[Update 9/4. No response as yet from the White House.

I will shortly supply a list of additional recipients to whom I have sent this open letter.]

September 4, 2010 [Originally sent July 4. Resent July 12, August 17. Revised, most recently 9/3.] Re: Systemic LENDER MENDACITY in your Making Home Affordable (MHA) program and its Home Affordable Mortgage Program (HAMP) President Barack Obama The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President: I am writing to delineate key elements of the organizational structure created by one lender (GMAC) in order to facilitate what I call the systemic lender mendacity that pervades your MHA/HAMP programs. I write from my own 16-month experience in applying for a HAMP modification with GMAC. This letter, I hope, will help you address and correct the problem of lender mendacity. I am a former Realtor, a current college English instructor, and a Harvard alumnus (¶64). I have coined the term lender mendacity to describe GMAC¶s handling of my HAMP application. While news media have made much of this problem in general terms, lender mendacity has not to my knowledge been described with the specificity I attempt here. As you are surely aware, many and conceivably most of MHA/HAMP applicants are being victimized by their lenders. Mr. President, lender mendacity is therefore a political and economic disaster for you and the nation. As awareness of it spreads among MHA/HAMP applicants and their families and neighbors and among members of the financial and government communities as well, lender mendacity is causing tens of millions of Americans to mistrust the integrity of the nation¶s financial institutions, the administration that created MHA and HAMP, and government itself. After delineating key elements of GMAC¶s HAMP application process I will further describe and document it by taking you inside the belly of GMAC¶s HAMP beast, so to speak, as I myself have seen it. Before delineating this process, it must be said that two flaws in HAMP itself have unfortunately made HAMP an enabler (unwitting, I hope) of GMAC¶s intent to deny. These are 1) the absence of a clear and common set of guidelines used by lenders and applicants alike and, 2) the regrettable fact that HAMP¶s creators have unaccountably made HAMP guidelines all but invisible to HAMP applicants. It took me months to find the March 4, 2009 HAMP guidelines and months more to find the Treasury Department¶s Supplementary Directives to them. Not even the federal, state and non-profit agencies I spoke with could direct me to these crucial documents. Combined, these two flaws have made it impossible for the vast

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majority of HAMP applicants to verify any of GMAC¶s constant professions of adherence to HAMP guidelines. Only when I finally had the guidelines in hand and had tried (without success) to get GMAC customer service agents to respond to them could I see exactly how GMAC has realized, furtively ± in its constant professions of adherence to HAMP guidelines - its intent to deny HAMP modifications to qualified applicants. The invisibility of HAMP guidelines to most HAMP applicants has thus enabled GMAC to exploit and subvert, in more or less Orwellian fashion, the HAMP guidelines created by the Treasury Department presumably to ensure HAMP¶s integrity. From government sources you have heard, I am sure, that information supplied to HAMP applicants by HAMP lenders is often confusing and contradictory. This confusion is no accident. It is, rather, the very lifeblood of a HAMP application process that GMAC has designed expressly in order to deny loan modifications to qualified applicants. To do make its denials furtively, GMAC has taken five steps: 1. GAMC has first denied its hundreds of customer service agents any access whatsoever to HAMP guidelines. 2. GMAC has then supplied its agents with its own self-serving guidelines and instructions designed initially to get applicants engaged and committed to HAMP until GMAC guidelines start contradicting themselves, again and again, so that GMAC can realize, again and again, its intent to deny. 3. GMAC has then trained its agents to ignore any references to specific HAMP guidelines coming from HAMP applicants. 4. With HAMP guidelines now 100% off the table, GMAC agents can readily (and usually unwittingly) present GMAC guidelines to HAMP applicants as HAMP guidelines. It is precisely this hollow profession of adherence to HAMP guidelines, constantly repeated by GMAC agents, that constitutes the mendacity of GMAC¶s HAMP process. 5. With these deceptions in place, GMAC agents can and do constantly cite ³HAMP guidelines´ in order to justify HAMP denials on grounds that demonstrably violate HAMP guidelines or are nowhere to be found in them. I have documentation of each of these five steps. Yet GMAC acts with relative impunity because, as one observer tells me, ³Sadly, there is no way to enforce HAMP since it is not a law. The regulators have tried to beg, scream and expose by the monthly reports to shame then into doing more modes. But there is no way to force them - only Congress can make laws and HAMP is not a law.´ Before we venture inside the belly of the GMAC HAMP beast, be aware that GMAC presents its HAMP process to applicants as a hierarchy of five phases beginning with an initial, non-profit phase (seemingly independent of GMAC yet in fact funded by GMAC and other lenders) followed by four phases, or tiers of GMAC agents:

