strategy into our open government strategy come into the national strategy. we talk a lot. there are so many parallels between cyberspace and outer space in terms of things that spin orders. but i do think it is tough because in the sabre security space, which i also spent a lot of time on, the challenges that are hugely differing and i would hate to have cybersecurity, which is a very fast pace type of operation into space policy, which by nature is very slow changing dynamic. i think cyberspace than takes a more dynamic, 85% of the infrastructure is owned and operated by the private sector

and it requires interesting partnerships between the government and private sector to deal to solve another space, even though there's a lot of linkages. i think if you combine the two structures and have it run by one, to boot both effort. >> invited follow-on as well. there's also a maturity level issue. steve kraft folks here from carter on a, also isenhour imad samarra, we've been doing this for 50 plus years we have a good idea to at the space where it looks like. we still have to involve the dynamics, but to try to get those two to marry if have to do that will tell you the national security portions for obama was informed by the guys on the sabre site. espinola of time so we would have cohesion and we would have cohesion. the sabre site just isn't there yet. from a personal standpoint, i

just at least i'm not a sabre guide. [laughter] >> thank you. i don't think anybody in this room in 1889 would've been super impressed i told you we would be relying on donations for space. i don't think anybody would have been particularly impressed with the costs the classic lineup, not down even with names like lift. industry has continued to struggle. mike would make good direction now, but i don't think for a good two decades. it's 20 years of both republican and democratic administrations, but what went wrong? specifically the policy thing. i think we can all agree money has been scarce in interest has gone down. but this hasn't been a good few decades. what did we do wrong?

which races did we not make the wrong choices to be made? >> i'll do that one. it's complicated. part of it if they think everything has been sort of said hearing different at menstruations. it's very hard to stop something and start something new. the bargains you have to make in starting something new to get enough to overcome the inertia of do they not seen substantial, the entries and stakeholders have become so powerful and ingrained, to start something new is an overwhelming object is. you have to feel to find and now we need to add more. in a time is constrain constrained budget, really going down the aisle here, there wasn't anybody other than our friend was president reagan who seem to have cash.

[laughter] and so, that's part of it. institutions have gotten mauled in bureaucratic. i hate to say that, but it's true. the waxy buildup and implementation is just i can't remember who said it, the guys who ran a pub in their 20s. the guys in there are 50s. enough said here that's true in the aerospace industry. mobile to see -- i was country before country was cool. you know, there's a lot of young people around, but the guys that are really doing a fair 60. bear lake retirees. they are past five and they're going back and reliving old hits. so it's really a complicated problem. it's a think a huge problem in

the space program. it's a huge problem for the united states space program moving forward. can we become nimble clicks can we become affordable? can we become efficient and fast again in space or is this going to become the auto industry at the 21st century? good question. complicated. i'm not sure how we get out of it. >> it does highlight the dependence of implementing the space program on the economy. in one sense, it is a miracle that any major program survives to this many administrations with the epson down of the economy. and i think that really highlights one of the contributions, the commercial print dr. space program is offering to the hollow of the space program.

it wasn't too many years ago that dave thompson and i at orbital formed a company called orbital image and we really pioneered the commercialization of high resolution imagery from space that you see now and what peter and others referred to as google earth. that's where policy can really be important and marching their resources of the government to help in the chair cab relies on the entrepreneurship and the technology sitting out there because the government cannot do it ourselves. so we have to rely more and more on create dvd and capturing the genius this country has been meeting some of the schools for the future. >> i certainly echoed that. i think what the fundamental

problem has been trying to do the same thing for too long. because space programs are hurt because they're expensive and also because it such success early on. in 10 years we went from nothing to maintain on the moon in coming back in 12 years. you know, we have by contrast operated the space shuttle and on the space shuttle since the mid-70s. first launch and 81. 30 years is a remarkable achievement, but it doesn't allow for dynamic growth or change or a learning curve for a few folks come in, they design systems, move on to design other systems. if you coming on the national security site, you can work one program for 20 years instead of being in your late 20s and mission control for apollo 11.

and to go on and do skylab shutoffs station. if we don't have a dynamic sql that is more akin to the business cycle of innovation, a three to five year timeframe instead of 30 years, the problem. one of the things in the implementation for exploration that i did not like was that one of the drivers was this were going to go to mars in 30 years, we have two designed a vehicle now. if we're using the same view closer to your sabbatical to mars, were fundamentally doing it wrong in my view. and that's part of the, you know, the lack of innovation, lack of dynamic two d. it was to get out of the commercial cargo

started under administrator griffin under this administration, and those can change that and allow nasa to debate with dean and that sector will be there. >> started on the sum of the table, one of the things that has emerged over the decade that we're talking about in this space procurement arena has been an incredibly large and cumbersome democratic procurement process. love for a solution industrial provider and procurement of

incredible prosperity to these protective procurements, whether it's a small instrument in space for a major activities such as a space launch vehicle for station. so the infrastructure that we overlaid and required a been a significant contributor to that end it is something that can be redressed into that. it is not a need to reclaim it is then overlaid over the process. >> so one last thing we try to do and then suddenly it's a dense mass of ugliest reflection of what arches mentioned, which is that we do the acquisition system and find out why was broken. the report came back and the acquisition system is not broken. the acquisition system serves as a computer. it's garbage goes in, garbage is coming out. the program management for

serious thought. that's on the civil side and national security site. the only place that seemed to have some glimmer of hope with the commercials say. they are driven a short timelines, it's a high-technology rates were driven by profit, which i don't have a problem with profit. everything's been done on the commercials that they should be harnessed by the government side and that's why you saw the full embrace of commercial crew and cargo which had been started in previous administrations. that's basically national security site look into models to acquire services rather than a. the thing that surprises programs as budget. there is nothing that suppresses the appetite of policy requirements for were trying to do is put appetite since the system. >> i'd be remiss if we didn't follow up on mark's comment that her human space exploration program was dying a slow death. and in particular, we stand for

and away was the end of the cold war lifted the rationale for human spaceflight and we've been struggling manner to find any reason to do it coming a reason to enemy supports and initiatives and budgets behind it. so i would ask in particular, art and gil to comment on president carter about the human spaceflight program and do they see reasons to do it aside from this day's race with the soviet union and perhaps some of the others might want to chime in about what they see as the ongoing rationale for human space exploration. >> on the front end, that was the driving force. clearly the aspirations of the nation to be in an orbiting -- in orbit capability was the driving force for being first to do that with suspicion. however, there is also how you

expect tatian that they would be a bigger role on the return of having been in space for the space station with industrial manufacturing and things of that nature, which unfortunately have not shared. >> i think the president saw the space program has been the face of the space program is like a visibility to the program, as i got money in the hope for the space program. it was hard -- always has been hard to rationalize the space program on the basis of its cost-effectiveness because it isn't. the military came to the conclusion back in the late 60s that a program called them in orbiting laboratory that was eventually can't hold in 1969. the military concluded there is no mission and phase that was

needed to support the battlefield commanders that couldn't be done by an unmanned satellite system. and so, when it came time for president reagan to make a decision on space station, the department of defense said we really don't have a vote here. we thank you, mr. president ostomy decision of what is in the best u.s. interest for other reasons, not for the military. so it is hard to argue with what mark says and it's a shame. it's a real shame. that we can't do more, but the problem is put a man in space is a very, very costly enterprise and any time when we got people on the hill now arguing about

how much we cutit, not whether we cut, i wouldn't want to be a policy guy today in the white house. i think it would be kind of depressing really because i think it is a real heartbreak for those who've been involved in the space program going on way back to mercury and gemini to see where we are now in a couple of months, ending with a stream of programs that have been so important to our country is something to lament. >> can i take an alternative view? i believe we are in an exciting time, that we really aren't just at the beginning of the bright new age of humans in space. i don't disagree with the preset of the budget challenges that we

face. augustine committee, for example, look the way we do this, the scientific basis of the air. we can send robots and other places further into space much more affordably and actually accomplish a lot why. there's something about u.s. leadership in space that is important. there's something about driving new technologies that lead to economic opportunity. one of the things i find incredibly exciting and the reason why i think there's a great future as i look back to 1969. two incredible governmental conscience in 1969. within the dominant, but we invented the internet. but they took two different fundamental paths. now, the internet is a huge -- bigger part of our economy being in space. everyday there is a dynamic new thing have been in the internet being discovered. 35:00 p.m. yesterday, billions of dollars for length and.

but the differences and stacy cooked entirely as a governmental program. in the internet around the 90s, we moved it. we created.com and moved it tightly out. it was no longer .mil and.gov, but we created a space that can grow a drive. idc exciting things around the corner. and may not be government programs directly, that may be spurred on by new things enabled by this broader ecosystem. you know, the fact we have companies like piccolo were working on a private space station up inflatable habitats. we don't want to work, but we're something of the past. this one of the commercial crew people get access, that's their primary problems, it can become something new and different. and the set verbose base, a lot of new entrants developing new check ologies that weren't possible before.

some of us also did a big move to prices we have prizes happening now that people are doing some amazing things if we can think outside the box rather than a government program thinking about what we should do. we are trying to harness the experience of a broader set of americans to figure out how to accomplish goals and other things. so while the inherently governmental abuse is hard in our case, we are trying to focus nasa not on the lower its orbit. , that the harder stuff. you know, it's really exciting. there is one other rationale for why we do some of these things. and i look separately at the space station with a little different rationale. one of the things i hadn't appreciated when serving in the clinton administration is doing through hard trees is i bring the russians to table.

but when that town, when there is a? in moscow affect to lean on the communication channels are broken down, what actually was amazing was the communication channels built around the space station rose up and helped us create a channel for communications to help move things forward. i do think the international cooperation is extraordinarily thoughtful and underappreciated. >> i like to make one point to outgrow first jim's point about how this is an exciting time and i think this goes back to happen in the last 20 years into me really the last 40 years. but when we landed on the, those of us who grew up in those days, we were told when you grow up you get to fly in space theatre going to go there then, go to mars. the fact is the maker of him and i didn't just happen. it wasn't anywhere close unless you dedicated your life should

be in a pilot or researcher for the one 10th of 1% of the people who applied it elected as an astronaut. in the commercial human spaceflight today that this administration has pushed that was part of the vision for space exploration, that is the first thing i'll change that equation and that's the first time people could say well, you know, maybe i'll get to go someday. first it's going to be very rich people, but those are people that didn't dedicate their lives to be an astronaut. that's how aviation started. but as the price comes down maybe i get to go someday so i finally come around to the view that i might actually get to fly in space and time. >> well, i had hoped we would come to answers for all the questions that dog space policy over the past four decades, but alas we fail to achieve that goal. nevertheless it is fascinating and stimulating discussion.

i invite all of you to visit the website attack america for updates on the very good work you are doing for our part marshal.org or you can copies of the declassified versions of space policies we've been talking about today are there at the website called making nationals is policy. will continue to update the archive is additional materials come out. i ask you all join in thanking the panelists. they did a fantastic an excellent job. thank you all for coming. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

