Providence, RI – U.S. Senator Sheldon Whitehouse (D-RI) today brought together a panel of local experts and homeowners to discuss the impact of the foreclosure crisis on Rhode Island families and to examine whether bankruptcy court mediation programs can help to keep families in their homes. The participants joined Whitehouse at Rhode Island Housing in Providence for an official field hearing of the Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts, which Whitehouse chairs.
Starting in 2009, the Bankruptcy Courts for the Districts of Rhode Island and New York began providing pre-trial foreclosure mediations. While no settlement is required, the program helps homeowners cut through red tape and bring the mortgage company to the table for a good faith negotiation.
“For families in Rhode Island and across the country snarled in the foreclosure nightmare, it is vital that we find a way to address the growing crisis. Today’s hearing will help us determine whether bankruptcy mediation programs can serve that purpose, and whether federal legislation might be useful in replicating the Rhode Island and New York programs nationwide,” said Whitehouse in his opening statement.
John Rao, an attorney at the National Consumer Law Center, testified about the effectiveness of foreclosure mediation programs. “Homeowners routinely encounter numerous bureaucratic barriers in attempting to obtain Home Affordable Modification Program (HAMP) modifications,” said Rao. “The advantage of mediation programs is that they generally require that each of the participating parties designate a person having authority to resolve the matter… While these programs do not compel a servicer to provide a loan modification, they ensure that homeowners have a fair opportunity for consideration of their HAMP applications.”
Robert Cardullo, a Johnston, RI homeowner, testified about the long and frustrating process of trying to obtain a mortgage modification. “It seems they would rather take the house than work out a reasonable payment plan,” Cardullo said of his mortgage servicer. “Not only would a loan modification help me and my children to remain in our home, but most importantly, it would provide my children with much-needed stability and eliminate any further upheaval right now in their young lives.”
“I applaud Senator Whitehouse and Rhode Island Housing for holding this hearing and their efforts to help distressed homeowners who are facing foreclosure and trying to work with their servicers,” said Senator Jack Reed, who attended the hearing.
Other witnesses at the hearing included Larry Britt, a homeowner from Riverside, RI, Martin Glenn, a United States Bankruptcy Judge for the Southern District of New York, and Christopher Lefebvre, a Rhode Island Attorney.
Whitehouse’s statement, the witnesses’ testimony, and other materials will be entered into the official record of the Senate Judiciary Committee.