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The CFPB at the Philadelphia Residential Mortgage Diversion Program Anniversary Celebration

Prepared remarks of Richard Cordray
Director of the Consumer Financial Protection Bureau
Philadelphia Residential Mortgage Diversion Program anniversary celebration
Philadelphia, PA
June 12, 2013

Thank you, Judge Rizzo. As you may know, Judge Rizzo and Patty Hasson, who is also here with us today, are members of the Consumer Advisory Board for the U.S. Consumer Financial Protection Bureau. The board has become a valuable source of guidance and perspective for the Bureau on issues in the consumer financial marketplace, which covers mortgages, credit cards, student loans, auto loans, bank accounts, debt collection, credit reporting, payday lending, and more. We are grateful for their insight and for their efforts on behalf of American consumers.

We are here today to celebrate the fifth anniversary of the Philadelphia Residential Mortgage Diversion Program. This program began in 2008, at a time when a large and growing number of families were being forced out of their homes. But because of all of your efforts, thousands of Philadelphia families were able to work with their lenders to find a way to stay in their homes. This program was the first city-sponsored plan in the country to facilitate negotiations between mortgage lenders and struggling homeowners. And you have clearly made a difference not only here, but in cities across the country that are replicating your program for their citizens.

The concept is a simple one based in that most wonderful of human attributes: common sense. It is just that troubled homeowners and lenders should talk. And if they talk, in a supervised setting, they may find solutions to many problems. Your team of over 600 volunteer attorneys, housing counselors, judges, clerks, and other public servants make that happen. We salute you for your hard work. Particularly, Judge Rizzo, I thank you for your leadership in this mission. And Patty, I know that your organization, Clarifi, has been an integral part of this program since the beginning. You have provided what I believe to be a key element, which is HUD-approved housing counseling. All of you are to be congratulated on a job well done. I wish I could say that the job itself is done, but we know that the foreclosure crisis is not yet over and still is playing out its pernicious effects for many homeowners in many of our communities.

Her Honor, Judge Rizzo, asked me to come here today because she knew that I can speak to this program with special feeling. Like you, I lived the foreclosure crisis at ground zero. As a public servant in Ohio, I have walked through neighborhoods in Cleveland where every third house was in foreclosure, often abandoned, and the houses in between were fast losing their value, regardless of the care and diligence of those homeowners. Even people with sensible mortgages who faithfully made their payments on time were overwhelmed by the collateral damage from the foreclosure crisis, which caused the painstaking savings of many low- to moderate-income households to evaporate overnight.

In Ohio, we responded to this crisis by fashioning our own homemade tools. We created “Save Our Homes” task forces at the county level, eventually covering well over half the counties in the state. We worked with the mortgage servicers to get better results for homeowners. We reached out to the Ohio Supreme Court to create a foreclosure mediation program closely akin to yours here in Philadelphia. Who knows? – I may have read an article about your work here and shamelessly stolen the idea for our folks who were hurting. Our motto was the same frank appeal to experimentation that FDR made during the Great Depression, when he said: “One thing is sure. We have to do something. We have to do the best we know how at the moment. . . If it doesn’t turn out right, we can modify it as we go along.” Or, as he said on another occasion: “The country needs and, unless I mistake its temper, the country demands bold, persistent, experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.”

In the wake of the most serious financial crisis of our lifetimes, the Consumer Bureau was vested with authority to provide effective oversight of the consumer financial markets. Our first responsibility has been to write clear rules of the road to address the obvious problems in the mortgage market. We completed this task on time. Never again will we have “no doc” loans in this country, and many other irresponsible practices will be curbed or banned. When these rules take effect in January, they will help consumers throughout their mortgage experience, from signing up for a loan to paying it off. We envision a mortgage market characterized by honest, responsible practices that are not designed to take advantage of consumers.

For the first time ever, this new federal agency has the authority to supervise both the nonbank and the larger bank participants in the mortgage market. Prior to the Consumer Bureau, nonbank lenders had not been subject to federal oversight, even though they originated almost 2 million mortgages in 2010.

Many mortgage servicers are also nonbanks, and we are now exerting close supervision of their activities for compliance with federal consumer financial laws. We also have adopted rules to protect mortgage borrowers from costly surprises and runarounds by their servicers, including new restrictions on dual tracking. Like you, we want to promote effective communication between borrowers and servicers, and our rules will help ensure that happens.

When consumers face problems with their mortgage lender or mortgage servicer, or with their credit cards, auto loans, student loans, bank accounts, money transfers, or credit reports, they can submit a complaint to us. Many are already doing so – as of March 1, we have handled more than 130,000 consumer complaints. Once a consumer contacts us, we work with them and the financial institution to help resolve the issue. Complaints also inform the Bureau’s work, helping us to identify and prioritize problems to be addressed. Consumers can submit a complaint on our website at or by calling 1-855-411-CFPB. So please spread the word. Tell your family and friends that they can submit complaints to the Consumer Financial Protection Bureau, that we are here to help, and that every complaint makes a difference.

We are glad to be working alongside you toward the same ends. All Americans deserve to know that someone is standing on their side to make sure they are treated fairly. We are doing that every day. And we applaud you for your dedication to helping struggling homeowners. Together, we can ensure that each of us is treated with dignity and respect in the consumer financial markets. Thank you for having me here today and keep up the good work.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit