 
so that they can, in a timely way, deliver an appropriate 
support or opportunity to help get that homeowner back on their 
feet. So, for example, the homeowner may have missed 2 months 
of payments for reasons having nothing to do with an economic 
disruption due to the pandemic, but for some other reason. And 
so, the servicer wants to get in touch with that homeowner, 
find that reason, and get to solving that homeowner's 
particular problem.
    That is why we should suggest that the idea of making sure 
the servicer is actually staying in contact with their customer 
and the customer is staying in contact with the servicer is 
going to yield a better outcome for the various situations that 
we are going to see here.
    Mr. Barr. My time has almost expired, but I think it is 
important to recognize that different homeowners face different 
difficulties, and a one-size-fits-all approach may not be 
better. And if we can get folks into repayment quicker, we 
should do that.
    And, finally, what we did in the CARES Act or how much 
forbearance requirement or forbearance is allowed in these 
cases, nothing can replace getting people back to work and 
getting kids back in school so people can take care of their 
mortgage obligations. Thanks so much, and I yield back.
    Chairman Green. The gentleman's time has expired.
    The Chair now recognizes the gentlewoman from Ohio, Mrs. 
Beatty, who is also the Chair of our Subcommittee on Diversity 
and Inclusion, for 5 minutes for questions.
    Mrs. Beatty. Thank you so much. It is certainly my honor to 
be on this subcommittee, and I thank you and Ranking Member 
Barr, and I certainly thank our Chair of the Financial Services 
Committee, Chairwoman Waters, and Ranking Member McHenry.
    First, let me say to all the witnesses, thank you for your 
time and for your testimony.
    My first question--I am going to try to get through several 
questions, so, if I kind of put my hand up or move on, please 
excuse that, it is just because of the timer.
    This question is for you, Ms. Cohen. As you know, the CARES 
Act is very explicit about the protections Congress intended 
for homeowners with regards to forbearance. Borrowers 
experiencing financial hardship due to COVID-19 were to be 
provided forbearance for 180 days with the possibility of an 
extension for another 180 days. Despite this, I have gotten 
calls, dozens of calls, and they are confused about what the 
law said and what my constituents' mortgage servicers were 
offering in that way.
    As you know, we passed the CARES Act on March 27th. Can you 
tell me, despite the confusion going on in the marketplace that 
we all knew about--where was the CFPB, who has oversight of the 
mortgage services industry, and why did it take us until June 
4th?
    Ms. Cohen. Thank you for your question. In terms of the 
complaints that you are hearing, we do have some good 
protections in the CARES Act. And the Federal regulators only 
need to step up their game and do much greater oversight of the 
servicers. In terms of the CFPB, they appear to have spent most 
of their time relaxing regulations for servicers and providing 
advice for homeowners. Homeowners need protection.
    Mrs. Beatty. Do you think they should have been doing more? 
I get the relaxing part, but people are still hurting, and they 
have oversight. Yes or no?
    Ms. Cohen. Yes, the CFPB should do more, starting with 
making sure people don't face foreclosure until they get help.
    Mrs. Beatty. Thank you.
    Let me move on to the next question. Mr. DeMarco, this 
question is for you. Earlier in the week, and maybe you have 
seen this article, ProPublica published a story entitled, 
``Trump Financial Regulator Quietly Shelved Discrimination 
Probes into Bank of America and Other Lenders,'' which found 
that the Office of the Comptroller of the Currency (OCC) halted 
or stalled at least six investigations into discriminatory 
mortgage redlining against the recommendations of their own 
career staff. This was the same time and the same agency that 
was working to undermine and water down the Community 
Reinvestment Act (CRA), which is supposed to protect against 
that type of discriminatory lending. In this article, they 
found that the OCC had found patterns of discriminatory lending 
against African Americans and Latinos in several lending 
institutions, in several areas around the country. It also 
listed a whole lot of other things that were shelved.
    Mr. DeMarco, many of the lending institutions identified in 
the articles are members of those associations you lead. Can 
you tell me your response to this, and what are you doing to 
ensure that members of your organization are not perpetuating 
the social and economic injustices that African Americans and 
other minorities continue to face? This is very troublesome to 
me.
    Mr. DeMarco. Certainly, and I would understand that Mrs. 
Beatty. Forgive me, I am not aware of this article. I have not 
read it or seen it, so I am at a disadvantage there. But I will 
take what you said, and certainly, I would be concerned about 
those sorts of issues. I am sure if any of my member companies 
are named in that article, that they are looking at what is 
going on here, and I would be happy to go and take a look.
    Mrs. Beatty. Thank you so much. Let me go to the chairman.
    Mr. Chairman, I would like to request that the committee 
use its powers and resources if necessary to subpoena documents 
from the OCC related to previous lending discrimination 
investigations, and seek depositions of senior leaders of the 
OCC, including the Director himself, Joseph Otting, to get to 
the bottom of these allegations. We have been hearing them. It 
has been talked about, and I am sorry that Mr. DeMarco is not 
familiar with the article. I will have my staff also send that. 
And my time is up. I yield back.
    Chairman Green. Your request is duly noted and will be 
acted on in the due course of events.
    The Chair now recognizes the gentleman from New York, Mr. 
Zeldin, for 5 minutes.
    Mr. Zeldin. Thank you, Mr. Chairman. I appreciate the 
testimony here today.
    Thank you to Chairman Green and to Ranking Member Barr and 
Chairwoman Waters, as well. I appreciate all of you holding 
this hearing.
    I have the honor and privilege of representing the First 
Congressional District of New York, which covers most of 
Suffolk County. Suffolk County is one of the most expensive 
places to live in the country, so affordable mortgage options 
are essential to my constituents.
    We are here today to discuss mortgage servicers who play a 
client-facing role in mortgage finance. On April 10th, I 
spearheaded a letter to Secretary Mnuchin with 19 other members 
of this committee. The letter highlighted the need to ensure 
adequate liquidity for mortgage servicing because residential 
mortgage servicers are typically obligated to advance payments 
of principal, interest, taxes, and insurance on to investors 
and municipalities and insurers, whether the borrowers make 
those payments or not.
