then they can use institutional rules but unless the pre-existing agreement is there, i don't think institutions can bring it out. >> there is a real sense out there that cost of inaction there is a real crisis.

my home state of tennessee routinely ranked in the top states with the number of foreclosures. the extent of the foreclosure crisis is such that even some middle-class areas are effected. with unemployment at 10%, many responsible homeowners on find themselves on the brink of losing their homes.

back in july, we are raising concerns about the effectiveness of the program. that was in july. so far, the efforts appears not to be working. some of my colleagues and i suspect that the efforts have been exclusively focused on key encouraging lenders to redo mortgage terms. it might be the same thing as encouraging president karzai to root out corruption. encouraging th the program is still relatively new. i am troubled by continued reports from the media and suggesting that the program is simply in effective in stemming foreclosures. my constituents and feel it is ineffective because they're not getting help. this congress has acted earlier.

i helped with a be helping families save their homes act which would give authority to bankruptcy judges to modify mortgage terms including a reduction of the mortgage principal. also i sponsored an amendment to the regulatory reform legislation. it contains language that is substantially identical to the authority of hr1106. this provision has not been signed into law as it has not been passed by the senate.

i now give it over to the ranking member. >> thank you, mr. chairman. thank you for being here. i believe that by allowing mortgage cramdown in bankruptcy poses a major threat to the housing sector and the overall economy. it is completely unfair to future borrowers, it harms lenders and investors and it undermines the stability necessary for recovery. as we have seen, such a proposal does not meet the threshold to pass the senate. the uncertainty that this would

create for mortgage originator is what the housing sector does not need to be in the car the volatile housing market. allowing this would be a continuation of the heavy-handed interference that got us into this precarious predicament in the first place. as we know, the political housing establishment in the name of increasing home ownership significantly contributed to the crisis. this is accomplished through the intention a weakening of traditional mortgage lending standards. these weekend underwriting standards were encouraged by the community reinvestment act mandated by congress. as my friends on the left work so hard to coerced banks into changing their spending practices and even to making loans that were untenable, and now we see them suggesting that the banks should make the loans that failed because of the

interference as free as they possibly can. this is a recipe that cannot stand. allowing mortgage cramdown in bankruptcy would be an extension of the failed government interference in the housing sector. according to today's hearing, we are not here to discuss mortgage sector cramdown. although voluntary loan modification efforts have not been perfect, lenders and servicers are making an effort to keep people in their homes. there are over 650,000 trial modifications under the program and over 5 million as part of the alliance.

lenders and services work every day to keep as many people in their homes as possible. their efforts are stifled and complicated by how poorly underwritten mammy of these loans are penned jumped more portly, by an unemployment rate of that hovers at 10%. -- these loans are. -- their efforts are stifled and complicated by how poorly underwritten many of the loans are. more importantly, an unemployment rate hovers near 10%. i think the chairman and i yield back. >> now i recognize the next gentlemen in order which is the vice chair. would you like to make a statement? >> i will be very brief. my friend from arizona, the distinguished ranking member, he

referenced his understanding of how we are rife here in these very very dire realities in terms of the housing market. i could not disagree with him how more. i think that the facts are that if one examines mortgages issued pursuant to the community reinvestment act that it is surprisingly a performance in terms of foreclosures and troubled mortgages that i only wish was true of the entire mortgage industry. the foreclosure rate is minuscule compared to the

mortgages that were issued by the unregulated market. that is what the facts are. i think that that will be will be a commission that is independent and independent. we did not get here because of government, we got here because government did not do its job. that is how we got here. now we are cleaning up the mess.

it is not about government over regulating, they did not advocate it their responsibility to supervise. this is fairly. is not open to scam artists that actually are arrive in this position. it is interesting, you cannot do a cramdown but you cannot do it if it is a private home. i wonder how that happened. it would be interesting to go back and look at the legislative history to see how that was achieved. it is ok to do it for investment properties, second homes, cars, boats, for every asset but the

home of someone lives with their family in. i would just like to say that the consumer should be and treated fairly. that is what i can achieve. the voluntary programs don't seem to be working. if we continue to go to the root of a voluntary program, you will just extend the pain. the pain will be extended and you know what is going to happen. we are never going to get out of this housing slump.