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1. The non-profit agencies to which GMAC refers HAMP applicants for an in-depth review of an applicant¶s financial situation. Counselors at these agencies, after completing this review, encourage applicants to think they may qualify for a HAMP modification. (³HAMP was designed to help homeowners just like you.´) These agencies, however, are funded in part by lenders like GMAC. 2. Tier I GMAC Customer Service Agents who supply initial guidelines intended to engage applicants in HAMP and get them committed to it. 3. Tier II GMAC Supervisors who handle complaints from HAMP applicants whose applications have been denied. 4. Tier III GMAC Loan Resolution Specialists who handle persistent complaints and who speak for 5. The (unreachable) Tier IV GMAC Case Officers who review applications and issue denials by mail or by phone call from Tier II or III agents. Now to venture inside the belly of GMAC¶s HAMP beast. GMAC¶s HAMP applicant process resembles the customer service processes used by cell phone service providers. And like them, it is structured to prevent me from speaking with the same GMAC agent twice. And again like them, GMAC¶s process is unified by a log of contacts maintained by each agent I speak with. But unlike the logs maintained by cell phone agents, my GMAC log is radically incomplete: it has no record whatsoever of any of the GMAC guidelines/instructions I¶ve previously received from multiple GMAC agents, often in great detail and over periods of many weeks. The log is silent on them. This silence paves the way for GMAC¶s intent to deny. It allows the agent I speak with today to deny any knowledge whatsoever of past guidelines supplied by GMAC agents. Again and again, agents simply apologize for the ³misinformation´ I¶ve received from previous agents. Then they supply me with new, often blatantly contradictory guidelines, always allegedly HAMP guidelines, but always leading to denial by GMAC. At this point agents insist (incredibly) that the guidelines they give me today have ALWAYS been in place and THERE NEVER WERE any others! The process works like magic. Bottom line: virtually nothing that GMAC has said in the past ever applies today - yet always GMAC is working within HAMP guidelines! There you have it. My HAMP experience is summed up in the Post Script below and documented in three binders of notes and correspondence between GMAC and government officials. Mr. President, GMAC is running a shell game. It is making a mockery your promise of HOPE to at-risk homeowners. And for it, GMAC appears to be accountable to no one, not even to the various state, federal and non-profit agencies charged to maintain HAMP¶s integrity. For months I have been in contact with six such agencies and public officials. Although several freely acknowledge GMAC¶s dissembling, none can hold GMAC to account. Three months ago, two of the six agencies I am in contact with ³escalated´ my case to the HAMP solution Center. I have yet to hear a word from this Center. I stress that GMAC has been unwilling to refer to a specific HAMP guideline over the past 16 months. Nor has any GMAC agent I spoke with had access to, or could direct me to, the 4/4/09 HAMP guidelines or the Treasury Department¶s HAMP Supplemental Directives to