    If a homeowner falls behind on payments, it is the 
servicer's role to work with the borrower and find ways to get 
them back on track through loan modifications. In the CARES 
Act, Congress decided that a nationwide, broad-scale 
forbearance program was needed, but it was important that steps 
were taken to buoy the market if forbearance take-up rates 
continue to skyrocket.
    Mortgage servicers have a vital role to play in helping 
borrowers, but cannot shoulder the entire onus of government 
actions to protect the American homeowners impacted by COVID-19 
if they do not have access to the needed liquidity to execute 
on those government actions.
    I am pleased that Federal agencies have focused on this and 
continue to work with servicers on how best to serve 
homeowners. FHFA and HUD issued guidance and scripts to be 
distributed to mortgage servicers. These step-by-step 
instructions have helped to guide servicer discussions with 
borrowers. Additionally, the GSEs and Ginnie Mae have provided 
assistance to servicers dealing with loans in forbearance.
    Meanwhile, the New York attorney general, on April 24th, 
called for mortgage servicers to, ``automatically waive late 
fees and place homeowners in 3-month forbearance as soon as a 
payment is missed, whether or not this action is requested by 
the homeowner.''
    Dr. DeMarco, my question first for you is, should borrowers 
be automatically enrolled in forbearance, or is it better for 
the borrower to speak with his or her servicer first regarding 
the best options for his or her situation?
    Mr. DeMarco. I think it is definitely better for the 
borrower to speak with their servicer as soon as they have any 
issues with making a mortgage payment, explain what those 
issues are to the servicer, and the servicer may work with the 
borrower to determine what is the appropriate course and the 
best course for that particular borrower's circumstances.
    Ms. Cohen. May I respond to that?
    Mr. Zeldin. Please.
    Ms. Cohen. Because the subject came up twice, I will do it 
quickly. We agree that people should try to talk to their 
servicers, but as I stated before, more borrowers are not 
paying their mortgages than are making forbearance arrangements 
with their servicers, according to the U.S. Census Bureau. 
People who are already late on their mortgages have taken a hit 
on their credit, and they shouldn't face foreclosure, and they 
should get more assistance. Thank you.
    Mr. Zeldin. Thank you.
    Dr. DeMarco, forbearance take-up rates seem to have leveled 
off for now. What is your assessment of the servicer liquidity 
situation?
    Mr. DeMarco. I think that, as a result of the 
administrative actions that you mentioned, particularly by FHFA 
and HUD, as well as some actions by the Federal Reserve and the 
mortgage-backed securities market, the liquidity situation has 
stabilized. And the interesting thing here is by regulatory 
actions that put guardrails around or limits around the 
servicers' liquidity responsibility on any given loan actually 
enabled the private market to step in and provide additional 
liquidity. Once we had greater certainty about what the rules 
of the road were going to look like in terms of the answers and 
what the duration was going to look like, the markets actually 
stepped in. And we still believe that the Federal Reserve and 
the Treasury can and should be ready to step in as needed if 
the situation turns worse again and liquidity is needed for 
nonbank services.
    Mr. Zeldin. Thank you. My time is running out, so I just 
want to thank again all of the witnesses for being here.
    To Chairwoman Waters, Chairman Green, and Ranking Member 
Barr, it is great to see all of my colleagues here. I look 
forward to seeing you in person. I hope you and your families 
are healthy. To all the staff on the call, thank you for what 
you do to make this hearing possible and for your service to 
the Financial Services Committee. I yield back.
    Chairman Green. The gentleman's time has expired. The Chair 
now recognizes the gentleman from Massachusetts, Mr. Lynch, who 
is also the Chair of our Task Force on Financial Technology, 
for 5 minutes.
    Mr. Lynch. Thank you very much. I appreciate you holding 
this hearing, Mr. Chairman.
    I guess, I would like to look further out in terms of, in 
January or when we--hopefully when we start to come out of this 
lockdown, especially in the southern States, what does the 
transition look like in terms of recognizing the inability--
well, recognizing the tremendous pressure that has been put on 
individual homeowners, in banks, local community banks, what 
does that transition look like in terms of trying to slowly, 
incrementally get us back to where there is full opportunity 
for people to catch up on their mortgage payments, in some 
cases, reengineering some of the mortgage products that are out 
there or reconstituting the mortgages that are on property that 
are inadvertently falling behind? How does that all come 
together? And is it the mortgage servicer or is it--obviously, 
the mortgage servicer has obligations to the shareholders. So, 
I am little bit unclear on how we can reengineer this in a way 
that doesn't put the homeowner or the renter, in some cases, at 
severe risk.
    Let's say the President pulls off the emergency status, and 
by Executive Order might end all of the support and relief that 
we have been providing, what does that look like, and how do we 
help those people transition slowly back to some semblance of 
normalcy?
    Mr. DeMarco. I will be glad to take a crack at that, 
Congressman.
    With 4.8 million households in forbearance, you can imagine 
that not everyone is going to come out of forbearance in the 
same situation.
    Over the last few months, I think between FHFA, the GSEs, 
FHA, and I don't want to leave out VA and USDA, there has been 
a lot of development about refining for servicers the 
guidelines of these programs for what that post-forbearance 
looks like, but I think across all of them, it can be simply 
boiled down into, broadly speaking, three buckets.
    For a borrower who comes out of forbearance and actually 
has the capacity not just to continue to pick up their mortgage 
payment, but to make a greater payment, they may determine they 
want to be on a short-term repayment plan and get caught up 
faster.
    For a lot of borrowers, if they get back to work, they can 
resume their pre-pandemic mortgage payment, but can't pay more 
than that. In that case, for most of those borrowers, their 
forborne payment is going to get added to the end of the loan--
life of the loan to be paid then and then resume a normal 
payment, but for those whose income has been permanently 
disrupted, they can't go back to their prior payment, we are 
going to be able to do a loan modification where we get a way 
of getting them caught back up by redoing the loan using loan 
modification terms. That is it, briefly.
    Mr. Lynch. Okay. So you don't anticipate any objection on 
the part of some of the shareholders that are due payments from 
the mortgage servicers, and you don't expect any action that we 
would have to take in order to make that happen? It is already 
in place?
