President Obama's top housing official said Wednesday that lenders may resume foreclosures while allegations of rampant processing errors are investigated. U.S. Housing and Urban Development Secretary Shaun Donovan said the administration will pursue allegations of fraud that prompted the nation's biggest banks this month to temporarily halt foreclosures. While Vermont has experienced fewer problems than other states, caseworkers in Sen. Bernie Sanders' office have fielded more than 100 "horror stories" from homeowners facing eviction. Sanders supports creating a federal agency to curb abusive lending practices. The Senate in June passed an amendment to create the Office of the Homeowner Advocate, but the underlying bill has been blocked by Republican filibusters. Sanders hopes the legislation will pass when Congress reconvenes in November.
Vermont participants in an administration initiative to let qualified homeowners renegotiate loans told Seven Days' Ken Picard the program has been a disaster. The article cited constituents who contacted Sanders' office to report lenders giving out false or contradictory information, losing paperwork, or rejecting legitimate alternatives to foreclosure. "While the scale of the problem in Vermont may not be as large as in other states, the experiences of individual Vermonters are, unfortunately, often the same. Many Vermont families who are struggling to keep up with their mortgages payments are being treated unfairly by the big banks and other lenders who are holding those mortgages," Sanders said.
"While I appreciate the efforts of the Obama administration to address the foreclosure crisis, the Home Affordable Modification Program simply has not provided the relief needed by many families. That is why I strongly support the creation of an Office of the Homeowner Advocate to help struggling families who have been wrongly denied assistance, or who have had difficulties navigating the extremely stressful system of avoiding foreclosure. The Office of the Homeowner Advocate will not only give Vermonters a strong voice in the process, but it will identify ways to make the HAMP program work better," Sanders said.