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[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> former first lady pity for dead deceit and at age 93. mrs. ford is known for helping to found the betty ford clinic for battling drug and alcohol addiction. her outburst was the medal of freedom in 1891, the nation's highest stability away. she was given the word by president george herbert walker bush in a statement released late this evening in the white house, president of imus said

mrs. ford was a powerful advocate for women's health and women's rights. the statement also said that she helped reduce the social stigma surrounding addiction. former first lady nancy reagan also released a statement. the statement said mrs. ford had banned an inspiration to so many through her effort to educate women about this cancer and her wonderful work at the betty ford clinic. former secretary of state henry kissinger released a statement late this evening. he said mrs. ford showed you can have a life after the presidency that was important not just on the president the. according to a family member, 34 date this evening in rancho mirage california with her family at her site. >> tonight, a house financial services subcommittee joint hearing on for a close shave and meditation practices. later, a look at the impact of

the supreme court citizen in any decision on corporations, interest groups and campaign funding. tomorrow on "washington journal" comment neil irwin of the "washington post" talks about the latest unemployment rate. enter as clint johnson of the "financial times" talks about news coram's recent decision to step down descended publications after allegations of hacking into voicemails of u.k. citizens. later we'll chat with the influence and at the hill about the u.s. and south korea pending trade agreements. that's it at an am eastern >> this involves the inescapable central question of whether the

state can support single sex education. >> who is really going to get fired from non-policy on jon boehner. they are shorthand for the incredibly narrow range of choice that we actually have in political -- and elected officials. >> to house financial services subcommittee funny joint hearing on mortgage service in a foreclosure mitigation is. they also discussed the role of

federal regulators in the ongoing mortgage service the negotiations. among those test thing at the hearing was david stevens, president of the mortgage and the immediate former commissioner of the federal housing administration. this is about three hours in 35 minutes. >> this hearing will come to order. and that you think my ranking member, mrs. moloney as well as oversight investigations chairman, if new cabal or who will be here in a few minutes and is ranking member, mr. pappalardo for organizing this joint hearing. many members have a great interest in having a hearing on the topic of march at servicing. it's light of today's hearing will provide a forum for members to cover multitude of subjects involving servicing. we were all shot at the news was followed allegations that mortgage servicers abnegation of

a signing and falsifying documents in order to expedite foreclosures. last november, community opportunity how the hearing and efficient these are the foreclosure process. in the months following regulators have been part. they determined the need for national servicing standards in its appropriate to establish penalties for these institutions. today's hearing is not virginity at the forefront as regulators consider remedies is important we first identify who has been hired by the actions of the servicers. a survey by the regulators of 2000 mortgage foreclosure filings demonstrated they were indeed weaknesses in the procedures, but failed to evidence that barbers have been significantly hurt. it my hope that consent orders agreed by agencies and servicers will provide for their clarity about the extent of the virus as well as improve systems.

some of race question that the role of the consumer policy bureau and the ongoing negotiations the servicers in the state general. witnesses from these parties can further add clarity on each negotiation. recent news accounts indicate the monetary settlement is imminent between major servicers in the state attorneys general. i'm interested to hear that this is that all state attorney generals are active in negotiations. the settlement is reached msp oversight as to how money is distributed at what cost rises term for borrowers. the proposed settlement between parties reject impact of servicing standards going forward. second panel and services. as well as national servicing standards. the input of industry and consumer representatives. a national servicing stack will have an effect on the mortgage market and we must work together to ensure new servicing standards coupled with propose

qualified residential market standard and other efforts do not unintentionally impede recovery of the mortgage market. .. in addition, we now know that lenders board signatures and improperly notarized documents in

the rest of foreclose on homeowners. these allegations led to a 50-state investigation into the matter of forest signatures. just in april that federal regulators entered into a consent decree with the largest servicers requiring them to submit their action plans for foreclosure mitigation. i understand they are due tomorrow or this week. this is a step in the right direction for the industry and most importantly for the consumers and our overall economy. rather than holding a hearing about the need for servicing standards and intervention on behalf of the federal regulators many of my colleagues appear more interested in defending the status quo. suggesting the states and the federal regulators stand down. no one disputed that things need to change in the servicing industry.

because from where i said it is clear that some left to their own devices, many servicers have engaged in abusive and unfair behavior and have literally violated the law. they would have continued to do that if there had not been exposure. yet my colleagues are eliminating federal programs such as one which was very successful in helping people renegotiate their loans. i understand there is a movement that they may extend that program for some time. i hope it is true. questioning federal intervention in the industry. the same industry that got us into the mess to begin with. my friends on the other side of the aisle are essentially criticizing the state agees for investigating these matters. they are investigating potential violence is a state law hyoscine

the party of states' rights would support their right to do this, not say their actions are inappropriate. other release saying the services should not be held accountable for violating laws of all 50 states and the district of columbia? states such as illinois, california, utah, and connecticut are engaging in independent investigations separate and apart from the sunland negotiations because they, too, recognize the need to intervene. my colleagues are entitled to question things, but they are certainly not entitled to their own fax, and the servicing issue has certainly been a problem in the whole recovery. for me the hearing is not about the role of the csuba during settlement negotiation. it should be about allegations of abuse in the mortgage

servicing industry. these abuses are one more reason why we need the cst be and why it has assembled a team that will work on servicing standards once it opens the door on july 21st. for me this hearing is about making sure that this type of abuse never happens again. my time has expired, and i look forward to your testimony. >> thank you. i'd like to recognize the chairman of the oversight committee for the purposes of an opening statement. >> thank you, chairman. we are holding this important hearing today to better understand the appropriate role of regulators in addressing the failings of some of the nation's largest mortgage servicing firms are no doubt that documentation internal controls and processing were seriously deficient at some of the firms and it reveals steps to cure these deficiencies are necessary. as a result of the fed and of t.s. entering into agreements with the services to address

many of these weaknesses in a mortgage foreclosure process in april of this year. i will not comment directly on the regulatory settlement. it is worth noting that regulators led investigations of the mortgage servicers to mediate deficiencies seems appropriate. unfortunately the state attorney general's and political appointees of the apartment are pursuing a far reaching settlements, especially that of elizabeth swan and the cftc, an organization that raises serious concerns about the settlement process. political complexities -- political appointees involve themselves to advance a particular agendas. the terms of the receipts presented which includes a potential a $20 billion settlement. now we are hearing it could be a $60 billion settlement for principal reduction fund which magnifies is concerned that the administration, some are attempting to regulate through

enforcement. speaking more directly, a review of the term she brings words to mind including coercion and extortion. even yesterday the new york post reported a possible reduction find is nearly $60 billion. the settlement proposal requires the resuscitation of policies of the programs that have not worked toward that congress has explicitly rejected. for example, revising a failed initiative with harsh principal, a policy rejected and the house and senate which would be funded by the mortgage servicers with the tab in the tens of billions. restitution for victims specifically harmed by misconduct is appropriate, there is no evidence boris have significantly been harmed by the services' actions and in fact interagency review conducted by the fed and sec found that in all of the 2800 mortgages files examined, the borrowers were seriously delinquent and the

servicer had the legal authority to foreclose. it would be interesting to hear from some of the witnesses why a large scale principal right down on would be an appropriate punishment, especially since there is no evidence servicer malfeasance called financial hard steps. thank you. >> eighty. i would like to recognize the ranking member of the full committee for three minutes. >> let's be clear why we are so concerned about this because there are two reasons. first is a consideration of paris for individuals. my colleague just said there is no evidence anyone was harmed by the failure of the services to follow the law. we hold people to a standard of following law without the burden of proof to show specific harm and specific cases. back, the services as a group are quite culpable. the first -- many of them were engaged in loans that should not have been made. then they compounded that by

being inadequately staffed to deal with the problems that arose. i have seen few things done as incompetent lee has the role of the mortgage servicers. to exonerate them and say no harm no foul, i think, is inappropriate. i was also surprised to hear my colleagues be so critical of the political appointees. members who are elected office and run every two years to talk about political as it were something bad seems to me quite inconsistent with our mandate. the notion that political appointees i somehow not to be treated as serious policy-makers is not only inaccurate -- that is called democracy. i would say, and this hearing will, of course, make it clear, if the people really believe things should be handled totally non politically they should not ask that 535 politicians make

the decision, which is us. i would also say, i was surprised to hear this criticism of the state attorney general. i shouldn't say i was surprised because it has been a constant theme in this committee where there has unfortunately been a party difference with respect to the role of the state. a total reversal. talk about states' rights. there has been a consistent move on the part of many on the other side to diminish and minimize the role of the state's. finally, let's be very clear that we are doing this not just because of individuals, but the mortgage problem, the combination, and a lot of people were irresponsible and guilty. at this point of failure to respond more appropriately is causing great harm economically. one of the things we need to do to improve the rate of recovery, we are in the recovery, but it is much too slow, is to deal with this problem of the rate of foreclosures. so i very much hope and look for to this testimony, but i reject

the notion that somehow it is inappropriate for policymakers, people who have elections and are appointed by people who are elected, including the state attorney general and higher-ranking federal officials to be involved. finally this continued effort to demonize elizabeth warren because she has advised people, not ordered anybody, not insisted, advised people of what to do is, i think, bizarre. >> thank you. would like to recognize the chairman of the full committee for two minutes. >> a few, chairman. i have listened to my colleagues on both sides. there is actually some agreement and some consensus, despite what you may have durbin. we all recognize that there have been shortcomings, shortcuts and shoddy paperwork in some of the

mortgage servicing companies. in fact, the chairman mentioned the occ and the federal reserve acted to correct these in april. i think all members of this committee supported that. our concerns is not the concern of the ranking member frank. our concern has been the same for the last two to three years. one of those concerns is that the government's efforts in the housing market has actually, in many cases, had mixed results. let's just say that to be kind. they have been expensive, but they have often been counterproductive. the program is a good example where billions of dollars a been spent to try to prevent foreclosures. the target was 4 billion for

closures. i think it came in about a half a million of those, many of them have gone back into foreclosure. so i do think on both sides of the aisle we agree that we need to work through this backlog of foreclosures. that is good for all of us. the housing market needs to seek a proper level. in fact, chairman bernanke, here is what he said before our committee about six months ago. i would like to see further efforts to modify loans where appropriate and where not appropriate, and that is what we're talking about, we're not appropriate, many times they are not appropriate, that is why we worry about. people in the houses aren't paying their mortgage and, yet, the mortgage companies are not only being stopped from foreclosing on it, but these people continue to be in the homes and not pay their mortgages. we don't think that it is

appropriate for people who are not paying their mortgages or who can't pay their mortgages to receive all the focus. we believe, and i think the american people believe that the neighbors who are paying their mortgages, the vast amount of americans are paying mortgages or have not gotten into these mortgages. we have advocated fairness for these people. let me close by saying chairman bernanke and i agree. he says, we need to speed the process of foreclosure and the disposition of foreclosed homes in order to clear the housing market and have a recovery. that is what we have advocated all along, fairness for those americans are paying their mortgage and fairness for those americans who are attempting to make their mortgage payment. not all the focus and money being spent on those who aren't paying their mortgages. thank you. >> thank you. the minority center it is to reserve their time.

>> may i have one minute? >> ready member is recognized for one minute. >> first of all, we agree. some mortgages should have to be paid. i have never been supportive of this in every case, but there are some very worthy cases. those who are unemployed it was mentioned today in usa today. the secretary is having a hearing on it. the administration is extending for people who are entitled to do this and are unable to, the foreclosure moratorium for the unemployed and for those 12 months. there has been at 3-month moratorium and they are in the process of announcing right now that that will be extended 12 months. to take the point of the chairman, that is not for everybody. that will be for some. it would certainly not make sense that there was no chance of people repaying. unemployed, but many of us have felt that the three months where other criteria were met when

people were appropriately given that kind of forbearance was not nearly enough time. and i think the 12 month extension will help very much. >> madam chairman, can i have one minute to respond? want to agree with the ranking member. i do want to say this, there are some good news. one in 20 american families wants to buy a home today. they have good credit who. our concern is that those families who want to get into mortgages, we don't want the government efforts some to prevent them or drive up the cost of buying a home. we all want those families looking for homes to be able to get into the psalms. we believe that the focus ought to be on them and not on those who can't make payments or do not have proper credit.

i think we can all get there, and i want to commend the regulators. i think, you know, we all acknowledge that we were too loose in 2006 and 2007, the underwriting standards. two wrongs don't make a right. being too tight today or responding appropriately today with too tight a standard or settlement that really doesn't help those americans who want to buy homes is counterproductive. thank you. >> thank you. i would like to try to get back in my rhythm year. i am going to recognize mr. fitzpatrick, the vice chair of the oversight committee for one minute. >> i think the chair and my constituents in the district of pennsylvania. more relevant or important than those dealing with the issue of foreclosure. economic situation is both a symptom and a result of our nation's housing laws. as we work together to repair the damaged and improve the

economy and ensure these figures don't happen again we cannot forget about the victims that have already been affected. for closure puts a unique strain on a family and the damage can linger for years. this committee and body have a responsibility to make sure that the mechanisms in place to avoid this catastrophic event are functioning. mortgage services are on the front line of this battle. issues with our mortgage finance system aside, servicers are the primary point of contact for most homeowners. our constituents service staff works closely with servicers in an attempt to avoid foreclosure. we count on the servicers to be responsive to our efforts and their regulators to be helpful toward that end. so, chair, i look forward to this hearing and hopeful that we will hear progress has been made in this area. more importantly i want to hear that improvements are going to continue, and i yield back. >> thank you. i would like to recognize ms. waters from california for a minute and a half for making an opening statement. >> thank you very much,

chairwoman and chairman, for holding this hearing. mortgage services are the topic of intense focus for me when i was chairman of the housing and community opportunity subcommittee, and it is good to have a joint hearing on this topic today. it's a little late. we have to do with the subjects. pleased to have the opportunity to question our witnesses, i'm a bit perplexed as to what the subcommittee decided not to invite any services to testify. after all it is her corner cutting and fraud been that causes this to be in this hearing today. i would really like to hear from them. every member here today has undoubtedly heard from constituents complaining about services not telling them the true form, losing back paperwork, and incorrectly assessing fees among other improper practices.

make no mistake, the services were allowed to have these parts operations because regulators failed to bring the men despite continued pleading from advocates. the result of this failure to act has now culminated in regulators and state attorney general's trying to make up for lost time by setting up industry standards and compensating lawyers to have been jerked around, often losing life savings in the meantime. some of my colleagues will no doubt characterized the settlement as some sort of shake down. i see it as an attempt to gorge services of a wrongful profits approved for use of boston deliberately understaffed operations. this is in addition to the untold damage done to the securities market in this country by the failure of these banks to properly establish the legal ownership of the mortgages they package and sell. so, thank you very much, madame chairwoman, i look forward to hearing from our regulators. >> thank the gentleman and i

would like to make a point of clarification she raised in a statement. both ms. maloney and i felt strongly about having services at this hearing as well. but they declined because of the pending legal investigation -- legal settlement and legal discussions going on. that is why they are not in attendance. >> thank you very much. >> thank you. i would like to recognize mr. royce for one minute. >> thank you, madam chair. look, according to the new york times two weeks ago they say new york state would take lenders 62 years of the current pace to repossess the 213,000 houses now and severe defaults or foreclosure. in new jersey they say it would take 49 years. you know, economists often argue that a cinco clearly defined set of rules would be part of the solution to effective regulation and certainly to clearing the market.

i think it is no wonder that the housing market continues to sputter. and i think we add to the problem given the hodgepodge of statutes and rules, none of which are the same, by the way. but we have -- we have 50 state laws, local ordinances, federal regulations, state regulations, court rulings, enforcement actions, fha requirements, requirements, rural housing service requirements, the fannie mae standards and the freddie mac standards. so at a minimum the lack of a cinco clearly defined set of rules has added to the confusion, delayed much of the market from clearing, disgraced private capital from coming back into this sector. economists are right, and we can be part of the solution if we assisted. >> thank you. like to recognize the ranking member for the remaining time.

i will yield to the gentleman i agree with you. we need to work to this backlog. it is slowing our economy. roughly 25 percent of our economy. as long as it is there we don't have a problem with our economy. we need to do it in a fair way, and i don't think anyone on this panel or this room agrees with the robust signatures for moving to evict people from their homes without meeting with them, telling them of a program or possibility that is there, working with them, or even finding out if they have money in the bank to help move through this process. we need to move through it, but in a fair way. again, i look forward to the rules and standards that will be coming out and yield. >> thank you very much. i have a few seconds, but i do

want to just share that i have just come out of working with the major home foreclosure prevention. we had phenomenal success. as you may know, georgia now ranks fourth in a number of home foreclosures in this nation. one of my county's, one of out of 70 homes is in some form of foreclosure. a very very effective at in atlanta, georgia. about two weeks ago. we were able. able to get the information there we had some disagreement with their situation and could not. let me just say. i tip my hat off. some outstanding loan services from bankamerica and wells fargo and citizens. region's bank.

some trust. all major. we were able to save the 200-0107 homes at one shot over the weekend with treasurys helped and had sell. the reason for it was we were able to get the information processed adequately. this has been one of the major reasons why we have had such a high rate of home foreclosure, because of the inadequate information on the parts of exchange of the loan servicers. this is not historically an area of high profit opportunity for the loan servicers. they have high turnover is "within the peopled pool are providing the service "to the home water. the home writer make call one day, come back, get an answer on his own, calls back. somebody else hammer in that case. but when we can sit down with the loan servicers and with the homeowners themselves and make sure the proper in formation is

processed we can get this problem licked. i can't begin to tell you, we had line after line of thousands of people, people in wheelchairs, people on canes, senior citizens, everyone coming at the convention center and leaving with tears in their eyes, so happy that they were able to get their problem addressed. so there is hope out there. there is success out there, but we have got to get the right information and get the loan servicer is to be able to interact properly with the homeowners. i wanted to share that part of the news. we have always to go, and i look forward to this hearing. >> thank you. i would like to recognize mr. mckinley for one minute. >> thank you. there is no doubt that this debacle uncovered problems in the mortgage settlement process used by the nation's largest services.

but, what is clear is that any proceeds of the settlements the to recover losses for those that are actually harmed and make sure that the management of foreclosure process is approved. instead certain folks are working under the mentality of never let a good crisis cutaways to. judicial watch recently uncovered extensive involvement by the c.s. pbs specifically miss warren in her attempt to step well outside her position as an adviser to both the president and the treasury secretary providing a detailed framework for the structure of a settlement in her holding emergency meetings with state attorneys. this is troubling. i find this involvement very troubling. i like fourth to the rest of the hearing. >> thank you. mr. gramm for one minute.

>> thank you, chairwoman. i appreciate the witnesses time. as everyone is aware, the real-estate market in the united states remains weak. it makes it difficult for the economy to experience a strong and robust recovery, and that the same time the government is either directly or indirectly, and they're right here cover 90 percent of new loans in this country. that is a situation that obviously is on this defense unsustainable. order for the real estate to recover and stabilize over the long term we must get private capital back into the mortgage market. for this reason mortgage servicing standards are so important to the future of housing finance. investors in new mortgage loans must have confidence that their principal interest payments will be received in a timely manner and the positions will be protected in the event of a borrower defaults or a foreclosure unfortunately occurs. without such assurances i would say that private capital cannot and will not and will continue to be reluctant returns of the

mortgage market. therefore i think the witnesses and look forward to the rest of this hearing. >> thank you for one minute. >> thank you, madam chairman. the ongoing foreclosure crisis in this country is one of the largest challenges facing our economy. since home prices began their decline in 2006 millions of americans have had their homes for closed, and that doesn't seem to and have an end in sight. last fall the troubling revelations came out about mortgaging services industry, an industry which is dealing with an unprecedented amounts of workflow due to the crippling housing market. as with any other government action toward an industry, we, as the congress, must keep a close watch on the regulatory response to ensure it is targeted and does not make the problem worse.

i have great concern that potential rules prescribed by federal regulators designed to apply to the largest mortgage servicers will ultimately impact the smaller servicers who will find the rules too onerous to stay in the servicing business. i am concerned the purported state's attorney general settlement with the larger services could open the door to perverse incentives that could make foreclosure problems worse. with this in mind i look forward to your testimony. >> thank you. one minute. >> thank you, madam chairman. when the mortgage crisis in our economy and left many homeowners questioning the american dream. the americans are now work more. many home owners were to their lenders, state governments, and the washington to find the answers. our number one priority should not to cripple our financial institutions but to find a happy medium to prevent another

mortgage crisis while ensuring that the approach taken will not impede our economic recovery. we don't want to fall into the trap of overreaching and unintended consequences. thank you for coming and i look forward to your testimonies. i yield back. ..

is also committed to a strong economy will and seeing for the nation recovers, and i think what he has laid out, and he has some strong reservations about what the settlement being led in that may have unintended consequences. when they have tucson's and luther is normally the tallest guy in the room. he was the starting center at tulane university, but he is actually may be the third tallest person in the room today because i see luke and his two sons. the works for jo bonner, one of our colleagues, and he works for senator sessions, and they are the two guys just as tall as

luther wright they're sticking we have in the audience. so you have a cheering section. and we welcome you and it is a pleasure to have you and your job as attorney general. your testimony is very insightful. >> i would like to welcome julie williams, the comptroller and the office of the comptroller of currency. >> chairman capito, ranking member maloney, ranking member of the llano and members of the subcommittee, i appreciate the opportunity to appear on behalf of the occ to discuss issues related to mortgage servicing. my testimony focuses on three areas, first my written statement describes the examinations by the occ and the other federal banking agencies of defects and foreclosure process he's at the 14 largest federally regulated mortgage

servicers. although these examinations found that the loans in the sample examined were seriously delinquent. the exams also found serious deficiencies, different degrees at each of the servicers in the areas of foreclosure governance, foreclosure document preparation, and the oversight of third-party service providers. these decisions constitute unsafe and unsound banking practices. to address them, the occ and other federal banking agencies issued a cease-and-desist orders. the forclosures a concluded was adequate to expos serious flaws in the bank's foreclosure process. but as a sample, it could not of course the individual are words that might have suffered financial harmid due to the defect. that's why the orders issued by

the agencies requires a comprehensive and independent review of the foreclosure actions during a two year look back period. the independent review will seek to identify financially harmed farmers who had a pending work completed for closure in 2009 or 2010 through two distinct means. one, notice an outreach to those borrowers of their right to file a complaint and to have that complaint reviewed by an independent consultant and targeted review of the loans of borrowers who are in identifiable high-risk segments which will provide an additional opportunity to detect the war borrowers who suffered harm. they require the servicers submit detailed action plans, to revamp major aspect of the mortgage servicing and foreclosure operations.

