“ICBA supports this important step by the Obama administration to stabilize our nation’s economy and financial system. It will help responsible borrowers stay in their homes and help lenders and servicers modify mortgages. The vast majority of our nation’s nearly 8,000 community banks have been responsible, common-sense lenders that were not responsible for putting borrowers in loans they couldn’t afford. Nevertheless, community banks nationwide are feeling the stress as effects from the troubled residential mortgage market impacts their local economy and the communities they serve.
“Community banks will continue, as they always have, to work directly with individual borrowers to find the best solution to keep families in their homes, including using elements of this plan to promote mortgage modifications. Common-sense community banks did not trip up on aggressive subprime lending and exotic mortgage products or use weak underwriting standards that fueled widespread foreclosure problems.
“ICBA supports the administration’s efforts to strengthen Fannie Mae and Freddie Mac so they can continue to provide liquidity and stability to the residential mortgage market, as they were created to do. We continue to oppose legislative efforts that will permit bankruptcy judges to re-write primary residential mortgages since it will significantly increase the cost of lending to all consumers. Thus, we are pleased that the administration is treating this as a last resort after incentives for borrowers, mortgages holders and servicers have been exhausted.
“In addition, how bank examiners treat modified loans on a bank’s balance sheet will be a key factor in bank participation in the programs.
“We look forward to working closely with the administration, Treasury and bank regulators as additional details of the various programs are crafted, refined, and implemented to ensure that any solutions put in place do not penalize community banks for problems they did not create and activities they did not participate in, and that community banks can continue to serve their customers in cities and towns throughout America.”