    Mr. DeMarco. Certainly, with the--
    Ms. Cohen. I can take that.
    Mr. DeMarco. Okay.
    Ms. Cohen. Just briefly, what we saw in the last crisis and 
what we continue to see is that, as you said, Mr. Lynch, 
servicers on private mortgages are beholden to the guidelines 
from the investors, and so what we would like to see is a safe 
harbor for mortgage servicers from investor liability so that 
they can provide loan modifications along the lines that the 
GSEs and FHA and the other government agencies can provide that 
are sustainable.
    I would add that these issues are unprecedented and we 
don't yet know whether the loan modifications being offered 
will be affordable to enough people.
    Mr. Lynch. Okay. That is a perfect answer. That is what I 
wanted to know, in case we need to create a safe harbor to 
allow the loan servicers to give a break to some of these 
mortgage holders. We need to collaborate on that. I think that 
would be a win-win all the way around, but thank you very much.
    And I yield back.
    Chairman Green. The gentleman yields back.
    The Chair now recognizes Mr. Rose for 5 minutes.
    Mr. Rose. Thank you, Chairman Green and Ranking Member 
Barr, and thank you to our witnesses for testifying before the 
committee today.
    Currently, as we know, approximately 4.1 million homeowners 
are in forbearance plans, some due to the uncertainty 
surrounding COVID-19. Reports have shown that a large number, 
however, have continued to make payments even after requesting 
forbearance. That number has dropped sharply between March and 
June, though.
    Back here in Tennessee, folks are ready to get back to 
work, and I believe we need to do so as quickly and safely as 
possible.
    Dr. DeMarco, why did some people opt into forbearance but 
continue to pay down their principal, in your opinion?
    Mr. DeMarco. Congressman, I am not sure there is one 
explanation for that. In some cases it might have been a timing 
issue. Maybe they weren't sure whether they got the request in 
on time for that first month. In other cases, I believe, and 
this may be the majority, that the consumer wasn't exactly sure 
what their economic situation was going to be.
    Maybe they had a lot of uncertainty at work, and they 
wanted to get on forbearance quickly, so that they had that. 
And then once they realized that, in fact, their circumstances 
were okay, they may have ended the forbearance or others may 
actually have needed it and have started to take advantage of 
it since, so I think there are multiple reasons here.
    Mr. Rose. Are there any adverse consequences to asking for 
forbearance being approved, but then not taking advantage of 
it?
    Mr. DeMarco. You have to have an economic hardship 
resulting from the pandemic in order to ask for the 
forbearance, but if you ask for forbearance and continue to 
make your mortgage payment, no, there is no adverse consequence 
for you.
    Mr. Rose. Do you believe, Dr. DeMarco, that getting 
Americans back to work would decrease the number of borrowers 
who actually need to be in forbearance?
    Mr. DeMarco. Certainly, Congressman, the more people we get 
back to work, the more they are going to be able to pay their 
mortgage, and the fewer are going to need forbearance, yes.
    Mr. Rose. The CARES Act required unconditional forbearances 
of voters experiencing trouble due to the pandemic. However, 
those provisions only covered federally-backed loans.
    Dr. DeMarco, how have the private mortgage servicers 
changed their practices to help keep families in their homes?
    Mr. DeMarco. They are generally doing the same thing as the 
servicers of federally-backed mortgages. They are offering 
mortgage payment forbearance to their customers who contact 
them and declare they are having a financial hardship due to 
the pandemic. As a result, the rate of those loans in 
forbearance is actually greater than the GSE loans.
    Mr. Rose. Interesting.
    Ms. Cohen. Mr. Rose?
    Mr. Rose. Yes.
    Ms. Cohen. One thing I wanted to point out is that most 
private servicers, if they have an investor that they are 
servicing for, they are advancing payments, so at about 120 
days of forbearance, they are much more financially strapped.
    And we are concerned that 90-day forbearances aren't going 
to go to 180 days in the private market and that is going to 
present a significant problem.
    Mr. Rose. Thank you, Ms. Cohen.
    Mr. Williams. And, Mr. Rose, excuse me, the National 
Association of Real Estate Brokers, in our statement, we have 
addressed that as one of our five solutions that private 
servicers need to adhere to the GSE and FHA guidelines--
    Mr. Rose. Thank you.
    Ms. Griffin. I would also like to add--
    Mr. Rose. Let me go ahead to some other questions--
reclaiming my time.
    Dr. DeMarco, what other efforts have you seen industry 
stakeholders make to protect homeowners?
    Mr. DeMarco. I think that they have done a great deal to 
set up on their websites clear information for borrowers to 
understand what their options are. They have made a tremendous 
effort to shift all their servicing operations to the 
individuals' homes. They had to do the technology and the 
security around that to make that happen. I think those have 
been terrific efforts that servicers have made.
    And the other is, they are proactively reaching out to 
their customers to find out what their situation is and to make 
sure that they are getting the right tools to help them in 
their situation.
    Mr. Rose. Thank you.
    Throughout the pandemic, I believe, that the Trump 
Administration has continuously rolled out updated guidance for 
industry stakeholders.
    Dr. DeMarco, in the few seconds we have--well, it doesn't 
look like we have enough time, but I would, if time permits 
later, love to hear your assessment of how the agencies have 
assisted with the implementation of the CARES Act.
    And with that, I yield back, Chairman Green.
    Chairman Green. The gentleman's time has expired.
    The Chair now recognizes the gentlewoman from New York, Ms. 
Velazquez, who also happens to be the Chair of the House Small 
Business Committee, for 5 minutes.
    Ms. Velazquez. Thank you, Chairman Green, Chairwoman 
Waters, and Ranking Member Barr for this important, quite 
timely hearing.
    This question is for the panel. Recently, companies and 
organizations like the Center for Responsible Lending, the 
National Association of REALTORS, and Quicken Loans have all 
come out in opposition to the Trump Administration's plan to 
weaken the disparate impact rule; thereby, making it harder to 
pursue housing discrimination cases. Several other groups have 
come out in opposition to the proposed changes as well.
