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House Oversight Committee Requests Briefing on Potential Independent Foreclosure Review Process Settlement

Jan 5, 2013
Press Release

Washington, DC  — The Chairman and Ranking Member of the House Committee on Oversight and Government Reform, Reps. Darrell E. Issa and Elijah E. Cummings, sent a joint letter yesterday to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry requesting a briefing as the agencies finalize a potential new settlement with 14 major mortgage servicing companies.  Recent news accounts report that a potential settlement now under consideration could replace the Independent Foreclosure Review process, which was ordered in 2011 after federal regulatory agencies identified improper actions during loan servicing and processing by mortgage servicers.

“In light of these recent press reports suggesting that a settlement may replace the Independent Foreclosure Review process, we respectfully request a staff briefing prior to the conclusion of the reported settlement agreement,” the Members wrote.  “We would like more information about how the potential settlement amount is to be determined in light of potential wrongdoing identified to date, how such aid may be distributed and in what form, and what may happen to homeowner files that are still awaiting review.”

In 2011, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the then-Office of Thrift Supervision issued a report identifying “critical weaknesses” in the foreclosure practices of these 14 mortgage servicers, resulting in “unsafe and unsound practices and violations of applicable federal and state law and requirements.”

The Oversight Committee has been investigating allegations of improper foreclosures and held three hearings on foreclosure and servicer abuses during the 112th Congress.

Below is the full text of the letter:

January 4, 2013

 

The Honorable Ben Bernanke

Chairman, Board of Governors of the Federal Reserve System

20th Street and Constitution Avenue NW
Washington, DC 20551

The Honorable Thomas Curry

Comptroller of the Currency

Administrator of National Banks
Washington, DC 20219

Dear Chairman Bernanke and Comptroller Curry:

The Committee on Oversight and Government Reform has been investigating allegations of improper foreclosures that have surfaced in recent years.  Last Congress, the Committee held three hearings on foreclosure and servicer abuses, including a field hearing in Baltimore, Maryland.  As we continue this oversight work, we ask for your assistance in understanding a potential settlement reportedly under consideration between your agencies and 14 major banks.

In April 2011, the Federal Reserve and the Office of the Comptroller of the Currency (OCC) issued consent agreements with 14 mortgage servicers regarding improper actions during loan servicing and foreclosure processing.  As part of those agreements, the mortgage servicers were required to establish an Independent Foreclosure Review process under which borrowers who had loans in 2009 or 2010 could request reviews of their files if they believed they had been subjected to an illegal or improper practice.  In response to a Committee request from 2011, representatives from your agencies have kept staff up to date with the enforcement actions and the interagency review process.  

Media reports indicate that discussions now may be underway regarding a potential settlement between the Federal Reserve and the OCC that could end the Independent Foreclosure Review process. In 2011, the OCC, the Board of Governors of the Federal Reserve System, and the then-Office of Thrift Supervision issued an Interagency Review of Foreclosure Policies and Practices that identified “critical weaknesses” in the foreclosure practices of these 14 federally regulated mortgage servicers. The Review found that these weaknesses resulted in “unsafe and unsound practices and violations of applicable federal and state law and requirements.” 

In light of these recent press reports suggesting that a settlement may replace the Independent Foreclosure Review process, we respectfully request a staff briefing prior to the conclusion of the reported settlement agreement.  We would like more information about how the potential settlement amount is to be determined in light of potential wrongdoing identified to date, how such aid may be distributed and in what form, and what may happen to homeowner files that are still awaiting review.  Please contact Katelyn Christ of the majority staff at (202) 225-5074 or Lucinda Lessley of the minority staff at (202) 225-5051 to arrange this briefing.  Thank you for your consideration of this request.

Sincerely,

Darrell E. Issa                                                 Elijah E. Cummings

Chairman                                                         Ranking Member

113th Congress