An “outraged” House Financial Services Chairman Barney Frank (D-Mass.) on Friday called for hearings into allegations that two prominent hedge funds are curtailing participation in a program designed to stem housing foreclosures.

In a letter to Greenwich Financial Services and Braddock Financial Corp., Frank blasted the two hedge funds for attempting “to defy” what Congress intended for them to do under a new housing law. A copy of the letter was also sent to the Managed Funds Association.

“What Congress passed overwhelmingly and President Bush signed last July provides for a reasonable modification of mortgages that clearly never should have been granted in the first place to avoid foreclosure and thus lessen the economic damage that a cascade of foreclosures has been doing to our economy,” the letter states.

Frank said he and other lawmakers were “outraged” to read in today’s New York Times, however, that the two firms are telling the providers of their mortgages “to defy this national program and to insist on further socially and economically damaging foreclosures.”

According to the Times, the hedge funds told the mortgage providers that they may take action against them if they participated in the government program to help homeowners avoid foreclosure. The program took effect in early October.

These are the same hedge funds that have been “the beneficiary of a lack of regulations and a very permissive attitude,” Frank’s letter continues, stating that for them to now put obstacles in the way of preventing more foreclosures “is intolerable.”

Pointing to the implications of the “irresponsible, antisocial behavior by these hedge funds,” Frank said he will hold a Nov. 12 hearing to talk to executives from the two companies and from the Managed Funds Association. “If we are not able to get voluntary attendance, then we will pursue steps to compel them,” the letter states.

Several Financial Services subcommittee chairs also signed the letter, including Reps. Paul Kanjorski (D-Pa.), Carolyn Maloney (D-N.Y.), Maxine Waters (D-Calif.), Luis Gutierrez (D-Ill.) and Mel Watt (D-N.C.).