we will see additional foreclosures. if that is what the minority party wants, that is what will happen. with that, i yield back. >> i represenwould like to intre chairman of the full committee. >> thank you, mr. chairman. we will not go into details as to one of your distant predecessors moved to texas. >> we cannot pull our homeowners out of the crisis. these are made more difficult by high unemployment which has not been reduced by the economic policies. in contrast to these modification efforts, today the

house is considering an amendment that gives bankruptcy judge's broad discretion to rewrite and cram down mortgages in bankruptcy. there is little relief to distressed borrowers. bankruptcy cramdown will lead to higher interest rates and less strenuous borrowing terms. unemployment has been a driving factor behind most foreclosures. it will do nothing for those most in need of employment. additionally, they cannot expect

to receive decisions from bankruptcy courts. this really transfers the cost of bad financial decisions to prospective home buyers will find it much harder to get a mortgage. these investors often include pension funds representing the retirement savings of millions of people. we should not pass the cost of irresponsible borrowing on culture and future retirees. we need to do everything we clan tooth stop the foreclosure crisis. we must not punish the successful and tax irresponsible and hold no one accountable.

i hope that there are positive suggestions for voluntary loan modification programs. suggestions that are not will not git out of our crisis until we have legislation that creates jobs and revitalize the housing market. >> >> it is ironic that the bankruptcy in history that made so many people and so much money based on these mortgage- backed securities that they both

sold and purchased, they have made a lot of money. there is a government bailout. when they got to the bailout, they got the money. they failed and refused to have it people help people on main street. it is ironic that the representatives in congress who care more about the bankrupting industry than doing what they

can. it is really an irony it would not support bankruptcy judges. they can do this on the primary residence with our target money. today will it explore the viability.

they are not being exercised in good faith. there is the mortgage modification and the extreme important. this is today's economy. currently our nation is the experiencing a major foreclosure crisis. many families are struggling to make ends meet. for homeowners who are struggling, losing your home can be devastating.

there are many negative side effects. foreclosure not only affects the family who owns the house but also that the neighborhood surrounding the house. this brought down the value of the surrounding houses creating places where criminals and criminal conduct can take place. this makes the neighborhood look as if no one cares about it. it is a psychological problem that ensues. people in the neighborhood where there is large foreclosure activity and it is not good for people and it is not good for america.

they don't want to take meaningful action to help the folks who are struggling on main street. this was intended to help homeowners modify their mortgage payments to make them more affordable and avoid foreclosure. it was designed to strengthen the housing market and stabilize the overall economy. it has been alleged that the this is a failure. the majority of homeowners have modified their mortgages and stayed in their homes. you have called a hearing on this particular issue.

i think the chairman once again. >> i will be brief. some people on more than the house is worth. -- owe more than the house is worth.

the value is not as much as the debt. there is an option to cram down. that can reaffirm the dead at the value of the property. there is always a better deal for the creditor because they would get more than the distress sale .

they might be a situation where they have to realize the loss that they did not have to do before they agree to a modification which affects negatively their earnings. the might be a situation where it affects their balance sheet where the modification gives them less and less land and authority. whether there are disadvantages in the accounting authority, there are disincentives from the system to agreeing to modifications. there is also the reason why we should not have cram down, whether or not a that would be an incentive to modification. i will be looking at those two issues, mr. chairman. thank you for holding the hearing. >> i would like to recognize distinguished chairman of the committee. there are those who are in need of help.