    So with a quick yes or no, does anyone believe now is the 
time to weaken housing discrimination rules?
    Ms. Cohen, let's start with you.
    Ms. Cohen. No.
    Ms. Velazquez. Ms. Griffin?
    Ms. Griffin. No.
    Ms. Velazquez. Mr. Williams?
    Mr. Williams. No.
    Ms. Velazquez. And Mr. DeMarco?
    Mr. DeMarco. No, we don't want to weaken housing 
discrimination rules.
    Ms. Velazquez. Thank you.
    Ms. Cohen, while the FHA has provided some guidance to FHA 
servicers regarding the implementation of the CARES Act related 
to the forbearance, a recent HUD OIG report found that, ``about 
90 percent of FHA loans provided incomplete, inconsistent data, 
and unclear guidance to borrowers.''
    Do you think further guidance from the FHA to servicers 
regarding forbearance is needed?
    Ms. Cohen. Yes. FHA should provide further guidance and so 
should Congress include it in the next package, both about 
websites, written notice, and oral notice.
    Ms. Velazquez. And why do you think the FHA hasn't issued 
such guidance?
    Ms. Cohen. I can't answer why FHA has not done that. I will 
say that I agree with Dr. DeMarco that they have done a really 
incredible job of putting out a lot of guidance and they just 
put out a lot of new rules, which, hopefully, will make loss 
mitigation more affordable for more people.
    Ms. Velazquez. Thank you.
    Ms. Griffin, what has your organization seen in terms of 
servicer communications to borrowers about having to pay a lump 
sum payment at the end of the forbearance period?
    Do you feel misinformation about repayment options is 
discouraging borrowers from accessing the forbearance relief 
afforded to them under the CARES Act?
    Ms. Griffin. Absolutely. The people that we talk to are 
frazzled about this lump sum payment. Few of them have actually 
even heard of the 180 days, let alone a year.
    So, it is causing really a lot of undue headache in these 
communities, and the borrowers are really concerned about their 
ability to pay, even at some point, let alone after 90 days.
    They are concerned that when they are going to work and, 
yes, the question earlier, yes, when employment increases, 
things will be a little bit better, but right now these 
homeowners are frazzled--
    Ms. Velazquez. Thank you.
    Ms. Griffin. --despite everything with the servicer--
    Ms. Velazquez. Thank you.
    Ms. Griffin. --they are not getting the right information.
    Ms. Velazquez. Thank you, Ms. Griffin.
    Yes, Mr. Williams?
    Mr. Williams. Just to dovetail on what Ms. Griffin said, 
that we basically need more awareness, the borrowers need to 
know that their rights are protected. We need to promote on TV, 
on the radio, and even email. They need to know they are 
protected because it is folklore right now.
    Ms. Velazquez. So whose responsibility it is to get 
information out? Who is failing?
    Mr. Williams. The servicers and the government right now. 
We are spending a lot of money, as we said in our statement, a 
lot of money on--
    Ms. Velazquez. Thank you.
    Mr. Williams, many individuals with mortgages currently in 
forbearance might still be unable to make their payments when 
their forbearance protections under the CARES Act expire.
    Based on what you have seen over the past few months, are 
you concerned about servicers' ability to work with borrowers 
to keep them in their homes after their forbearance period 
ends?
    Mr. Williams. I am very concerned. I have two witnesses, 
two people that I know who said that--one servicer said they 
didn't work with the program at all. It is a variable note. So, 
that is what they told this lady, that they didn't work with it 
at all; they would not be able to.
    Another servicer gave the person, the borrower, 90 days, 3 
months, and they have a payment of $17,000 at the end of that--
    Ms. Velazquez. Thank you.
    Mr. Williams. --so I am extremely concerned.
    Ms. Velazquez. My time has expired.
    Thank you.
    Chairman Green. Thank you. The gentlelady's time has 
expired.
    The Chair now recognizes Mr. Timmons for 5 minutes.
    Mr. Timmons. Thank you, Mr. Chairman. It is good to be with 
you all, even if it is on a conference video. I appreciate you 
having this hearing. We need to get this right.
    Just in January/February, we are experiencing some of the 
lowest unemployment in the history of South Carolina, in the 
history of our country, and COVID-19 has just changed 
everything.
    So, the Federal Government did what it could. The CARES Act 
had a lot of great things. It was hurriedly put together, and I 
think overwhelmingly, it was in the right direction. We are 
going to make sure we get the next package right. Phase four 
needs to be tailored to those who need it and people who are 
still struggling from unemployment or with other economic 
challenges. We need to make sure that we get them the help that 
they need.
    We are expecting a vaccine here in December, January, 
February, March, April, the sooner the better, in my opinion. I 
am sure we will all agree on that. I am probably going to be 
one of the first people to get it because I am in the National 
Guard, so I hope they get it right the first time.
    Mr. DeMarco, I am concerned that in October/November, we 
are going to hit our 6 months and we are going to have a lot of 
people who are still unemployed who are going to continue to 
have challenges making their payments. What policies do you 
think we should be considering to address that?
    Mr. DeMarco. For those in federally-backed mortgages, which 
is the majority of homeowners, if they get to 6 months and they 
still are experiencing an economic hardship because of this 
pandemic, then they should be in touch with their servicer 
requesting an additional extension of their forbearance period.
    In that sense, the answer is already there. The larger 
question is getting people back to work, and balancing and 
dealing with both the health issues our country is facing as 
well as the need to get the economy going.
    Mr. Timmons. We are dealing with that exact issue here in 
South Carolina. And the issue is, if you are older or have an 
underlying health condition, we need you to protect yourself 
and we need to make sure that you are able to protect yourself.
    You are not worried about having your credit ruined or 
risking your safety going back to work, but if you are healthy 
and you have a lower risk factor, we need you to get back to 
work, because ultimately, getting the economy restarted and 
getting the vaccine is what is going to get us through this.
    Ms. Cohen. Mr. Timmons?
    Mr. Timmons. Yes, ma'am.
    Ms. Cohen. I just wanted to supplement what Mr. DeMarco 
said. We do want to see people get back to work when it is time 
to do that and they are healthy, but one-third of the mortgage 
market is not government-backed loans and so we want to make 
sure that those people can get affordable loan modifications if 
they need them after their forbearances so that we can see 
increased employment and decreased foreclosure, including in 
the upstate where you live.
    Mr. Timmons. Yes, ma'am. I appreciate that.
    Honestly, it was remarkable to me. I had so many 
individuals calling and talking about this issue we are 
discussing of a balloon payment at the end of the forbearance 
period, and I had a call with the bankers and the credit unions 
immediately the next day, and I just wanted to make sure that 
was not going to be the case anywhere.
    Obviously, it is unacceptable. And I think the adverse 
impact on the perception of any entity that is not providing 
the forbearance necessary to those who need it is sufficient, 
the PR hit would be not worth the rub.
    But on to a different subject. As you all know, the FHFA 
and the GSEs have adopted temporary origination policies for 
the largely remote and virtual environment we find ourselves 
in. This has applied to appraisals, underwriting, and remote 
online notarization. This has been hugely helpful, in my 
opinion, to help maintain the health of the housing market 
during the pandemic.
    I would like to ask each of you, yes or no, do you think 
these remote policies, which are set to expire August 31st, 
should be made permanent?
    I will start with Dr. DeMarco.
    Mr. DeMarco. These policies have certainly helped keep the 
mortgage market going, and yes, in one form or another, we 
would like to see some of these--certainly things like the 
remote online notarization be made permanent.
    Mr. Timmons. Mr. Williams?
    Mr. Williams. I believe some of those programs, some of 
those options should be made available and be made permanent.
    Mr. Timmons. Thank you.
    Ms. Cohen?
    Ms. Cohen. Yes. We think those are important programs, but 
we need to make sure they are only used in certain 
circumstances and we need to make sure that appraisals are 
still reasonably accurate.
    Mr. Timmons. Absolutely. I think we can agree on that.
    Mr. Chairman, again, thank you for having this hearing and 
I look forward to working with you on this issue.
    I yield back.
    Chairman Green. The gentleman yields back.
    The Chair recognizes Mr. Perlmutter for 5 minutes.
    Mr. Perlmutter. Thank you, Mr. Chairman.
    And I have to say, I subscribe to much of what Mr. Timmons 
had to say, and a pretty realistic view of what we are facing 
in the questions that he asked. And I had taken some--not 
offense, but I differed with Mr. Barr as he started off his 
remarks in saying this economic situation we are in is as a 
result of a government-mandated shutdown.
    The bottom line is, this is COVID related, and we don't 
have it under control. This thing is going to continue to 
evolve. It is going to be difficult in we don't know how many 
different ways. And as Mr. Timmons was saying, and I think all 
of us believe, each of us has to provide some kind of latitude 
to others for all of us to get through this thing.
    So, 37 States in this past week have seen increased numbers 
of infections and hospitalization, so we are not out of this by 
any stretch of the imagination, and I think that the housing 
industry, the mortgage industry is going to continue to be 
roiled by this for some time. So, I think this is going to 
evolve.
    I would ask Ms. Griffin and Mr. DeMarco, there are 
provisions in the HEROES Act that contemplate the fact that we 
are not out of this virus yet, and at the end of this month, 
the pandemic unemployment insurance runs out. We see a lot of 
the funding for the PPP loans will have been exhausted by 
individual businesses. We haven't done another stimulus or 
stability payment.
    If this virus continues to roll as it has, and I will start 
with you, Ms. Griffin, are we going to need to implement some 
things in the HEROES Act so people can pay their mortgages? 
Forget about forbearance for a second. I think we would all 
like them to pay their mortgages.
    Ms. Griffin. Absolutely. The reality is that the more help 
we can give to homeowners, the better. They are going to 
absolutely need it, as you just said. This situation is not 
getting better. It is getting worse.
    Certainly, consideration to helping homeowners, helping 
organizations like ours, and others that can help these 
homeowners get on their feet and work with these servicers, 
this is really critical.
    Our homeowners do not have--many of them, at least, don't 
have a grasp for what is next. And so the work--and I will just 
certainly say with the counseling organizations, that we can 
just kind of settle people down, give them direction, even help 
to provide advice and guidance about working with their 
servicer as well as how to enhance their own lives. This is 
what we want.
    And we certainly need to think about a HAMP-like program 
that was very affected the last time. I think that this will be 
very effective going forward, and this is something that we 
would really, really encourage.
    Mr. Perlmutter. And I thank you for that. Ms. Griffin, I 
think, you hit the nail on the head. When you have uncertainty 
and you have fear in an economy, it slows the economy down. No 
ifs, ands, or buts. There needs to be some level of certainty, 
and to try to hopefully, get a vaccine as soon as we can or 
make some technological breakthroughs in therapeutics to take 
away the fear.
    But Dr. DeMarco, what do you think we are going to need, 
assuming that this virus isn't extinguished or isn't fought off 
by a vaccine for 5, 6, 7 months?
    Mr. DeMarco. Mr. Perlmutter, I agree. This is a big-picture 
question about our economy. It is about small businesses, and 
even large businesses that are suffering because of how the 
pandemic intersects with those industries and those businesses. 
It is causing great hardship among families because of the 
furloughs and the unemployment that is resulting from that.
    So, this is a big macroeconomic challenge and that is a bit 
outside of my scope, but I would say that I understand that 
Federal Reserve Chairman Powell has been up before Congress 
recently, talking about the need for continued fiscal support 
in face of how the pandemic and the economic response to it is 
affecting our economy, our businesses, and our workers.
    And so, I don't have a particular prescription, but to say 
that I think Chairman Powell certainly identified that as a 
role for Congress.
    Mr. Perlmutter. Thank you.
    And I yield back to the Chair.
    Chairman Green. The gentleman's time has expired.
    The Chair now recognizes Mr. Taylor for 5 minutes.
    Mr. Taylor. Thank you, Mr. Chairman. I appreciate this 
hearing. I think this is a very important topic and I think we 
have been--I get a lot about the individual impact and I think 
all of us, as Members of Congress, see that every day in our 
districts.