for example, action plans are required to implement comprehensive revisions of mortgage servicing, loan modification and foreclosure process these. the orders also address the elimination of toole tracking and require the establishment of a single point of contact system to ensure that borrowers can contact a live person throughout the process. the second portion of my statement discusses the relationship between the implementation of our enforcement orders and the separate negotiations that are being conducted by other authorities. most notably the department of justice is coordinating settlement discussions involving the doj, a group of other federal agencies and state attorneys general. the scope of these discussions includes issues outside the scope of our orders, but also includes areas of mortgage servicing and foreclosure procedures that overlap the scope of action plans required

under our orders. other initiatives also were under way that will affect mortgage servicing standards. in particular, the newly announced gse delinquency management and default prevention standards will have a substantial effect on servicing practices since those standards for the foreseeable future will govern an overwhelming portion of the mortgage market diesel subject for was to the moral standards and provide borrowers greater protections. they also raise the prospect of multiple and potentially inconsistent standards. we have strongly urged the value of achieving a common set of standards whereby servicers can satisfy not only the terms of any settlement agreements but other applicable requirements as well such as the gse standard. in order to help achieve this

result in consultation with the doj we have adjusted debt lines for servicers submission of various action plans that are required under our orders. to facilitate incrimination with the doj land settlement efforts. in the final portion of my testimony, i discussed the current interagency effort to develop comprehensive and uniform servicing standards. the goals year is to establish rigorous kunar standards for conduct that reach beyond the servicers covered by the current enforcement action. it would be critically important to ensure that any standards that are adopted apply to and are implemented by all forms engaged in the mortgage servicing, not just federal labor law regulated depository institutions, and that there is strong oversight of all the servicers compliance. i appreciate the opportunity to appear before the subcommittees this morning to discuss these

important topics, and i look forward to answering your questions. thank you. >> thank you. our next witness is mr. martin pierce. i have your information mr. pierce. >> director division of consumer protection fdic. welcome. >> thank you, chairman capito, chairman of neugebauer, ranking members maloney and members of the subcommittee. thank you for the opportunity to testify behalf on the -- fdic on the need to evers, a result the challenges in mortgage servicing. the issues involved continue to impact the housing market. the bar was in communities across the nation. as you know, the fdic is not the primary federal regulator of the largest financial institutions and mortgage servicers where the major servicing and foreclosure deficiencies have been found. nevertheless, as the insurer of

deposits of these institutions, we remain concerned about the potential ramifications of these not only on these institutions, but on the housing and mortgage market overall. last fall in the wake of allegations of the signing, the primary federal regulators and face defeat coincided the fdic to participate in the interagency review of the foreclosure practices, of the 14 largest mortgage servicers. these identify significant deficiencies in the foreclosure process cheese of all 14 institutions. these deficiencies included the filing of the inaccurate affidavit and other documentation in foreclosure proceedings. inadequate oversight of attorneys and other third parties involved in the process. inadequate staffing and training of employees and the failure to effectively coordinate the loan modification in the foreclosure process to ensure effective communications with the

borrowers seeking to avoid foreclosure. in april this year, the primary federal regulators took important first steps in addressing the deficiencies by issuing enforcement orders related to the foreclosure practices by these largest mortgage services. the fdic is hopeful these will put servicers on a path to having staffing, management and operational controls necessary to work effectively with homeowners to fairly and efficiently resolve mortgage defaults. to do so, regulators need to closely monitor the servers to insure the orders are implemented as they are intended to be. in particular, the reading of the past foreclosures must be able to convince a skeptical public that homeowners harmed by the service are errors have been identified and compensated and the regulators. even if implemented fully, the consent orders are only a partial resolution to the mortgage servicing deficiency the interagency review of the

foreclosure practices did not purport to examine loan modification practices or other potential errors in the mortgage servicing. as such, the fdic supports a federal state collaboration between the department of justice, other federal agencies in the state's attorneys general to address a broad range of industries regarding the servicing process. the comprehensive resolution passed servicing errors is essential to the recovery of the housing market in the greater economy. past servicer errors have given rise to a multitude of actual and potential claims and litigation lacing a cloud of uncertainty over the recent foreclosures in the recent transfers of title. targeting site is regarding the ownership rights it the obligation of the poorest of investors. the expectations regarding the housing market's recovery and discourages the return of the private capital to the mortgage market. accordingly the fdic has

encouraged the financial stability oversight council in examining the potential financial system at risk surrounding mortgage servicing and foreclosures. furthermore, until the servicers improve their practices and process these, some current homeowners will miss opportunities to avoid foreclosure while others will be able to delay the inevitable. giving the continuing fragility of the housing market effective servicing is as important as ever. in conclusion, the mortgage servicing system over the past few years is ill served, all parties involved and the borrowers, neighborhoods and investors. and it's impaired the health and recovery of the housing mortgage markets market reforms are needed to align the incentives for the effective servicing. the fdic will continue to work with our federal colleagues to develop sensible and balanced servicing standards tempered by the knowledge that community banks have long demonstrated the

type of deficiencies and errors present in the largest institutions. thank you for the opportunity to testify on these issues before you today. i look forward to responding to your question. >> thank you. our next witness is the isasi director of research, markets and regulations in this consumer financial protection bureau u.s. support for the treasury. welcome to the estimates before. chairman capito, chairman not hour and ranking members melanie and capuano, thank you for inviting me to testify about mortgage servicing. i serve as the assistant director for research market regulations that this efp to read our mission is clear, to make consumer finance markets work for the american people. that means insuring the of the information they need to make financial decisions right for them. means promoting fairness and transparency and competition in consumer finance, setting and enforcing the clear consistent rules to allow banks and other firms to compete on a level

playing field. the bureau is and get open for business but to weeks from today on july 21st, pursuant to last year's dodd-frank at the bureau will receive transferred authority from the seven existing regulators to administer federal consumer financial protection laws and on that day i am happy to report we will be -- >> could you move the microphone a little closer? >> sure. on july 21st, i am happy to say that the bureau will be ready. and on that day mortgage servicing will be one of the speed seven -- cfpb prb's. it's a market with some 10.4 trillion on the principal balances, it is marked by the structural features that make it unlikely the forces or loan can protect consumers. the structural features is simple. in the vast majority of cases, consumers don't actually choose the mortgage servicers of fleeced of overtime. let me introduce the importance of that as an example. i had a withdraw if my

pharmacist made me stand in the longline or if she was rude or was impossible to find on the phone or she gave me guidance that was wrong i would throw it to a different pharmacist next time. that's how many facing markets work. i get to choose my drug store. i typically don't choose my mortgage servicer at least not over time to read the second structure that relates to consumer protection is under the current system of the serve a search compensation taking on the mortgage reserves the data on credit. if remains performing the servicing loans remain profitable but if the borrower becomes delinquent and the cost of the properly servicing alone is likely to be greater perhaps substantially greater than the revenue from surfacing that land. the servicer portfolio contains many more nonperforming loans than the service are expected, the stand to lose money. baste with that unfortunate financial reality, when they encounter the of the swing in the mortgage delinquencies servicers apparently started cutting corners rather than making the necessary investments

in the capacity they lose in the appraisal protocol to the point of violating the state and federal law. the evidence of striking. the 14 major servicers this spring, the fed, the coo discovered weaknesses and governments and foreclosure processing. and vendor management. they discovered unsafe and unsound practices, the violations in state and federal law and discover the weaknesses and deficiencies in all 14 of the 14 servicers examined. together accounting for more than two-thirds of the entire mortgage market. when the dodd-frank act congress to importance to correct laws and federal law division in mortgage servicing in particular, the lack of comprehensive federal standards for mortgage servicers and lack of direct federal oversight of an independent non-depository servicer. the cftc wouldn't that fell 40 to have the tools to address both of those problems. and to make sure that the clean understand the markets we will be regulating. our team has been in contact with a range of sticklers coming community banks, big banks, consumer academics and many others but while at the cftc can

and will address consumer protection a comprehensive approach to protect investors and the financial sector and economy in the housing market as a whole requires the coordinated action of a larger group of federal agencies including provincial regulators the bureau will be working together to the maximum extent possible and that's because after all the consumers and the industry will benefit when regulatory action is careful and coordinated and coherent. two weeks from now, the bureau will be ready to start helping these consumer finance markets work for the american people. and i am confident that the result of our efforts coordinated with those of the other agencies should make the market work better for everyone. thank you for your opportunity to testify. >> thank you. our final witness has been introduced but he is the honorable luther strange, the attorney general of alabama. >> thank you very much, chairman capito and not of our comer ranking members maloney and capuano and members of the subcommittee and my congressman,

congressman chairman bachus. my name is luther and in the attorney general of the state of alabama. thank you for inviting me of the oncoming settlement negotiation in the mortgage servicing company started in october of 2010, the attorney general's office to other 39 states attorneys general to form the so-called foreclosure multistate working group. the purpose of the group is investigating allegations mortgage companies must handle documents and violated laws when they close on homeowners across the united states. like 26 other states, alabama is a nonjudicial foreclosure state. the other states have elected for the legislatures to adopt the judicial for closure process. this year the working groups have made the term sheet the nation's largest mortgage servicers which presented as a draft on behalf of the attorney general's and other agencies intended to settle allegations related to improper foreclosure practices and loan servicing. the services responded to the term sheet and negotiations currently under way between the

states, the federal government and mortgage servicers. his eyes and the attorney general review a potential settlement agreement i'm guided by three overarching principles. first the settlement must hold the mortgage servicers accountable for unlawful practices under state law. second, attorneys general have not been responsible for legislating in setting policy and the settlement agreement should not attempt to over reach the area of state and federal policy decisions. third the settlement must contain provisions to discourage and detour the ceiling collectivities. above all else, and ethical mortgage servicers and many other bad actors in the mortgage servicing industry must be held accountable for any on laforge destructive practice the engaged in. certain aspects of the term sheet such as those dealing with point of contact poltrack foreclosures, wrote cosigning a verification of account information contained many changes in practice of the beneficial to consumers to reinforce the agencies and the entire industry should have a vigorous debate on these proposals. my staff and i take our duty to protect consumers seriously and

we will work to investigate and prosecute bad actors to the fullest extent of the law. any signs are penalties assessed on the servicers pursuant to the settlement agreement should be linked in my opinion in response to a specific document in violation of state and federal law. protecting the consumers like many others in the foreclosure multistate working group is small only lawful, it's something i consider my highest duty. and i am concerned that was started out as an effort to correct specific practices harmful to consumers has evolved into an attempt to establish an overarching regulatory scheme that fundamentally restructure the mortgage loan industry in the united states. an effort which is well beyond the scope of responsibility of attorneys general. cure or just a few specific concerns i have. first in the ultimate settlement must not preempt state law sovereignty. alabama, like the majority of other states is made the policy decision to permit the nonjudicial foreclosure is. i'm skeptical of any agreement that makes all the states subject to the judicial foreclosure process without a

legislative mandate. second, mandated principal reduction. bad public policy creates questions of the fundamental fairness and justice. mandated principal write-down would read incentive for homeowners to default and seeking a reduction in principle. if requiring lenders to reduce mortgage balances for incentive for banks to lend money and investors to purchase mortgages. the denying access to the credit they need a purchasing helm. the market facilitates economic recovery. i'm skeptical of any settlement forcers contracts with mortgage owners and obligates the rights of second lienholders. finally, a settlement must not impose regulatory burdens on community banks. in my stevan le mevel we have over 130 community banks. they're an important economic driver in the state. we must not increase the regulatory burden when it's clear they generally were not engaged in the, acting rise to the investigation.