>> thank you, mr. chairman. i think you should remain chairman of the next congress as well. as he will testify, the subprime mortgage was what triggered the financial place that we find ourselves and not nationally but globally as well they have chalked up all of those mortgages, rebuttal of them and then set them out all over the country to all americans and all of the world. now, our judiciary committee and i think everyone here on the

subcommittee supported a simple solution since we have jurisdiction of bankruptcy . we passed it in the house, the senate as usual is not able to shut off the filibuster so the bill was withdrawn. i just left a press conference for the congressional black caucus, how do we create jobs.

there is an economic downturn, there is a lot of work to be done. i am proud of the chairmen. >> thank you for participating. your written statements we placed into the record. the lighting system starts into a green light. it means that you have a minute to go. you should be finished or in the process of being finished.

456 @#$@432 ^ & >> mr. chairman, ranking member. good morning. i am an associate professor of law at georgetown. i served as special counsel to the oversight panel. the views i expressed today are my own.

we are two days into a foreclosure crisis. the picture is grim. mortgage foreclosure rates are at four and half times the historic rate. the cornerstone of federal efforts to mitigate the foreclosure crisis is the home of the station program which provides tax fair funded incentive payments to services, lenders, and homeowners to facilitate standardized loan modifications. this involves an initial trial modification. after it converts to a permanent status even though the permanent modification is a permanent modification. first, a trial modification must be commenced.

there has been around a million trial modification. there was an increase in the trials conducted suggesting that the enrollment in the program might have already peaked. trial modifications have adapted to promise status. nine months into this, there are 31,382 permit modifications. as of the end of october, less than 10% were converted by the end of the three month trial

time. this has improved in recent months but at a politically low- level. this will be quite limited and not enough to have a noticeable impact on the foreclosure crisis. conversion from trial to promise that this is not the only obstacle for the loan modification to be successful. it must also continue to perform. it is too early to talk about loan modifications but to the baseline prediction is that 40% will defaults in the first five years. that is optimistic. the closest the structural analogue to the loans are the exotic subprime months. and to be fair, the monthly payments on the loans are far more affordable. both of the mons the chair the below market introductory rates has stepped up over time. balloon payments@@@@ easury seems to be that this

can be corrected through some regular fixes. i will submit that the program is fundamentally in capable of

helping homeowners with foreclosure. homeowners cannot wait six months to find out if treasury has finally gotten it right this time. the mortgage industry have had multiple lights at the apple to have the refinancing working. -- multiple lines available to have the refinancing working. there is a voluntary service for needed for request -- success. for a variety of reasons including skewed incentives, contractual restrictions, where orders services are unable or unwilling to perform sustainable modifications in sufficient volume. i would urge congress to explore possibilities that cannot rely on servicer modification. this program is not working. >> our second witness is miss swartz, the executive director of the hope now alliance.

a coalition of counselors and other mortgage market participants. >> good morning. i am the executive director of the hope now lines. i appreciate the opportunity to speak for you today to discuss the mitigation efforts on the lake. we are a nonprofit alliance working to reach an help as many homeowners as possible stay in

their homes. many servicers are participating in the program and the alliance is working with the administration in implementing and improving the program. this is an important tool. people are working for homeowners that cannot qualify. also members are continuing outreach for people who helps the shall meet at we have a new need -- we are working to assist homeowners who want to stay in their homes. first, i want to clarify that this is not a voluntary program the services are required to evaluate all loans for eligibility.

many have been reported a child on -- trial modifications. all these people are making lower payments. we have suggested that some improvements to make the process easier which i might highlight later in the testimony. this is not the only useful tool that services are using. in 2009, 2.6 million servicers presented foreclosures.

the number is 5.8 million homeowners. there are a variety of programs. we're looking to work out to give a more complete picture of what is going on and show the true number of homeowners being assisted and then avoid a foreclosure. since march, 2009, we have gone out to many different events. homeowners are given an opportunity to meet with a servicer. you can call our hotline 24 hours a day, 365 days a year.

and there are six agencies and sixth nationwide servicers. they can submit the applications. there is a better system. we are working with the servicers, attorneys and treasury in creating a solution for hamas and bankruptcy. i -- for homeowners in bankruptcy. there are ongoing issues and struggles for the program. we're working on many of these and i would like to highlight a few i have recommended to treasury. one is to streamline the documentation. the requirements should strike a balance of being less extensive. the document collection is often

the cause of delays in turning try modifications to plummet. we believe that treasury should eliminate the requirement for wage earners and allow them to use the most recent w-2. some services estimate an uptick of 20%-30% a permanent modifications. another is to revise the model, the net present value model should be updated. servicer data indicates that people who are successful in completing three month trial modifications have significantly better performance than those who do not. would these changes, we anticipate the improvement could include more borrowers and a better pick up on productivity. in conclusion, they are dedicated to providing solutions to those not eligible and reaching and assisting as many distressed homeowners as possible.

services continue to increase efficiency and enhance execution on loan modifications. i am willing to keep you all informed. thank you for the opportunity to testify. >> thank you. i appreciate your testimony. our next witness would be missed gallants. she is the former assistant general counsel -- >> outhird that she handles issues of securitization and structured finance. predatory lending, tree planting, consumer collection

act and fair debt collection practices. she is the former counsel for all when financial. they manage all mitigated mortgages and a former judge. >> thank you for inviting me to testify regarding my work. my testimony is based upon my work for these families and also my earlier work on the other side it in addition to my work for the servicer. i also worked at two foreclosure law firms. i really can't see this from both sides. i want to tell you with -- what this means for real people.

-- i really can't see this from two sides. i work on main street. -- i really see this from two sides. these are not people who gamble with on affordable mortgages. most part ordinary americans. due to circumstances beyond their control, they cannot get out. they are frightened, desperate, and losing hope. most of us do not realize that if anbar were becomes more than 60 days delinquent, the servicer rejects any subsequent mortgage payments unless at the same time that the bar workers default. they're still not allowed to resume making payments even if they want to and are able to. the result is that they become trapped in the foreclosure spiral. many would lead to resume making full or partial payments. when they come to me, they're

terrified. they have tried to gain entry into the program, try to work with their services, fell victim to loan modification scandals when they were desperate. mcnall became my clients when foreclosure was filed. -- they all became my clients when foreclosure was filed. i set out to try to find them leverage. this is difficult since our system of forced them none. generally, it is only when i backed the plan if it into a case that any sort of concession emerges. -- generally, it is only one eye back to the plaintiff in to

i have filed 60 of these motions. in only two of the cases, because i got a completed package and all others were contested. we're hearing have occurred, all but one granted my motion. not one of my clients who got into a trial modification received a permit modification even after exceeding a three month trial time, submitting all required documentation and making payments. i take issue with any claims that to the foreclosure crisis is improving. most troublesome is that the owners of many of these homes could and would have made payments. the program and to be purely voluntary programs exist but did not do enough or work fast enough to change the landscape significantly. the real problems are that the mortgage industry players lack the ability, the authority, and the wherewithal to really solve

this mess. there is no time to create something totally new and have it moved quickly enough. structural hurdles make it virtually impossible for the voluntary programs to work on any sort of meaningful scale quickly. what has not worked so far will not work in quantity. allowing bankruptcy judges to have a chance. i think there should be legislation to adopt mortgage modification.

bankruptcy judges have extensive experience dealing with problems. the processes rigorous, solutions@@@@@@@@ @ @ @ @ @ @ å4

[inaudible] he has been a friend of mine since 1982. we worked in the general assembly. is the council for a national law firm and an honorary kentucky colonel and tennessee. he is a fellow at the american college of bankruptcy. he is a highly respected

individual. >> i am delighted to be here on the national association of chapel 13 trusties. -- chapter 13 trusty's. chapter 13 is the mechanism and bankruptcy whereby debts are approximately payback. we are approximately a back 6000 a year. traditionally, chapter 13 has constituted a last resort of a bar or in which to save a home in which the mortgages in default. millions of families have saved their homes through chapter 13

and maintaining conservatives. it has been remarkably successful from where i come from. they fell into default not even knowing what the requirements were. does chapter 13 from a model from 1979 provide the tools to be able to cure the problems that exist under these exotic mortgages? chapter 13 trusty's are disappointed that the senate did not agree with the house.

mortgages in the pull that are looked at it resulted in a loss of approximately $12,000 per mortgage. in foreclosures, the loss is $130,000. the model does not work. the legal barriers exist.

there is the entity for the possibility reward. this is not what we wanted. the system does not work. can we make it work better? i hope so. the trustees are certainly willing and participating now or we can make this work. bankruptcy, there are many of them try to save their home. they already have the incentive to try to save their home. bankruptcy creates a system whereby documentation can be provided.

let's change the program to allow the bankruptcy documentation. does this mean that because it did not work, doesn't make it better? no. we need to make it better. the trustees to encourage you to continue to look at how different the tools can make chapter 13 and better mechanism to cure defaults. we think that things can be improved. it does recognize that chapter 13 recognizes that values for mortgages that are being cured are different that are distressed values.

we recommend that if the process is stalled, does not work, results in silence, create a judicial review of the program. if the mortgage modification is not acceptable, at least we should look at the review of the judges. >> you have shown that you are knowledgeable about preserving the leak use of -- preserving the use of liquid assets. >> i recognize myself for five

minutes for questioning. tell me the things that you agree with in this progress? >> i think that we are frustrated that we cannot get this wrapped up in a bow and finish every month in a greater number. the truth is that there are many people pain on the mortgage.

i have been on this for two years. that is a good thing. working with two parties are a good thing. time is of the essence, that is a good thing. that said, what i agree with is that we should work on loans that are already in bankruptcy and figure out a way to help those people get modifications. that is something that i am working on with my colleagues in treasury. another issue is not one loan should go to foreclosure that has not been reviewed. let me assure you, the loans that failed, we will look at others and we do. >> i will interrupt you slightly. you have many other things that you go to that you want to talk about. >> they are not getting reviewed. i only see people when they have tried their hearts out and have

not gotten reviewed, and have not gotten any answer. while they are waiting for an answer, the processor shows up with a foreclosure complaint and then they come to me. >> these will be done under the modification. the rate of foreclosure will go down. there is a queue of people waiting. there are timely reviews. we have seen the numbers. that is the process that has been prescribed. that is the process within these organizations to do so. maybe it is the lack of communication that is half of this. >> the question on the cramdown, the other says that this will drop the market and raise credit

rates and all of these things and make it more difficult for people to get mortgages. >> are people getting financing for yachts and vacation homes? >> no, mr. chairman. the bill is only limited to existing mortgages anyway. it cannot possibly affect financing. >> they have done this over the plan and it has worked. it does not caused credit to disappear.

>> the program does help people. we should try to help anyone who is in foreclosure. this program is helping some people but it will not ever produce the volume that we need to keep up with foreclosures. >> how many people are in this to 4%? >> we don't know the answer because they are all in the process. this is under the grace period. this measurement is difficult to assess. >> in response to the question, we have a hearing on monday with the domestic policy committee.

six under 50,000 are in some kind of preliminary trial phase. today, the numbers that i thought were 1711 at that families, they have had their loans modified. >> 765,000. >> 650,000 are in the trial phase. >> i have had the number from the treasury report. there are some permanent modifications. you have to have full documentation to get permanent. there are many people current on the payments but not documented.

>> i.t. try to get people to apply for this because despite the participation agreements, many servicers will not even allow i have people who have made their three months payments and they're still not getting permanent modifications. i'm talking about people who cannot get in the door. it is not that i am not trying. when i try, i get a resistance. . .

