Washington, D.C. -- Today, Congressman Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, released a new report issued by the Inspector General of the Federal Housing Finance Agency (FHFA) warning that mortgage companies that service loans backed by Freddie Mac “have largely failed to implement” requirements to resolve “escalated cases” of serious homeowner complaints alleging abuses such as improper foreclosures and fraudulent servicing practices.
“Today’s report reveals the latest in a sorry string of failures by FHFA leadership to protect American homeowners,” said Cummings. “After so many reports documenting the abuses homeowners have suffered at the hands of mortgage servicers, it is unconscionable that FHFA has failed to require mortgage servicers to properly handle tens of thousands of homeowner complaints.”
The Inspector General concluded that between October 1, 2011, and November 30, 2012, more than 34,000 escalated cases were filed by homeowners with Freddie Mac and its eight largest mortgage servicers. Although current FHFA guidelines require these complaints to be resolved within 30 days of receipt, more than 20% were not resolved within that timeframe.
Current FHFA guidelines also require mortgage servicers to report the escalated cases they receive to Freddie Mac on a monthly basis. The Inspector General found that four of Freddie Mac’s largest mortgage servicers—including Bank of America, CitiMortgage, Provident, and Wells Fargo—“did not report any escalated cases to Freddie Mac despite handling more than 20,000 such cases.”
The Inspector General also found that no penalties have been imposed on servicers for their failure to handle escalated cases in a manner compliant with current FHFA guidelines.
Ranking Member Cummings also sent a letter to Chairman Darrell Issa requesting that the Committee hold a hearing with Edward DeMarco, the Acting FHFA Director, and Steve A. Linick, the Inspector General of FHFA. Cummings requested that the Committee also invite representatives from Bank of America, CitiMortgage, Provident, and Wells Fargo – the mortgage servicers singled out by the Inspector General’s report as completely disregarding FHFA’s requirements to report monthly on the escalated cases they receive.
Cummings has called for new leadership at FHFA and encouraged President Obama to nominate a permanent, Senate-confirmed candidate to replace DeMarco.