Federal officials should go easy on overriding state sovereignty by changing foreclosure laws without a legislative mandate, former U.S. Department of Urban Development (HUD) general counsel Robert Couch told a Senate panel on Tuesday.
Testifying before the Senate Banking Committee, Couch said that while national standards can address servicing mistakes that led to the robosigning scandal, “they can also potentially cause uncertainty to creep into the markets and devastate investment, which will ultimately be felt by homeowners.”
Prior to joining HUD, Couch served as president of the Ginnie Mae, but also worked in the industry as CEO of New South Federal Savings Bank, a thrift that was one of the largest residential lenders in the south. (He is currently an attorney with Bradley Arant Boult Cummings.)
In his prepared remarks, the former Ginnie Mae president said “much of the recent criticism of the mortgage industry is warranted. Recently, we have witnessed sloppiness and abuse of process by some lenders and servicers.” Still, he wants federal officials to carefully consider the ramifications of instituting national standards and gutting state powers.
He noted that efforts to slow foreclosures have created a huge backlog that has real estate markets “still reeling from the recent recession.” Depending on the state, foreclosures can average up to 900 days.
Each state has adopted procedures spelling out how the foreclosure process should be conducted, while affording certain protections for mortgagors. “These procedures have worked very well for many years,” he told the senators.