@@ loans and banks due

to their own fault or due to the pressure that was in the system kind of did away with the three main legs that hold up loans. and one of those is income, one of those is credit history, and of course one of those is the collateral, how much money they put into the loan in the first lays. and when you take those first three things out that allowed that to happen, that's what catalyzed this problem. and we should be, as a congress, looking very hard on ways to prevent that again and at least to face that squarely. i don't really think it's a partisan issue. unfortunately, it has become that. i don't know what else we can do with that. ms. schwartz i have been very obviously impressed with your testimony. we note that will 680,000 trial modifications under hamp. what does it take to turn from a trial modification to a permanent modification and what are the main impediments to

make those conversions? >> i can name a few. because there are taxpayer dollars involved with these modifications, what you have seen in the past is less rigorous dotting of the i and crossing the t before granting a permanent modification. it would be performance on pay history that gets them there, some documentation like a hardship, pay stub, etc. this is more prescriptive. in fact if you need a w-2 and tax returns and a 4506 p and a hardship letter and the other documentation, if it's going back and forth with servicers, counselors, and the borrower 10 times on the same mortgage, it's very difficult to be efficient and effective. with any government program, you're at risk of making a mistake and no one wants to make a mistake if they put them into a mod. a lot of process and friction in the system is these are taxpayer dollars. that's the biggest difference is documentation, streamlining

and trying to contact the borrower that don't return calls and 120 days later you start getting into the process. there is all kinds of issues. >> is there any way to eliminate some of these impediments without putting the program in the same kind of challenges that got us here? >> we do think -- we have some recommendations and to the government that we think there are ways to improve it. i don't know that you're going to get what everyone wants and expects with a program like this. again, the unemployment is one of the biggest drivers. lack of income means you cannot modify a loan. >> that was my next question. how is unemployment affecting mortgage modification efforts, and isn't it or is it the single greatest impediment to these modifications? >> i think it's one of the biggest ones in that we're all in such a changing landscape that was true 120 days before when you start the trial modification, a loss of income of one spouse, maybe overtime being cut changes the dynamics.

when the income documentation gets documented, it's different than what it was 90 days ago. this changing landscape, it's difficult to keep the process in place. it's a threat to i think all of the good work going on on all parties whether it's counselors, lawyers, and servicers. the changing landscape is clearly the issue. >> mr. chairman, i guess with that i will just suggest that one thing we should be able to get together on both sides of this aisle here is recognize the importance of jobs and productivity and solving these problems. it is the only way home. it's astonishing how a lot of the economists can talk in big words, but to fundamentally, the economy is about productivity and that's measured in large part by jobs. i hope that we can get together and face that. i don't know if either side has the answer to how to fix it, we should agree that's a huge, huge issue and i yield back. >> thank you, sir. i now would like to recognize

mr. delahunt. mr. conyers? >> you don't pass. you pass everything with honors. you are recognized, mr. conyers. >> you can't chair two subcommittees at the same time. let's see what we're talking about here. i -- this is a funny kind of hearing. we have two witnesses that say everything is going along well as about as it can and two that are clearly dissatisfied. now, my gator tells me -- invest gator tells me that the whole coalition is made up of community counselors, bankers, and mortgage company officials,

true? >> and investors and freddie mac and all of the nonprofit hud approved counseling agencies, that's correct. >> how many bankers? >> well, we have about 34 different servicing institutions, many of the top banks are members of hope now. >> they're the ones that created the problem. >> tharet once, sir, that need to get you out of it. >> oh, because they got us into it. >> they're the ones in charge of executing modification and helping borrowers through lost mitigation and to help get out of it. >> how many are there? >> pardon me? >> how many bankers are there? >> i don't know the breakout. let me think, maybe it's 18 out of 33 or something. i have to relook at that. >> look at it and we may want

to put it in the record. >> sure. >> what about mortgage company people? >> so all of these institutions -- >> all of them are, most of them are. >> we have the resources of people that work with us on all of the committees and help go to the outreach events and send teams of people to meet with borrowers. they're all walks of life within these companies. >> how many? >> thousands probably working to help -- i don't understand the question perhaps, i apologize. >> that's all right. that's a great acronym, hope, reverend jesse jackson, keep hope alive and how many people have you helped? >> this year alone, the records on 40 million loans which is the majority of the market share indicates that 2.6 million people have had either modifications or repayment