thank you for holding this hearing and i look forward to answering your questions. >> thank you. i would like to begin questioning ms. williams. one of the concerns i have and i think it's already come to light as we have had the floor testimony is we've got the occ over here developing a standard. you mentioned in your statement it that the gse is looked at the servicing standard, the state attorney general's want to make sure that there's no state preemption so they have servicing standards. who is going to enforce this and what kind of a single standard in my view is going to move in this direction a similar standard would certainly be better in terms of how the servicers meet those demands but also in terms of the service provided to the consumer. can you comment on that? >> certainly. as i indicated, a concern that

we have with of the process is underway right now is whether there will be at the end of the day multiple and potentially inconsistent steps of standards, and so we very strongly urged the effort to try to come together at least on core principles and core elements of the servicing standards that are going to be the components of the different enforcement results in the double also carry over into the discussions that are ongoing among the baking agencies, the cftc and the fha for example with respect to developing uniform consistent national standards that would apply to all servicers. so i think the enforcement

process these in other words will identify a body of course standards in some detail under those standards that hopefully will translate into significant portions of uniform standards the agencies can adopt going forward. there are potentially different in forcers involved in different entities subject to the standards at the end of the day. >> thank you for that. and - que highlight properly there can be serious issues involved with trying to figure this out, and deliver the best service and stop some of the practices that have gone forward. the other thing i reflected ask what is the principal reduction and i'd like to ask all of you this question briefly and the state attorney general mr. strange already mentioned he doesn't think this should be

mandated principal reduction should be part of the national service and standard. is this something you're recommending? i will start with you, mr. dante. what does it think about that? >> thank you, chairman. the way in which i try to think about the notion of the principal reduction is within the broad context of the lost mitigation. it's a mortgage which is after all largely seeking a non-recourse secured lending market. in that kind of market is a potential for a hazard and many techniques employed by servicers today in the marketplace and folsom men are appropriately as economic concession to a borrower to keep the bar were current. principal reduction is one of those manners of economic concessions and one that could very well and indeed today as for some servicers play a part in the overall lost mitigation. >> what i am speaking of you are saying it might be one of the

tools in the toolbox but it wouldn't be a requirement of a service in agreement. the quick yes or no because i'm running out of time. >> the national standards may or may not address any particular lost mitigation techniques in particular but i knew the interagency group is working hard to frame the issues and at least think about those issues. >> are you aware if this is already included in the settlement agreement in the state attorneys general is? >> i'm simply not involved in the day to day conversations with the mortgage servicers. that clearly is a process being led by the department of justice and state attorneys general. >> mr. pearce, did you have a quick comment on that? >> i think the way the servicers look at whether to delay loan modification and figure out who's doing the modification better than the alternative of going to the foreclosure and losing significant portions of money and so i would agree --

>> i guess i'm asking for the mandatory issue. have you considered should be a part of the national service and standard? >> well i think the attorney general's and the department of justice are working out whatever agreement they can come to a voluntary agreement they can come to with the largest servicers on that, and so i can't really speak to where they are in that process. but i don't think that a sort of mandatory process is something certainly the fdic hasn't talked about that, you know, people should meet principal reduction when they don't make economic sense. >> thank you. ms. maloney? >> for the overall economy, the large number of defaults, the lawsuits, the servicer challengers are really putting up a barrier that could delay a broad recovery of our economy, so moving forward and getting

this solve this critical, and i would like to ask honorable stringent mr. dante down the line of the servicing process. in new york we had some of the highest numbers of subprimal loans but under the leadership of the governor we organized regional with other elected officials with voluntarily banks participated, not-for-profit, and one on one, we worked out details that help people stay in their homes. so i'd like to ask you, do you think that servicers have done a good job of communicating to the bar was about their lost mitigation policy and about the rights and options once they have gone into default? and if not, what improvements need to be made and what is the best mechanism to ensure we have this improvement.

>> we have a consumer protection in our office the attorneys general. we have received a number of complaints. we deal with them on an individual basis. i wouldn't say it's a collection and alabama but we have stayed always that deal with it and they work well. that's this the decision we've gone with on the nonjudicial disclosure process which contains them for consumers, so your diligent in making sure the procedures are followed and it's working fairly well in our state. >> mr. dante? because of its size and the diversity of the participants it has a range of players in terms of how good they are frankly at some of the harder pieces of good business and making sure there's a high touch customer contact is a physical skill and there's no doubt in my mind some firms happen to be quite a bit better at it than others to read

the question of whether or not there for there should be a man of baseline expectation is exactly the kind of question that i would love to be addressed in this interagency dialogue on national mortgage standing services. >> what would you think would be the baseline? obviously what we saw in the past was rose signatures moving to evict people from their homes without even if meeting with them for telling their options were looking at their bank account to see whether or not they could work it out. what kind of baseline would use it just would be inappropriate? >> there is obviously the less rudimentary baseline which is abiding by the current, federal and state law. despite the diversity and standards across the various states and as promulgated by the gse is versus the fha, the fact of the matter is there is no state in which falsely notarizing an affidavit is an

acceptable thing to do so there's that baseline but unfortunately it comes down to a provision of effective and force the overtime. with respect more broadly there are certainly mechanisms one can use at a trigger point in terms of number of days of delinquency where if you are going to proceed for example of for to foreclosure some other steps should have taken place. one form of that is restraints on so-called dual track processing. >> thank you. >> certainly and our participation we found significant efficiencies throughout the process these and strutting staffing and training and that's in my testimony. one of the things he raises their different departments and mortgage servicers that don't always communicate very well with each other and that can have from the war were is and

that's why the fdic strongly supported the idea of only having a single point of contact to have an individual person that can answer a question whether they are in the process of foreclosure or loan modification we think that would add a lot to making the improvements in staffing and training at -- >> i think you're asking a question with a couple dimensions. one, how the borrowers are dealt with in their interaction and also the outreach to the bar were working out the problem they have with their mortgagors. i think what we have seen is the course of the last couple of years is they got a slow start in with respect. they've done a lot to improve on

the outreach part and the initiatives they've undertaken themselves, they waited to partner with a regional community organizations in the even congressman scott described and there's been an improvement in the way that they've dealt in their internal operations with customers come single point of contact being one example. in the complaint process we envisioned in our orders to have the servicers reach out to borrowers that were faugh in any stage of the foreclosure process during the specified time period we are going to be requiring even more aggressive outreach in that process. >> thank you putative the time is expired. i would like to recognize the german neugebauer for questions. >> thank you, madam chairman. i think to restate everybody

agrees with the mortgage servicers if they violated the law you've taken the appropriate action and nobody is faulting that. we also need to understand the servicers in many cases did not originate so many cases we have to be careful of what we are punishing them for is it for servicing, are we trying to punish them for mistakes what he did what i am concerned about as clear evidence this administration has been trying to install to the settlement agreement policies this congress has rejected, and that's the point that i want to cover. adverse wrote secretary --

settlement to read the response we got back was that the quest was limited to advice yet when we receive documents that was produced to the committee says ms. cfpb took a leadership role in the senate and talks about e-mails, females show this efp convening an emergency meeting with certain attorney general's to push settlement solutions that focus on the principle reductions would you agree that cost so little bit more than advice? >> thank you for the question. with respect to the request made at the treasury department and professor warren with respect to her participation or the bureau participation in the mortgage servicing settlement conversations i do feel the response has been an ambiguous

over time and especially my own side i would reiterate that again today. we had been asked by the secretary of the treasury to provide advice to those federal state agencies involved in this matter. we tried to do that and in doing so we were inactive and i hope in each participant in that dialogue that i believe was the response but the time, mr. chairman, and i believe it is my response now. >> i don't think it's just this one event here and i guess we can get some e-mails between ms. warren, yourself and u.s. bank ceo richard davis documented meetings held march march 10th in 2011 and march 11th of 2011. what was the nature of these meetings and was anything but the settlement discussed in those meetings? >> what mr. davis to as you say is the ceo of u.s. bank and i've

had the opportunity to talk on several occasions in the past about a variety of issues, the nature of my role in particular is to lead the of markets and regulations, and indeed my intent and the division's intent is to make sure that which we do from a policy point of view is simultaneously ground in the empirical analysis on the one hand and a deep grounding and the pragmatism of what actually happens in the marketplace. to my recollection any conversations with mr. davis and or his team have been with that in mind and in particular the meeting that you were discussing i recall professor who warren actually prefaced some of that meeting with an explicit statement that what that meeting is about is about the market probably and not -- >> let me refresh your memory a little bit. in that e-mail it describes the needs test eligibility for the personal deductions and loan modifications so the loan modification discussion has been

going on for long period of time and the tilt of the presentation he has what discussions the child had about, you know, determining who is going to get the loan modifications. anything in particular as it relates to the u.s. bank i would be happy to talk about the nature of that conversation with mr. davis. it is broadly known that the institution of acquired through the fdic process and another institution which they characterized deeply troubled mortgage portfolio, they elect other mortgage participants thought about it lost negations a form of economic concessions and you don't think about how they are offered, it can trigger a moral hazard which is any kind

of linder you want to avoid talking about one of the means. >> my time is expired, but i can give to a great job of avoiding answering the question, but the truth is the cftc has been extremely involved in these negotiations, yet there is other e-mails they want to know can we meet of the record because we are concerned about what we are reading in the paper. so i think that's the troubling part of what we see going on here is this agency which use a july 21st which has no director and we question whether the agency can be up and running july 21st or not because of the fact that you don't have an acting -- the involvement by this efp really having much

input. i would like to recognize mr. capuano but before i do that i would ask unanimous consent to enter into the record statement for the federal reserve system and also statement of the national association of realtors. without objection? so entered. mr. capuano. >> thank you. mr. attorney general, you raised an interesting point. i just need some clarification. >> that was my predecessor? >> it wasn't required by any law, so you voluntarily joined. for any settlement, is there a way for you to step back and say look we don't want to participate? >> yes. >> so anything is agreed for the sake of discussion, 49 or five others coming you do not have to participate. >> thank you.

that's important. one of the things you raised is important. on this intrigued initio no one should require in the state to take action if they don't want. so you answered that question for me satisfactorily. when you can involve other cases like this held a 56 or ten states, whatever it's going to become final the country an agreement at the end? do you vote on it or is it a general consensus? how is it generally done? >> i'm relatively new to this, since i was not sworn in until january this year, so i sort of inherited this as i waited until -- i couldn't speak to the history of these things, this particular case being led by attorney general miller who's been active in these things for many years so i'm learning about it. >> the attorney general's daughter left the table, ones that have not walked away that will have a say in the final

decisions. as the mcelwee this is structured as a working group, so there may be seven or eight ag is actively involved. >> no one from the outside can force you to come to a decision is that if your assessment? that includes the cfpd. >> i don't think anyone can foresee a attorney general. >> before the attorney general, were you we believed in these? >> i developed different types business transactions. islamic when you were involved in things like this in the past when you reach out to people who may not be participants for their expertise and in piatt and advice. in my experience i was doing with the parties had negotiated in the arrangements so to parties with a wrecking ball and is attrition so why don't have a lot of experience dealing with these global policy matters. >> that's a fair answer. i would like to ask.

would it be for people to reach out to you or you reach 02 other people who have expertise in a knowledge in an area that you don't? >> my experience is the interagency process with the banking agencies, and so i don't know that that parallels the experience with having a 58 negotiating group. within the occ, we reach out to experts within the different apartment in the occ. >> i would guess the fdic and have others reached out when you want a party to resume? do you reach out to others to find the expertise you may not have available? >> sure. i think and especially ms. williams points out in her testimony we need to line these up as much as possible and having a the interagency consultation.

islamic i believe you ms. williams but i'd like to clarify it. is it fair to say that everybody should have a general-interest not to give up any rights or abilities but in coordinated oversight and regulation of the financial-services industry. is there any interest. if anybody ever heard of somebody interested in having won this coordinated oversight and regulation. every financial service industry has different ones they have not talked to each of the. has anyone on the panel heard of anyone advocates that position? i didn't think so, because we all want oversight. is their anyone here who disagrees that the comments on july 21st, the cftc, whether you like it or not this efp will take over a significant amount of this particular aspect of the financial service industry.