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them. Nor, amazingly, could any of the government agencies or elected officials I spoke with. Out of this Orwellian fog five questions arise: 1. What role did HAMP service providers have in developing HAMP guidelines? 2. Why are HAMP guidelines virtually hidden from HAMP applicants? 3. Why are HAMP lenders and applicants not working from the same set of HAMP guidelines? 4. Who at GMAC is responsible for a HAMP process that trains thousands of its agents to obstruct and prevaricate in the manner described above? 5. Are other HAMP lenders using similar processes? Summing up: GMAC¶s HAMP process is a lender¶s delaying mechanism designed to lead applicants on a wild goose chase whose planned outcome is foreclosure or short sale after months of full mortgage payments extracted from gulled applicants. From what I read, HAMP service providers are gulling millions of at-risk homeowners in this manner. What can be done to stop lender mendacity? Short of eliminating MFA programs that by most accounts are causing more financial misery than financial relief, I see four options, of which the last two, for reasons given below, are vastly preferable to the first two: 1. Do nothing, on the judgment that any action to stop lender mendacity will raise more problems (with lenders but also members of your administration) than it solves. Do nothing and pay the political price, which I believe is high enough to swing elections. 2. Allow lenders to deny HAMP applications for no stated reason. While repugnant to qualified applicants, and while furthermore a violation of your promise of hope to at-risk homeowners, this option would at least stop lender mendacity dead in its tracks, giving applicants closure on a bogus HAMP process and hard, cold clarity on their limited housing options going forward. For good or ill, it would also render superfluous existing HAMP guidelines. 3. Make mandatory, not voluntary, the decision by lenders to approve loan modifications to qualified applicants (current HAMP regulations make this decision voluntary.) Lenders will howl. Let them. On balance, given the toll that lender mendacity is taking on their credibility and on that of your administration and government itself, this option is prudent and sensible. 4. Buy some time. Take the issue of lender mendacity to the people. Call ³an immediate halt to all foreclosures until new, mandatory guidelines are established and [for] these guidelines be overseen by a new Consumer Protection Agency.´ This language is from the Petition to the American Government from American Homeowners at the Petition2Congress website. It too makes sense, for lender mendacity compellingly demonstrates the need for a strong Consumer Protection Agency (Elizabeth Warren). I write out of respect for what you have accomplished to date and wish you every success in leading our nation in these trying times. Very truly yours,

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STEPHEN P. SEWALL Glenview, Illinois P.S. Summary of Specifics of my HAMP application. In March 2009, GMAC referred me to a San Francisco-based senior finance counselor who reviewed my financial situation and assured me that HAMP was designed to help homeowners like me. I would need a documented Gross Monthly Income (GMI) of around $3,400, she said, to qualify for a modification of my $276,000 mortgage. This made sense. Over the next eight-months, however, a dozen Tier I Customer Service Agents (I never spoke with the same agent twice) cited HAMP µguidelines¶ requiring a GMI of from $5,400 to $7,600. My GMAC-referred finance counselor, upon hearing this $7,600 figure from a GMAC Tier II Supervisor during a three-way conference call with GMAC in January 2010, commented that a mandatory $7,600 GMI on a $276,000 mortgage ³made no rational sense.´ But GMAC stood its ground. On November 30, it denied my second HAMP application on the ground of ³insufficient income.´ In December 2009, Tier I agents had advised me to set up regular distributions from my (modest) retirement funds. I did so. In February 2010, however, Tier II Supervisors and Tier III Advocacy Resolution Specialists flatly rejected this advice, writing the Illinois Department of Financial and Professional Regulation that ³IRA funds [are] NOT allowed within [HAMP] program guidelines.´ GMAC then reversed itself (again) just as I was about to confronted agents with HAMP Supplemental Directive 09-07 October 8, 2009, which permits ³monthly income from . . . retirement funds.´ On March 23, 2010, however, GMAC denied my third application, this time on the ground of ³sufficient income,´ which obviously contradicted GMAC¶s previous denial on the ground of ³insufficient income.´ Most recently, on April 30, GMAC denied my fourth HAMP application on the ground that ³hardship is not imminent.´ In justifying this decision, a Tier II Supervisor cited a ³HAMP guideline´ that she was unable to link to any specific HAMP guideline. Unable to explain GMAC¶s denial of my fourth application, this Supervisor insisted that my only option is to submit a fifth. To qualify for a HAMP modification, GMAC had all along insisted that my monthly mortgage payments must be current. But this same Supervisor insisted that HAMP applicants have always been eligible to qualify for a modification when behind on their monthly payments. Another GMAC agent I spoke with blamed GMAC¶s changing guidelines on changing guidelines at Freddie Mac, the owner of my loan. Call Freddie Mac, he said. I did. Freddie Mac flatly denied his assertion. It seems to have in place a shield of deniability like GMAC¶s. Not surprisingly, I could never speak with any of the Tier IV loan resolution officers who denied my four HAMP applications. Instead, GMAC sent me four crude form letters announcing its denials in a few words that made no reference to HAMP guidelines.

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