plans in addition to the 700,000 government trial plans, 3.4 million people while 700,000 went to actual foreclosure sale, four times higher. >> what am i missing in this question, counsel? what's the basis for saying -- you're saying millions were saved? how you can identify who was prevented from foreclosure and the numbers you reveal are staggering and raises some questions. >> well, those are actually records we get on the data of people that are in repayment plans or actual modification which is a structural change in the contract and we have the

government actual modification trials and then foreclosure sales are records. so we know how many go to actual sale. there are a lot of people in-between. there are millions of people who need help and we know that. so i'm acknowledging that when i'm trying to share you is data that is very strong data. >> professor, help me out here. >> sure, mr. chairman. first it's important to distinguish between the private modifications counted by hope now and the private modifications and repayment plans that are included in ms. schwartz' statistics and hamp modifications. there are as ms. schwartz notes, there are several million repayment plans and private modifications. there are a couple important things to note about them. first, we don't know what the terms of any of those are, and the terms actually meamplet a

repayment plan can be a very helpful thing or it can be a useless thing depending on its terms. looking at an absolute number doesn't really tell us that much. secondly, there is some element of double counting in the repayment plans and modifications because often a borrower gets in and a repayment plan and fails in the repayment plan and then gets a modification and maybe fails in that modification and gets another modification and we don't know how long, how the string of events goes. but just looking at the cumulative numbers from hope now compared with foreclosures is not the most meaningful comparison. certainly hope now and its members are trying to do various mitigation actions. how effective those are is another question entirely. >> well, you know, this isn't working out so well, mrs. schwartz. what's the problem here? i mean, what's the difference

between what i ask you and what professor levitin responds? does he understand this program clearly? >> we have talked several times and i think what's important here, sir, is a know, you're right in that if 30% or 40% go back into default and you try another modification, for instance, maybe the hamp modification, you know, that's another bite at the apple before you go to foreclosure. and what i would say with my numbers that are accurate is we count every foreclosure. so they would flow through our pipelines and show you what happened and clearly millions of people are not in the final stage of foreclosure every the effort, that's clear. two out of three don't go to foreclosure and that's historic in the years through these efforts. it used to be one out of two go to foreclosure. more works needs to be done, i

totally agree. but every loan should be reviewed for a workout alternative. that is the prescriptive agreement for what hamp is. after they have been exhausted, they go to foreclosure sale. i would like to think that is exactly what is happening, but i don't know every answer on this. >> you say the mortgage bankers and the mortgage people are the ones that can help us get out of. who is it that helped us get into it? >> i think there are a lot of parties to all of these transactions. we all know that. >> but i'm talking about these two groups. >> we have counselors -- >> don't you want to blame the subprime mortgage thing as triggering this off? >> those have stabilized, we're in the two to three times higher on primary mortgages. >> i'm talking about what started it. you shake your head.

that means yes? >> yes, i think that started in the product of subprime. it's negated to a different issue. negative equity is another issue that hasn't been discussed. that's another haunting issue as well as unemployment. the nature of making a modification has changed. >> but the bankers and the mortgage people are the ones that gave out the subprime mortgages? >> i'm working with the loan servicers, sir, whose job -- >> i'm not talking about that one guy. i'm talking about the industry people. these are the guys that got us into this. now, almost most people recognize and acknowledge that. this is a couple of years old now. so why are we back and forth and modifying all of this? i'm going to have, ms. schwartz, some additional questions for you to submit for

the record because of the five minutes and the chairman has been generous, we need to go into this a little deeper and i thank the gentleman. >> i thank the chairman and the full committee. we have a series of votes. let me inquire of the panel. i think this is an important hearing. it's my understanding that we're looking at probably a 45-minute recess. if your you're willing to come back, i don't want to encroach on your time, but i think this is an important hearing. it might only be one or two of us that might come back, but i think hearing from you at this point with the kind of questions that are being posed by chairman of the full committee, mr. conyers, is important. if it's a