anybody disagree with that statement? >> one thing that i would clarify here is the transfers that occur on july 21st do not transfer the safety and soundness authorities. >> said to disagree a proportion of this industry will be transferred to see if pt on july 21st. >> so what we have is a situation to reach best to this situation to ask them advice and coordination. when they did that come of this efp be has no authority, no right that they can force anyone to agree to anyone, nor do they have a vote so this crime is that someone actually reached out and asked for advice. it's not only crime summit will be a crime to do otherwise. estimate i would like to recognize trend of the full committee mr. bachus for five

minutes for questioning. >> i would like to clarify something first. when ms. warren testified in march before our committee, i specifically asked her if she had participated in negotiations. her response is she gave advice when asked. i then wrote her after the hearing and asked she would clarify and at that time she did so either she has been an active participant with both federal and state agencies, were which was i consider that quite different from advice. she was forthcoming in response to 9/11 although most of the headlines at that time said she give the same response that she gave the hearing. he would have to be illiterate to think that. i don't think many people read

or responded to the testimony. we asked inouye bup letter in march ms. capito and i asked for any documents pertaining that participation. we didn't get those until this tuesday night. a lot of them judicial watch put out about a month ago, but it was tuesday night of this week when we were given information which other independent sources picked out. the staff has handed view of this settlement. the protection bureau gave the attorney general back in february is not? >> this is a document, mr. chairman, that describes --

it is meant to propose ideas, but those ideas in perspective. >> it's more than an idea, you had proposed after you sold the settlement it wouldn't be sufficient, do you not? >> i apologize, could you -- >> will get paid to, where you see the servicers spend $20,000,000,000.20 billion plus 5 billion settlement seems too low. the second sentence says of roughly $5 trillion would seem to -- >> but you say that they've saved more than $20 billion. when you said is we are proposing a $5 billion settlement of the 25 billion wouldn't be enough. >> here's what is done here. obviously there are a variety to

calibrate any. >> beavers adjusting $25 billion would not be enough? right? >> for a penalty? >> that's right. adel show penalty. >> for you all proposing -- are you proposing of a settlement be used for principal reduction? >> mr. chairman, i would be happy to discourage the analysis that over pence the document that is helping in the public domain. >> it would be a meaningful attitude to happen. on page six, and pr m what mandate 3 million permanent modifications. do you want a program to be in addition to a camp program, is that right? >> this would be a component of

the voluntary settlement. you're right. i am proposing components of a settlement, is that right? the notion unjust to ground what is here is that it's helpful because there are different means by which to think about the penalty with this principle we does is it tries to say the analogy would be on stole a car and you're going to punish me for stealing that karkh i don't know the right way for punish me is but you should take the car away. >> see you suppose taking the 20 billion that they saved, plus the penalty? >> that would be a way in which -- >> i'm not arguing with you about the merits. i'm just saying that you proposed and by saying they outplayed -- in addition to that they ought to pay a penalty.

>> mr. chairman, i don't think that is -- i'm not contesting people may think that by anxious not. ischemic let me close by saying he proposed the money from the settlement be used for the principle mortgage principal reduction of the mortgage. >> that is what is presented here. >> right. okay. now are you aware we have a law, the miscellaneous receipts supplement that says if a settlement needs to going to the treasury to pay down on the debt as opposed to creating a new program? >> i would not be able to see the specifics. >> so you wouldn't be opposed to that? >> we just pay down the debt with the settlement. >> mr. chairman, i should not -- >> instead of a principal reduction that would be an alternative, would it not?

>> the time is expired. >> thank you i guess [inaudible] the role in casablanca as a chief. apparently my colleagues are shocked a leading consumer adviser to the president made suggestions about how we should deal with a major consumer problem. i'm absolutely baffled by what this is all about. yes, he elizabeth warren, who's a very able and thoughtful expert in the field apparently made some suggestions they were not binding or courses, she made some suggestions and talking about the merits of the issues, we are in a panic kind of. it's the silliest thing i heard of. i am pleased there may be suggestions. attorney general, were you

attorney-general and february this year? >> yes, sir. this to make did she threaten you with any way. do we need to get protection against her to it i think i'd better watch them pass. she didn't seem threatening. [laughter] maybe some of my republican colleagues will take heart from your courage and being willing to stand up against this incredible force lady elizabeth warren against maybe it's a play we should be writing but who's afraid of the warrant? she made suggestions in the form of her coherent proposal. maybe if she was incoherent or internally consistent my colleagues would have been less and then she had the temerity to suggest that those financial institutions many of which made loans they couldn't have made and package them into securities that couldn't be sold and then they should pay some penalties.

that's consistent because my colleagues on the other side have to be very protective of the financial assets of the institutions. indeed there fan complaints about the money that is spent. under the bill that originally passed to the conference committee and the financial reform bill there was a section that said $20 billion would come to administer this including some of the mortgage relief for the unemployed and others from an assessment on financial institutions that have 50 billion or more in assets and to get the republican votes we need in the senate to pass, that was transferred from the large financial institutions to the taxpayers so there has been inconsistency here in terms of worrying that the financially institutions will be some how unfairly put upon, and the suggestion apparently thus efp

as was suggested that the estimate to be with the saved and a penalty. that might be wrong, maybe what to do principal reduction. i've been skeptical of the skilled principal reduction of the when you were talking about the unemployment i think there is a clear case for that. but the notion that it is improper for me elizabeth warren to suggest that in a non-coercive way there is an obsession with the elizabeth warren and let's be clear where it comes from, people who never wanted an independent consumer bureau, wanted protection to be with the regulators was as the chairman once said it's the job to serve the banks and it did not want independent consumer protection taken away from those regulators. and we felt they haven't done a good job and part of what they want to do is to take away that independence and give the

regulators the right to overrule the consumer agency that they don't like the consumer agency. they haven't been able to make a head-on assault because it's popular to read what we have is looks demonize elizabeth warren but discredit the consumer agency by attacking the person who i think ought to be ahead of it and played a major role coming up with the idea and what did they conduct? i guess she should take comfort in the fact the worst thing they can say, people who determine the kind of determined reputation as the chairman said this isn't about elizabeth warren but i wouldn't take a lie detector test on that. the worst thing they can do to discredit elizabeth warren is a woman charged with protecting consumers and looking out for consumer interest propose a plan for dealing with the mortgage situation. how terrible of her. shame on her that she would actually sit down and try to figure out what she thought and

then submit it in the wholley non-coercive way to others. i've got to tell you the attorney general wasn't intimidated. i know ms. williams, sometimes i wish i could intimidate her more than i've been able to. i don't think she was frightened by this. if she were more easily influenced by don't think anybody has ever said that elizabeth ward and threatened to beat me up, she did all this to me, come save me and protect me from elizabeth warren and we will go to more time to the chairman i would just say this, i would like to -- >> madam chairman i would like least 30 seconds to respond to that. >> pardon me but -- >> you can finish in ten seconds. >> the gentleman had six minutes and i don't understand we go back and forth and respond, that's not the five minute rule, but the point is yes, i would offer to anyone who feels threatened by elizabeth warren,

let us know and i will do everything i can to protect them from this menace of a consumer protection adviser making suggestions. >> mr. fitzpatrick for five minute. >> thank you, madame chair. >> mr. date, what is it about the efficiencies of the mortgage servicers that justify the principal reduction? >> thank you, a congressman for the question and as you point out the deficiency of the mortgage servicers which principally have been documented by the examination of our sister agencies are trolling but they are birth pervasive and within the scope of the examination profound and it is a fair question to ask in those cases where violations were the law has taken place, so a reasonable question i suppose to ask in the case of an active-duty soldier who has been foreclosed upon in

violation of the service member's relief act what is the appropriate penalty for that kind of activity and what is the appropriate remedy how it should be structured? those are of course a range of alternatives with respect to this question and that is precisely why i have been glad that the secretary of the treasury has asked us to try to inform those deliberations among the agencies that have the authority here. >> for instance, to see a causal link between the signing on the one hand and a particular mortgagor or vara were being under water? is there a causal link one to the other? >> it's a good question because the signing in the way that it is most customarily thought about is the systematically false permission of affidavits with respect to the various judicial mechanisms of and mortgage servicing in particular

, and because this is not the furniture business when it's not as if the paper work is somehow ancillary to the main business, this is financial service. the paperwork is kind of the point. the documentation with respect to these transactions is meant to provide investors with the comfort that they have and that they need to put money into the system and is meant to provide borrowers with confidence that they have with respect to the credit transaction that they have entered? >> general, you testified that you're concerned the proposed settlement terms would force a state like alabama which is that the judicial foreclosure state to become a judicial foreclosure stage. can you expand on that? >> yes, congressman. my basic concern is that our state is about handling of the home for pleasure.

the state legislature considered the alternatives and voted on it. my concern is that a settlement of some kind of it imposes not just my stick with the 26 other states that have chosen this path are somehow altered and without the approval of the legislature that put in place the plan that is why the overarching concern. that policy issue seems to be a decision for the members of congress or the members of the state legislature, not the attorneys general. attorneys general are good at enforcing the law and preventing the activity. they are not doing it in economic policy experts. islamic were you aware of the terms before they were sent to the mortgage servicers? >> not in the loop in terms of the details of the settlement, no. >> do you believe it's the role of the attorneys general to be involved in setting the national servicing policies?

>> i do not. i believe it is our job to enforce the law and protect consumers as i mentioned at the top priority of ours. i believe policy matters ought to be left to policy makers which are here in this romantic congress and the state legislatures. >> i yield back. thank you. >> the gentle lady from california is recognized for five minutes. >> thank you very much, madame chair. i don't know if i have questions as much as i am perplexed about how this meltdown which has caused all of these foreclosures and the so-called efforts to help homeowners. this review led by the occ that supposedly found about 14

modifications that had been turned down -- >> are you familiar with that? >> congresswoman, are you referring to the -- >> the foreclosure review. >> i am familiar with that, yes. >> are you familiar with the fact that out of 200800 files that found a small number of foreclosures that should not have proceeded because the borrower was a member of the military covered by the service members relief act. is that what your understanding from? >> that's correct. but as i sit in my testimony, the examinations -- the examinations that were done of our on a sample kalona files of each of the servicers so there's a limited sample that was covered in those exams.