    I was at a food bank this morning in Allen, Texas, and just 
watching the real need in our communities has deeply affected 
me. I want to take a second and kind of step back and talk 
about the macro for a second, talk about the big picture.
    Right now, about 8 percent of the home mortgages in the 
United States, according to the data I have seen, are currently 
in forbearance. And just thinking about what that could mean if 
there wasn't forbearance.
    Let's just kind of take that for a second, and say if there 
wasn't forbearance, my guess is that would mean about 8 percent 
of the homes in the United States would be foreclosed within 
the next year. And then, when they go to sell those or 
liquidate those, it would basically collapse the real estate 
market.
    So, home values would collapse across the country because 
you have a tremendous amount of foreclosures, and I am saying 
that based on the experience that Dallas, Texas, went through, 
and Texas as a State, during the 1980s.
    I remember the savings and loan crisis and you watched a 
tremendous number of foreclosures with the Resolution Trust 
Corporation (RTC), what are referred to as the RTC days in 
Texas in the 1980s and early 1990s.
    And the liquidations were such that things were literally--
office buildings were trading for $10 a square foot, people 
literally could take retail properties just by paying the 
taxes.
    So I just wanted to know if any of you have any thoughts 
about what if we didn't have forbearance, how bad would it be 
for the housing market in this country, when the valuation side 
in 12 or 24 months, once you had a bunch of liquidations, then 
collapses in values?
    Mr. DeMarco, do you want to speak to that?
    Mr. DeMarco. Congressman, it certainly would be bad. I 
don't know how to size it any differently than you just did. It 
would be bad. It would also--one of the things that forbearance 
has accomplished is it has assisted in the response to the 
health crisis by allowing people to be able to stay home to 
quarantine, or whatever the particular standard is in a 
community to help suppress the virus. It is helping combat the 
virus, recognizing we are providing economic support to that 
household or those workers because they are not going to be 
able to pay their mortgage.
    So, there is not just the economic toll and what happens in 
the real estate market, there is also the question of the 
health impact, and we create an incentive where people feel 
they have to go back to work, even if that is not coinciding 
with good health practices in this environment.
    Mr. Taylor. Sure.
    Mr. Williams, do you want to talk about what we are trying 
to stop from happening here?
    Mr. Williams. I do. It would be horrific. But what happened 
to--when I went to school, they taught me the three important 
necessities in life were food, clothing, and shelter. Well, how 
did we get to bailing out the airline industry before we look 
out for the homeowner?
    I just feel that if we don't do something, if we don't act, 
if we don't get everyone involved and get on the same page in 
the program, if we don't move quickly, then we are going to be 
in for a huge, huge problem.
    Ms. Griffin. Absolutely. If I could add to that--well, 
first of all, the forbearances have provided a profound help to 
homeowners. Without it, we would be inundated with foreclosures 
where there is a possibility we are headed towards that and we 
certainly need to work together.
    But without question, for people of color, for these 
vulnerable communities without the forbearances, without the 
work that we are doing together, there would be a whole other 
generation of loss of wealth. It is bad now, it appears to get 
worse, and hopefully we can sort of work together to stem this 
tide.
    Mr. Taylor. Ms. Cohen, do you want to make any comment on, 
again, the macro situation? It seems like there is consensus 
that we are avoiding a macro catastrophe by trying to use 
forbearances and mechanisms to get to the other side.
    Ms. Cohen. I agree with that, Mr. Taylor. I think what we 
should also keep in mind in this macro situation is, who isn't 
making their payments and doesn't have a forbearance, and what 
is that going to do to the economy and to property values as 
well, and how can we collect enough data that we understand 
what is going on so we can prevent a catastrophe?
    Mr. Taylor. Sure.
    And in my final few seconds, I will just point out that I 
am working with a lot of members on this committee on both 
sides to try to work on forbearance or trying to help within 
the commercial real estate space because we have done a great 
job. We have heard that on the home side. There is much work to 
do, but we are headed in the right direction, but in commercial 
real estate, I am very deeply concerned that we are about to 
have a foreclosure crisis--
    I yield back, Mr. Chairman. Thank you for indulging me.
    Chairman Green. The gentleman's time has expired.
    The Chair now recognizes Ms. Tlaib for 5 minutes.
    Ms. Tlaib. Thank you so much, Mr. Chairman, and thank you 
so much for this really critically important hearing.
    I know Chairman Al Green has come to my district and 
actually deeded tower of housing justice tour and saw that, 
even in the last recession, just how much communities are still 
suffering. So many of my residents, especially throughout Wayne 
County, have been in survivor mode.
    They have been living paycheck to paycheck, and in just one 
of my cities, in the City of Detroit, 88,000 people were 
evicted out of their homes. So, for this to happen in a 
pandemic is not in control of any of us, right? This is very 
much something that came about, that I don't think any of us 
could have truly been able to truly prepare for, especially in 
the housing mechanism. I don't know about the healthcare, but 
especially with housing.
    And so, I want to talk about this. I think this is really 
critically important, and I think my colleague, Mr. Taylor, was 
talking about this. Forbearance and these kinds of moratoriums 
on water shutoff, utility, student loans, mortgages, they are 
just band-aids, because all of that money is going to be due 
when the forbearance is up.
    So, what are we going to do then? I want to start with Mr. 
Williams. You know from many of your clients and even in your 
membership, because what I hear from my residents is, why 
aren't we doing recurring payments? Why aren't we doing 
something as aggressive and bold as we are doing for airlines 
and other industries?
    Why aren't we having a peoples' bailout where we are 
looking at recurring payments so that people can pay all this 
debt down because, again, some of these jobs won't come back, 
but even if the jobs come back, they are not going to have the 
lump sum ready to go to be able to pay it off. They still might 
end up losing their homes.
    Can you talk a little bit about that?
    Mr. Williams. Sure. You are absolutely right, but that is 
why we asked for that five-point plan. We had some serious 
solutions that we want you all to really seriously take a look 
at, because that is the direction we feel we should go in.
    We have been decimated. This is a critical time. It is time 
for action. It is really time for action.
    Ms. Tlaib. No, no. I appreciate you bringing up my Black 
neighbors, because we lost more Black home ownership in 
Michigan than any other State, about 40 percent.
    Ms. Cohen, you have been very thoughtful in how you have 
talked about these issues and the fact that we still are 
leaving a lot of our neighbors across the country, homeowners, 
behind in the way we are approaching this.
    I don't know if you are familiar with the Automatic Boost 
to Communities Act that I introduced, but it would be recurring 
payments of $2,000 per month on a recharged debit card.
    Do you think that will help with some of the issues we are 
seeing with people possibly losing their homes because of this 
pandemic?
    Ms. Cohen. Thank you for your question, Ms. Tlaib.
    I am not familiar with it, because I live in my little 
universe of housing legislation, and I can talk to my 
colleagues about it, but the biggest problem with financially 
strapped people is that they are financially strapped. And so 
they are living on the edge and they need cash in addition to 
needing help from their servicers and from all of their other 
creditors. And so, anything we can do, to do that, will move 
things in the right direction.
    People should also look closely at legislation around that 
Homeowners Assistance Fund, because States can also administer 
programs to hit the hardest-hit areas in ways that might be 
constructive.
    Mr. Williams. Also, Congresswoman, getting the word out so 
that the homeowner or the borrower is knowledgeable enough 
about the program. This has the same effect as the PPP, where 
huge companies got all this money and then we didn't get it, 
because we weren't--
    Ms. Tlaib. Mr. Williams, even with the PPP and my 
incredible colleague, Ms. Velazquez, has been so much on the--
bringing the voices of small businesses, but it is so 
cumbersome. Let's be honest, the servicers are playing games 
with peoples' lives.
    With some of them, if you are not actually saying the 
correct word, if you do not request it in a certain way--as a 
Member of Congress, myself, and I know I am new, but I have to 
pick up the phone and call a servicer and say, why did you tell 
my resident they don't qualify, when according to the 
legislation we passed they do qualify?
    Well, they need to say it this way. This is not a game. 
They obviously can't pay, so let's put that as an option and 
stop playing games with people who really--they are going to 
lose their home. These are not people who want to lose their 
home. They just don't have the capability of doing it, and I am 
tired of people pretending that it is because of economic 
shutdown or all these other--we did this to them. We put them 
in survivor mode. They have been literally one emergency away, 
and now the pandemic has happened, but they were one emergency 
away from going into poverty.
    So I think it is our responsibility to put people first, 
and I thank all of you so much, but I think we really need to 
talk about it--we talk about this program and, of course, we 
need all of those programs in the five points, but we need 
recurring payments. Enough.
    Other countries are doing that. They are giving people 
human dignity. Let them choose what they needed for their 
family and recurring payments, I think, is going to be key 
here.
    Thank you so much, Chairman Green. It's always a pleasure 
to work with you. Thank you.
    And I yield back.
    Chairman Green. The gentlelady yields back.
    The Chair now recognizes Ms. Dean for 5 minutes.
    Ms. Dean. Thank you, Mr. Chairman, for calling this 
important committee hearing. And I thank Chairwoman Waters as 
well.
    I also thank Ranking Member Barr, and Mr. Barr, you and 
your family are in my prayers, and you have my sympathies on 
your recent grievous loss.
    I am really pleased to be here to talk about this and know 
that the lens that I am looking through what we are talking 
about here in terms of folks and their mortgages in precarious 
places, is one from what lessons did we learn from the past? 
What did we learn from 2008?
    I was not in Congress then. Like Representative Tlaib, I am 
a freshman, but as Representative Taylor talked about, we have 
4 million mortgage loans in forbearance, as our witnesses have 
told us. Many people are not in forbearance and are missing 
payments, so we have a gaping hole there and we put together 
information and important protections through the CARES Act and 
we want to do even more through the HEROES Act. We need to get 
people the protections they need to keep the roof over their 
head to protect their credit, and protect their family.
    Mr. Williams, I would like to start with you. You have 
already talked about this, but you are concerned about what 
mortgage servicers are and are not doing to protect borrowers 
in terms of whether it is communication or reaching out when a 
payment is missed to find out what is going on to see if 
actually they should be put into the forbearance.
    What other things do you think need to be done in order to 
get protection, forbearance to as many borrowers as possible?
    Mr. Williams. I think we need to have some communication 
going out from the servicers. They need to put it in their 
mailings, emails. Hey, this should be a commercial on 
television, getting this information out. I think that we 
hinder ourselves. I think that they are limited in giving 
information for the servicers like diversity as well.
    So, those are the important things, I think, right off the 
bat that we need to increase our communication to the borrower.
    Ms. Dean. Absolutely.
    Ms. Griffin. And I would like to add in there also, get and 
complement. The outreach is critical. What we have found from 
the past foreclosure crisis was that people are--they really 
need some guidance, they really need some help.
    And even if the servicers send out information, it needs to 
be clear, it needs to be simple, and without question. We 
really need to have some advocates in the mix that can be able 
to explain things to these borrowers whom, as you said, 
Congresswoman, they are on the edge and really just need some 
guidance.
    So the outreach is certainly critical, and the hand-holding 
is also critical.
    Ms. Dean. I appreciate that.
    Ms. Cohen. Ms. Dean, can I just say one other thing? I 
agree with Mr. Williams and Ms. Griffin, but the servicers 
don't have the capacity to do the level of default servicing 
that we are going to see. They didn't do it well in the last 
crisis; they are not doing it well now. It is great if you can 
get onto a website and you don't need much from them, but if 
you actually need something from them, it is more complicated.
    So, we can't put the onus just on the homeowner to 
understand and reach out. We need automated systems and we need 
to make sure that people are offered what they need without 
having to go through a lot of red tape.
    Ms. Dean. Ms. Cohen, that is a perfect segue. I wanted to 
ask you next, what are the lessons that we learned in the past, 
that I desperately hope we do not repeat in this economic 
collapse? What are some of those lessons?
    Ms. Cohen. Thank you for the question.
    The first one is, people need affordable options when they 
can't pay their regular mortgage payment. That is one of the 
good things that came out of the last crisis, was the general 
understanding about that, but we don't know whether the 
programs we have now will be affordable.
