WASHINGTON — House Financial Services Chairman Barney Frank, D-Ma., pledged Friday to pursue more legislation to address the troubled U.S. housing market if a law set to be passed by Congress and signed by President George W. Bush doesn't sufficiently address the crisis.
Speaking at a hearing of the financial services panel, Frank told representatives of mortgage lenders and industry trade groups that he wouldn't hesitate to pursue more legislation to tackle the plague of foreclosures if the first law isn't effective at doing so.
Frank has been a key driver behind the housing rescue package that the House passed earlier in the week and the Senate is expected to do on Saturday.
He grilled representatives of Bank of America Corp. and Wells Fargo & Co. home loan divisions about whether they intended to utilize the tools granted to them by the housing law.
Both witnesses said they would do so.
Michael Gross, managing director for loss mitigation at Bank of America, said that the lender had already started evaluating its loan portfolio to try and determine what proportion might benefit from the provisions of the housing package.
Mary Coffin, executive vice president of Wells Fargo Home Mortgage, agreed.
"Yes, we are going to use the program and even prior to its final approval we have begun analyzing our portfolio to see who would be eligible," she said.
Gross said until the final rules were set in place by the various regulatory agencies that will implement the new rules, it would be difficult to say how many loans would be affected.
"My gut says there will be tens of thousands of loans in our portfolios that will be eligible to take advantage of this program," Gross said.
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee and another key proponent of the housing legislation, joined with Frank in challenging the mortgage industry to take advantage of the new tools in the bill.
"I certainly join with him," Dodd said, speaking to reporters Friday after the Senate voted on a procedural motion on the housing bill.
"I think this is an opportunity for them now to demonstrate what they claim is their willingness over the last year and half without much demonstration of this."
In a moment of high theater during the hearing, Gross was asked by Rep. Jackie Speier, D-Calif., whether Bank of America or Countrywide Financial required customers to sign a legal waiver before they would work with them to restructure their loans.
Gross replied that Bank of America did not employ such waivers.
Bank of America recently completed the purchase of Countrywide, one of the largest mortgage lenders in the country.
Another witness, Julia Gordon, policy counsel at the Center for Responible Lending, stated that such waivers in fact did exist at Countrywide, presented one to the Committee, and then proceeded to read its details.
Gross apologized to the committee and promised to review the situation promptly.
"It will be deeply underground...at least six feet," said Frank.
Frank said that a bill introduced by Rep. Maxine Waters, D-Calif., aimed at tackling problems in the mortgage-servicing industry could form the base of any new legislative effort.
Speaking to reporters after the hearing, he said his fear was that mortgage-servicing companies wouldn't embrace the legislation and work to restructure troubled borrowers' loans for fear of being sued by investors.
He said he had been heartened by the assurances by the representatives of the Bank of America and Wells Fargo that this wasn't the case, but admitted he still had concerns in this regard.
Frank said he didn't know how long it would take before it would be clear whether the legislation had been effective in addressing the crisis in the housing market.
Rep. Mel Watt, D-N.C., asked the panel of witnesses whether they still felt it was necessary for there to be a law banning predatory lenders.
Seven of the eight witnesses said they did. The only one who didn't was James Barber, chairman of the Acacia Federal Savings Bank, who was appearing on behalf of the American Bankers Association. He said he wasn't against such a law, but had no opinion on it.
Watt then asked about a law tightening up oversight of mortgage servicers. Barber and David Kittle, chairman-elect of the Mortgage Bankers Association both said they were opposed to such a law.