>> we basically projected a member of the foreclosures that have taken place that exactly 10,000 homeowners had been foreclosed upon. did you do those kind of projections? >> the purpose of the look back process that is part of the enforcement order issued by the occ and the other banking agencies is to specifically identify homeowners that were financially harmed as a result of the decision practices. so we have not done a back of the envelope extrapolation with the enforcement orders require is a very robust process using independent consultants to identify homeowners that did suffer financial harm as a result. >> i'm not sure what that means but let me tell you what i

experienced working with the services. trying to find out what is going on and over a period of time it was just unbelievable. first of all how many records got lost all the time? anybody aware of that? >> yes peery d'aspin also are you aware of the problem of beads? colin nurse sometimes even if they get to the modification by the time they pay their late fees, attorney's fees, the brokerage price opinion, the process fees' that the mortgages back up, the payment to back up where they were before they got the loan modification. are you familiar with that? >> the area of the fees with a they were excessive or unreasonable, customary, whether they were specifically authorized by the loan document the border were had with a particular lender is an area about will be specifically

looked at in this look back process pursuant to our enforcement order. >> don't you think the consumers should have more protection than anyone should be able to say you signed this document and agreed to all of the spirit in sure you admit not most people know about that at time of the process fees'. most consumers just don't know that, wouldn't you agree? >> i think the consumer disclosures is an area that there is a lot of room for improvement in the financial services arena and we strongly support that. >> since we had three of the too big to fail banks, bank of america and chase, we had a 60% of all of the services, don't you think we ought to be able to get our arms around that? they are the ones doing all of the servicing. in addition to all of the lost

papers etc., i discovered that many of the services were not very well trained. has that been looked at and has something been done about that? >> that has been looked at and there are provisions that specifically address staffing both in terms of numbers and training of staff involved in the servicing loan modification for closure process. >> 911th call to try to get some help to go to lost mitigation that's offshore oftentimes? >> i'm not personally aware of that. >> can you check it out? >> i will. >> mr. hensarling for five minutes for questions. >> thank you. ms. williams, in your testimony you talk about the examinations produced by your agencies and

several in the provincial regulators. i believe there was a sample size of 2800 foreclosure cases, correct? how was that simple chosen? >> the sample was 200 per servicer. it was a judgmental sample determined by the examiners responsible for the particular institution. there was a mix of judicial and nonjudicial states. >> did the agency's continued to be representational? there's 2 million under the descent and decree of the foreclosure cases that the mortgage servicers are going to be required to reach out to come is that correct? >> the samples were intended to be representative of the types

of standards and the processing centers. >> on page four of your testimony you state, quote, the generation sound in the sample are seriously delinquent. so i think you are telling me number one, that at least you consider the sample to be representational. i know mortgage servicers have gone out and have done a lot of bad and sloppy work and i'm trying to figure out the extent of it. [inaudible] there are going to be foreclosure proceedings against these people anyway. i will ask anybody on the panel was there another sample size

between the 2800 for pleasure cases that your agencies have examined, and what is the number of those who have been foreclosed upon who were not, quote on quote, seriously delinquent. do you have a number, anybody else on the panel? so, what we know is limited to this 2800a sample size and the conclusion is with these folks were seriously delinquent. mr. datacom in your testimony you say the bureau is not yet open for business. it sounds like you have been pretty busy for an agency that is not yet in business. in your term sheet, and you clearly suggest a 20 billion-dollar settlement, and looking at your term sheet dated february 14th of the white

of see a page, i'm sorry, page two, 20 billion-dollar settlement. i guess my question is when he have been charged with protecting consumers, and also suggesting $20 billion in the principle right down, is that correct? i believe you testified earlier that was an aspect to it, did i hear you correctly? >> just to clarify one of the things you are referring 97 to the presentation called perspectives -- >> correct. >> not the 27 page state attorney general sheet which was -- >> wasn't as your perspective for what the term sheet should be? >> a term sheet is more comprehensive than it is present here. that's the distinction i'm trying to drop. >> if you're suggesting $20 billion in principal write-down, we know right now

that already the taxpayers are out $150 billion. so from the gse is the fed has believed over a trillion dollars in mortgage backed securities already and there were tax payers, not consumers, that every single investor group in know of in america is fearful of the government forced principal reduction. i guess my question is if you are there to protect consumers, there is a robust private capital mortgage market, does the cftc consumer debt to be part of protection? >> access to the financial market as part of our mandate so i'm happy that it is. >> so he would be concerned, would you be concerned if there were less private capital coming into the market because of this

global settlement that he suggests? >> congressman, i am concerned the pervasive and profound efficiencies in the mortgage servicing have made it difficult for these investors to have confidence in what is their assets are going to be surfaced. >> the gentleman's time is expired. the gentleman from texas, mr. hinojosa. >> thank you, madame chair. i would ask unanimous consent to insert into 2-cd joint hearing record entitles making home affordable program updates to serve as incentives, supplemental directive dated july 6th. >> without objection.

>> thank you. >> last month the treasury department rated a performance of the 14 largest servicers participating in the making home affordable program, ranking them on three criteria. number one, identifying and contacting homeowners, number two, the homeowner evaluation and assistance and number three, program management reporting and governance. the treasury determined that six of the services needed moderate improvement and for needed substantial improvement in the first quarter of 2011. none of the servicer is needed only minor improvements. the interagency review of the foreclosure policies and practices found, and i quote, individuals who signed for pleasure affidavits did not

personally checked the documents for accuracy or possess a level of knowledge on the information they get tested to in those affidavits. in addition, some for pleasure documents indicated they were executed under oath when know of was administered. examiners also found that the majority of the servicers had improper practices which failed to confirm -- to conform the state legal requirements. these determinations were based primarily on the servicers self assessment of the foreclosure process fees' and examiners interviews of the service your staff and the proliferation of the foreclosure documents. and of quote. it seems to me that there is

room here for investigation claims that the borrowers are often tried exorbitant and unjustified force placed insurance. can one of you tell me how this is being handled so as to help these individuals we are trying to help out. >> congressmen, i can start. the issue of these and whether the borrowers were charged unreasonable fees that were not reasonable and customary or fees to were not authorized under the terms of the agreements they were entered into. it's an element that is part of the look back process pursuant to enforce the orders, so that is one of the things that will be part of the review of the bar was in the scope of that look

back. >> anyone else? >> well, congressman, i know the title of xiv appropriately to my mind includes the request for the bureau to undertake an evaluation and includes rulemaking authority anything with in this respect would be grounded in the real analysis and help consumers. >> we have seen an impact that of the actions of the top 14 servicers have on the military servicemen, service women who put their lives at stake each and every day to protect us here in america. what actions can be taken to ensure the troops are protected from unscrupulous lenders and mortgage servicers.

>> congressman, the law enforcement perspective we are seeking an extremely interested instance like that time sure i can speak for all the attorneys general that type of activity comes to our attention we will pursue it to the fullest extent of the law. >> congressman, actions have already been taken by the department justice in some respects but i think the short answer to your question is 100% compliance with the service members civil really sucked. >> madam share, on a yield back. >> the gentleman yields back. >> thank you, madame chair. i'm going to ask ms. williams some questions and i am not a fair of bifurcated regulation. and it's have some consequences but as i mentioned in my opening statement, the number of existing or proposed servicing standards is pretty daunting.

fha for fannie and freddie devotee individual state law, the bank regulated consent orders, the bank regulated joint interagency initiative, the legal settlement reported in the press, risk retention for qualified residents to mortgages of congressional proposals, you've got the potential let vbied this efp, and it would from "the new york times" in terms of the overhang or the i think you've got some 60 years worth in new york state in order to look through the backlog. you mentioned in your testimony that the occ supports the development of a uniform service and standard and you're all working with the agencies to come up with such a standard. >> i want to ask about that. >> i was going to say looking at

the backlog of the foreclosures throughout the country, what impact does flecha fit clearly defined set of rules have all the confusion throughout the market? you know, is that adding to the delay and does that add to the recovery when you've got that amount of confusion out there? >> to the extent that lenders and servicers are uncertain what the rules of the road are in proceeding with their mortgage servicing and the foreclosure process set does slow down the process and as i've said in my testimony, there are a number of different initiatives that deal with mortgage servicing in the larger sense, servicing with respect to current and

performing loans, lost mitigation including mitigation efforts and the foreclosure process of mortgage servicing and we think it's important for the players to bring that together to be as consistent as possible so that there is a single set of standards to the extent possible so that the servicers clearly know what is expected of them and so that the customers know what to expect from their surface your -- servicer. as to the committees are about a coordinated efforts. i can just give you my take on this scene through the hearings and then talking to people in the regulatory community about their feelings and but truth seems to be there is little communication and coordination

occurring in many ways partly due to regulatory battles, partly we just don't have one clear set of rules, and i think it's in everybody's interest to the ec this is done right, but let's say them "new york times" is right in this story a week and a half ago. let's say that new york state can really take lenders 62 years at the current pace what might that portend a going forward? how will we see a return to the private market when we are building so many inconsistencies into the system? >> congressman, i don't recall all the details of the article that you are referring to but

it's premised on the current pace. one would hope that isn't going to be the pace going forward once we get clarity in the standards that are expected going forward. >> it also goes through new jersey 49 years, florida, massachusetts, illinois. it would take about a decade in those states. so you know, again, dealing with bifurcated regulation with 50 different states, 50 different sets of rules and even at the federal level without a common standard it's hard to figure out how we move out of this morass with respect of the overhang.

>> five meds for questioning. >> the american people are justifiably skeptical anybody supposed to be independent has actually been independent. that was true of the rating agencies and everybody involved seems to have deep business tries to be cut ties with each other and even looking for somebody else the seem to be just looking after each other and it's the same folks with a hour service or trustees or secure or whatever else. the consent order a couple months ago with a 14 servicers inquired an independent review, consultants independently reviewed some of the files. mr. pearce in his testimony said that that should include all foreclosures where the homeowner had applied for modification or filed a complaint against a

serve a search or was a member of the military and because the importance of the review and skepticism whether they are independent or not that there would be an interagency group that would sample the reviews and look hard at them to see how they had been done. do you agree with that? >> the approach that we are taking at this point is to share information. we've been sharing information among the agencies with been participating in the reviews in other respects, but we haven't gotten to the point of having an interagency second preview as part of that process. >> are you saying -- whether or not you're doing it in consultation with these other agency groups. i took that the fdic was volunteering to be part of the

interagency to volunteer to work with you on that and be part of the interagency operation, but you see that you are taking a hard look at a reasonable sample of this. >> absolutely. estimate does it involve all of those in the foreclosure where does apply for the modification or veldt to complain in the military? >> what we are in the process of doing is identified in the the level of review for different segments, different high-risk segments and with the factors are that will trigger 100% review versus the sandlin approach. >> they can treat the skepticism of the american people and me and brandeis said that there was no -- the best disinfectant was some light and the street lamp, the most efficient. there has been no light on most of the spirit of this has been

in the dark. will the results of those reviews the public? to what extent will lead the public so they can look over your shoulder and decide if you are being an independent watchdog as you are supposed to be? >> congressman, what we anticipate is probably the two public reports as we go through this process. one on an interim report to describe the structure of the of look back process and the details about how the whole process is play to be conducted and this will get to some of the questions you just asked, and a report at the end of the process that will be similar to the interagency horizontal report. >> reports from the consultants, the independent -- >> the reports the agency would put out describing the look back process describing the findings

and the financially mediation that would be provided but what we would not anticipate doing is having bank specific information because that's confidential bank supervisory information but providing information about the scope and the details. >> mr. pearce come to you have a response in the question of the necessary views >> i guess i would say that, you know, people have been skeptical about what's going on in the mortgage servicing and other folks are going to be services to win the stickful and other laws and they've been on the books for a long time. whether they are going to be held accountable for that. i think the fdic seized with federal regulators is to look

back and needs to be robust and look at the areas where they think there's likely to be harm as ms. williams stated, the sampling approach can really identify where there might be errors and then how many you might find but it won't go all the way for the high segments like the borrowers to apply for loan modification and then ended up in the foreclosure, just to finish out come of the having the full review they seem to be pretty fundamental. >> thank you. representative, you're recognized for five minutes of questioning. >> thank you, mr. chairman. mr. date, in particular the cfpb, there's been questions about whether or not the cfpb

should be viewed primarily as a banking or substantially as a banking regulator or more as a consumer protection agency to the extent that it considers itself if you will or is considered to be a banking regulator than the examination council's policy presumably would be applicable to the cfpb's actions through financial institutions obviously. ..