    Second, when you have a crisis in Black and Latinx home 
ownership that has been exacerbated by the current crisis, you 
need to look freshly at what the problems are and what the 
solutions are, and to ask yourself whether we need to start 
something new.
    Ms. Dean. Let me ask you, in my final seconds here, you 
talked earlier in your testimony about the CFPB and that they 
need to help people avoid foreclosure.
    What is the responsibility of the CFPB? What could they be 
doing proactively, because we see the number of complaints just 
going through the roof with the CFPB? What should they be doing 
to help people avoid foreclosure?
    Ms. Cohen. I had a pretty long list in my testimony, but 
let me give you two. First, work with the Federal Housing 
Finance Agency on the Borrower Protection Program, provide 
transparent data, learn from the consumer complaints, and take 
action against companies that are misbehaving.
    Second, right now they have an interim final rule that they 
put out. They need to protect people against foreclosure, which 
they haven't done.
    Thank you.
    Ms. Dean. I know my time has expired.
    Thank you, Mr. Chairman.
    Chairman Green. The gentlelady's time has expired.
    The Chair now recognizes himself for 5 minutes.
    I will tell you, friends, I was here in 2008, and I saw how 
we treated the big banks. The truth is this: They were 
overpaid. Overpaid in this sense: There were banks that said, 
we don't want that money. We don't want it to appear as though 
we need the money, but we imposed upon them billions of 
dollars. They were overpaid, but when it comes to the consumer, 
the consumer gets short-changed. The consumer has to jump 
through all kinds of hoops to try to get what Congress intended 
consumers to receive.
    So I am just appalled, to be quite frank with you, at the 
fact that the consumer always seems to find himself or herself 
groveling to a certain extent to get something that these big 
banks get as a matter of course. I am not opposed to big banks; 
I just want everybody to be treated fairly.
    This program, in my opinion, has no consequences. If these 
servicers misbehave, there are no consequences. It seems to me 
that we, in the future, will have to find a way to impose some 
consequences.
    My constituents, who have actually received this notice 
that is according them 3 months of forbearance when they are 
entitled to 180 days, now have to hire a lawyer if they want to 
pursue this.
    They can't get it done simply because they have made a fair 
and just request. They will have to go through some other 
extenuating circumstances. I would like to note that this would 
be submitted into the record, without objection.
    Without objection, it is so ordered.
    It always seems that people of color are having to account 
for themselves. We have to prove that people of color are being 
discriminated against, and this is not just as it relates to 
the financial services industry, it is across-the-board. People 
of color always seem to be at the bottom.
    At some point, we have to have a system, a justice, such 
that people of color will get the same treatment as other 
persons in this society. I think that what happened to George 
Floyd is exposing the underbelly of what is happening to people 
of color, and other people are starting to realize that it will 
take more than our hues and cries to get this done. It is my 
belief that there is systemic discrimination.
    Let me go to you, Mr. Williams, if I may, please, sir. Do 
you agree that there is systemic discrimination taking place in 
lending?
    Mr. Williams. I do. I totally agree. I see it often. We 
have some resolutions. But there is no better time than now to 
address the Black home ownership program.
    Chairman Green. Let me do this. Time is of the essence.
    Ms. Griffin, do you agree that there is systemic 
discrimination in lending?
    Ms. Griffin. Yes, there is.
    Chairman Green. And let me go next to Ms. Cohen. Do you 
agree that there is systemic discrimination in lending?
    Ms. Cohen. Yes, I agree. The CFPB found that for people 
with the same credit scores, Black borrowers were rejected for 
mortgages at higher rates.
    Chairman Green. And Mr. DeMarco, do you agree?
    Mr. DeMarco. I agree that we have certainly had a history 
of this and there seems to still be areas where it is an issue, 
yes, sir.
    Chairman Green. Well, if you agree that there is this 
systemic discrimination, I have proposed that we have a 
department of reconciliation with the responsibility of dealing 
with racism and invidious discrimination in this country. And 
it would deal with financial services, it goes into policing, 
and many other areas.
    If you agree that we have this problem, and we have had it 
for hundreds of years, isn't it about time that we do something 
other than what we have been doing?
    Would you agree, Mr. Williams, that it would be appropriate 
to have a department of reconciliation, which has as its 
responsibility to look out for people who are being 
discriminated against, and this would include the protected 
classes, look out for them and report to the President, through 
a Secretary of Reconciliation? Would you agree that such a 
position should exist, sir?
    Mr. Williams. Yes, sir, I agree wholeheartedly.
    Chairman Green. Ms. Cohen, where do you stand, please?
    Ms. Cohen. Yes. We think that is important and we think it 
is important to change--
    Chairman Green. Let me move on. My time is of the essence. 
I am so sorry, Ms. Cohen.
    Ms. Griffin, where do you stand, please?
    Ms. Griffin. I fully agree that it needs to be monitored 
and there needs to be penalties.
    Chairman Green. And Mr. DeMarco?
    Mr. DeMarco. I have no opinion on a position like that, 
Congressman. I do believe we all have a responsibility to act.
    Chairman Green. Well, let me do this now that you have said 
this, Mr. DeMarco. All persons who are in agreement and you 
think that systemic racism and invidious discrimination as it 
relates to people, including the protected classes, should be 
handled with a department that specializes in this, kindly 
raise your hand, please. Raise your hand so that we may capture 
you all on screen.
    Okay. I see everyone's hands, save Mr. DeMarco. Would you 
do a screen shot of this please, staff? Thank you.
    My time has expired, and I would like to also include for 
the record, a statement from the Mortgage Bankers Association.
    Without objection, it is so ordered.
    Friends, if I may now bring this to closure. I thank all of 
you for appearing today, especially the witnesses. Thank you 
for your testimony and for devoting your time and resources to 
share your expertise with the subcommittee.
    Your testimony today has helped to advance the important 
work of this subcommittee and the U.S. Congress.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    This hearing is now adjourned.
    [Whereupon, at 1:50 p.m., the hearing was adjourned.]

                            A P P E N D I X


                             July 16, 2020
                             
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