>> someone with a supervisor of -- supervisory authority with the truth in lending act that is what we are

setting of swith the mitigating circumstances with any settlement come i am confident that the but the table with the department of justice and states' attorneys general and an alien who representatives are making arguments. >> in other words, iran not describing specifically to the policy but has not been entirely determined yet but is still under consideration? >> i should explain my role at the zero then point* to what may be a productive answer. my role is running the research markets and regulations for ago there is an assistant director for repositories a provision who

has been recruiting a team ready to take over supervisory authority with a consumer protection laws as of july 21st. and has been developing and hard at work to make sure it is ready to use guidelines policies procedures to that end and to my understanding that is some light of the existing protocols some. >> the importance being obviously since may taka run penalties being assessed against the banks in regard to their relationship of the mortgage servicers, you get that issue through the bank's. and read talk about the broader issue of bringing private days private capital into the marketplace to encourage that. if penalties are assessed without due consideration

what the banks are considered to be a policy that they understand and are familiar with it increases the uncertainty and might deter participation by private capital and the marketplace. any comments buy any other panelist would be will come with regard. >> from the fda seaplane to view we are concerned servicing heirs of created an environment to make a lot of different litigation and claims as state or federal level. the department of justice are other agencies lowered state regulatory authorities that have the range of government that they would have claims related to service our ears and private litigation with the loan modifications it and whether

the chain of title is secure. i think the point* in resolving the issues is to give private capital back into the marketplace with a comprehensive resolution. >> the gentle lady's time is expired part of a gentleman from turgid it is recognized for five minutes. >> i appreciate that. let me say as i mentioned in my opening remarks about the extraordinary success we had in atlanta georgia with the whole foreclosure event, and mr. date i held by did not do it justice your day year with trichet -- treasury is that correct? >> during that period of the bureau of which i am an employee is under the

governance of the secretary of treasury. >> techs lampert go i want you to get the message into treasury for me especially the assistant secretary wallace and the acting sick is very four financial's stability, they really work too tremendously to make this such a success to get over 2,000 homes prevented from foreclosure. and open my eyes to a world of will the which i was dimly aware and feel so much stronger how we can attack and solve this problem. this is a war we have going out here. so many of the american people and struggling homeowners are victims because of a lack of information and a lack of access. we have a plethora of

programs. the reason we could solve this, people can now thousands and thousands. i talked with thousands of people and i learned exactly what was on their minds. of the complaints loan servicers not returning calls come a multiple people foreclosing without knowledge of the loan. people burberry very frustrated by we could get in there to solve the problem. but two points to address address, one that is coming under criticism, we were able to effectively use those cases on the spot. the reason was is there is some banks like banc of america who made the decision to bring their

underwriters their common they could do the deal right there. this is a major move and should be encouraged and i really believe if your department continues that kind of work and outreach and worked at atlanta georgia and imagined over and over. we have to get the information out to the people to make sure it happens. i do want to get your comment the office of the comptroller of the currency and the fdic on the move you are making to deal with the loan servicers issues and the efficiencies which is the consent agreement. could you tell me exactly and the american people what that is and where we have that agreement? and explain which types of

servicers are not subject to the consent agreement for kriet understand this is a major tool we're using to address some of these deficiencies of the loan servicers. ms. williams? >> the reason why we have these agreements is because there were serious deficiencies in the foreclosure process. i thought those agreements were extensive, requiring major changes of the servicers compliance governance, mortgage servicing oversight and including loan modification and the foreclosure process. they are very comprehensive. >> why are some search and loan servicers not subject

to the consent agreement and others are? who are they? >> when we embarked on the interagency horizontal exam, a 14 largest mortgage servicers, a federally supervised were identified just looking at the volume of mortgages that they handled. those for the entities subject to the interagency asean process. none of those came out of bed with day could grade so therefore all of them are subject to the orders. >> your time has expired. >> thank you madam chairman. ms. williams, i'm curious of the overall goal of the consent orders that agencies have provided the base as a follow-up, let me ask from a please expand on what exactly the occ is trying to

do with the guidelines they are requiring banks to follow. >> what we've tried to do with the guidelines with respect to service same practices? >> what we're trying to accomplish what i will call is the action and plan is what they're referred to for mortgage servicing procedures and lost mitigation activities and foreclosure processes is to make sure there is a rigorous process with integrity to handle those operations and the way they are conducted and customers are dealt with properly and the servicers are making decisions based on accurate and complete information and they are conducting themselves in accordance with all applicable state and federal laws and how they operate.

>> >> please consent decrees to anything to reduce foreclosures? >> and they could to the extent there are four closures that have been based incorrect information that has been based for example, what about the amounts owed lowered the fees that have 10 charge. >> but not to the extent it will prevent somebody who has not been paying his mortgage to being foreclosed? >> no. >> okay. allegedly there has spent some discussion among regulators about changing the way in which mortgage servicers are compensated. one idea floated would pay servicers less for

performing loans and more for the nonperforming loans. my concern is this conversation among regulators is focusing only on a larger servicers. little attention paid to community-based servicers to have close relationships with our words. since all loans that these banks tend to perform much better because of the relationships that they have with their community, and any cuts of service compensation nonperforming loans would cause smaller servicers to get out of business and they may not be the most efficient in the industry but that business model is what they're looking for. have they considered the impact on community lenders of these proposed changes to change the way they are compensated? >> and the initiatives that

you are describing are not the regulatory agencies have commenced. i believe studded together with fed gse's have embarked on a significant initiative to revisit the compensation and structure for said gse howled mortgages and the servicing of those. the driver of the standards of potential changes you are describing is the added gse and i believe hide and i agree with the implications for community institutions. >> is your answer the same? >> i agree it is a process that had an fhfa to take on those initiatives but be careful the problems we have

identified the larger institutions with the economies of scale with different foreclosure and loss mitigation departments and the problems we have seen the right hand doesn't know what the left hand is doing is not the community banks. >> i appreciate your answer i don't mean to be rude but i am cutting-- running at a time but have you considered any measures to help keep a high quality servicers in business? especially those with community banks and other smaller servicers? >> . have you considered measures to help keep high quality community servicers in business? >> with your rules and regulations and orders? >> certainly from most committee banks with those

institutions we are very concerned about new initiatives. >> that is something we should certainly be sensitive to with interagency mortgage servicing standards. thank you very much. >> thank you madame chair i'd like to follow up on mr. conseco line of questioning coming out differently my law firm many years ago had a general practice representing a lot of lenders and financial restitution and from time to time we did a lot of foreclosure work and sometimes we were swamped and could not process as fast as a client wanted and ultimately will get you mr. attorney general but in this instance we have a huge number of foreclosures into the system so we have competing pressures but then need for speed so to speak.

where i have seen the excess and what i am concerned about before i get there just a public comment, the new form that has been done on disclosures when you take out a loan? good work for our want to applaud you for that. but on the default side, not the lending side we have the biggest banks and fannie mae freddie mac generally pay a certain amount to process a foreclosure? $650 and x number dollars for the bankruptcy? correct? mr. attorney general i domain to do the being questions but am i off base? there is a standard payment. >> i am sure there is. >> there is a standard payment for the bulk of procedures unless the is a private loan that has been made.

so within that amount that fannie and freddie pay for the foreclosure process now we have a tremendous number of foreclosures coming through now as opposed to what i used to deal with is a middleman who has taken charge of the default process and from my review of the cases, that seems to be where we have a lot of problems mr. churn a general can you expand on that? >> i think you are describing the situation and that is a new twist and it sounds like your experience is similar to mine with those individual cases and state law process is still typically the situation in alabama and my state.

>> a mess of number four closures that have to be processed and the client is up here and could be fannie mae, a loan processing servicer company here and title companies down here. in regulating all of this, talking about a standardized processing company we have state-by-state laws, how would you approach this? you talk about trying to standardize. >> what we found in our examinations as part of the area where additional corrective action is required and our order is the oversight of the third party vendors including law firms but also include paper

processor packages, the largest servicers relied significantly on third-party vendors of different types to do important components in the foreclosure process and did not oversee them properly. we have guidance we have issued supervisory guidance dealing with the oversight of third-party vendors the banks use regardless of a particular service being provided and that was pretty well ignored with the law firms and not adequately applied elsewhere. >> that reminds me of doctor/patient then it was dr. insurance company patient and now it is client/servicer/lawyer. i am hearing from the lawyers they were getting hit by like crazy and that

they have to pay the kickback money to the servicing company than the peace process they had to speed them through and you lost as a lawyer client relationship. i don't know if there are ethics issues going on and i want to be here on behalf of the lawyers to say let them do their job. >> i agree with a comment. what i point* out is the overall negotiation process a single point* of contact and, eliminating the robosigners program what consumers deserve hard good parts of the discussions. >> just very quickly how

many cases have you filed so far with your investigatory work against a the services -- servicers? >> i don't know how many at this boy. i have been in office five months. [laughter] muhammed. >> we had a lot of reorganizing but we have a very robust consumer protection division and have received a lot of complaints we are pursuing by could comment specifically. >> a number of complaints? >> and the hundreds. >> what is the fine for someone who is deemed to have committed fraud or it an offense? two make it depends on what the offense is. i would have to get back with you on that and depends where they fall far cry would be happy to get that information to you.

>> what do see, we had a good discussion this morning with regards to the events that transpired in how that has come about with the service same that has fallen short and now there is lack of communication. is that what you see that other players along the line with inappropriate things as well? >> bc lack of communication our understanding of the process. we try to do everything we can to inform the consumer and tried to adopt the approach that the congressmen mentioned to get people together. >> talking about 14 mortgage holders and servicers than

50% of the market roughly than talking about working with the stakeholder and included academics. can you explain how they aren't part of the stakeholders and mortgage servicing? >> quote we have tried to do broadly and within my work with our research is to make sure we are plugged into the market reality of how the financial markets were to operationally broke what is the structure and concentration and simultaneous leave be aware of in advance is of the understanding from the research point* of view. there are lots of great comments here in the employ a of the banks but we don't have a monopoly on good

ideas but want to make sure we are getting the insight and perspectives of a wide range. >> those people are on the ground dealing with it every day, i was curious. >> how could they impact since they don't have a working knowledge of it praxair just conceptualizing. >> i appreciate your point* by would say that when i was in business i would vacation i talk to her academic researchers four different perspectives. >> that is fine. >> in april o letter for center for responsible lending sent to reduce forestay solutions it does it can occur on this position? >> i'm sorry? >> in april there was a letter sent center for responsible lending to a federal bank for a

preference for the state to address the deficiencies as opposed to those crafted by the federal government does cfpb ag of concurrence? >> cfpb can have supervision authority from the federal consumer protection laws a respective of a particular charter or locale so it does allow us to be the voice to create the baseline that is consistent across the board but that said, much of the constraints on the mortgage market to our matters of state law which is why the state attorneys general. >> is that yes or no? >> state law issues should be an important part of the

solution but i don't think that excuses the bureau or other federal regulators to what appears to be a broken market. >> thank you very much. >> they do chairman when. mr. dante comment and connection with the loan servicing, the sd cfpb proactively reaching out to states' attorneys general? >> with respect to mortgage servicing conversations i assume that invitation of the treasury secretary rehab best to serve participate in the federal and state dialogue. although i don't personally know i would suspect that they have reached out to some of them. >> in connection with a loan

servicing issue as well, it is the agency reaching out to loan servicers? >> just to clarify with respect to the attorneys general, it cfpb as the enforcement division in the effort to make sure we are on and coordinated with the states' attorneys general and we have been trying to connect over time with the authority over the areas. your comment with respect to reaching out to mortgage servicers come amaya jabba jabba -- my job is to make sure rear plug negative and how these practical matters work and if you are an incumbent on me to make sure we're connecting i hope on a regular basis with those

that can provide market insight come as pointed out the servicing market has to be quite concentrated. my expectations and this that we purposely don't have that talks. >> in light of that, is it part of your practice in terms of your engagement of settlement issue to float ideas with the industry to see if it is workable? >> in general but that has not been the approach. we try to provide federal and state agencies that are at the table and i would argue it would become confusing to be making a parallel sets of negotiating rounds with the servicers of that is not something we have done.