Congressional Democrats press for details of foreclosure review program

A trio of top Democrats are urging federal regulators to release details about their decision to end a foreclosure review process in favor of a nearly $10 billion settlement.

Reps. Maxine Waters (Calif.) and Elijah Cummings (Md.) along with Sen. Elizabeth Warren (Mass.) sent a letter on Monday that “in the absence of a long-promised public report” about the Independent Foreclosure Review (IFR) process requests detailed information about the $9.3 billion settlement with 14 mortgage servicers that ended the program. 

The letter, sent to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry, expressed concern about whether homeowners wronged by shoddy foreclosures practices are getting an adequate amount of money for their trouble. 

“We have raised significant concerns about the decision to conclude the IFR process before all borrower requests for review had been satisfied and randomly selected samples of eligible loan files had been reviewed,” they wrote.  

“Based on the information provided to us at the time of the settlements, we could not assess whether the settlement amount and terms were adequate, whether it was appropriate for the mortgage servicers themselves to decide how to compensate the borrowers they harmed and whether the outside consultants hired by the servicers collected and analyzed accurate information.”

They have requested that the regulators comply with their request by year’s end.

Curry has argued that the IFR process was taking too long and that a settlement was the fastest way to compensate homeowners. 

The request includes a demand for a summary of the financial remediation received by borrowers so far, a description of information that has been and will be released to borrowers whose foreclosure files were examined and any information on cases referred to the Justice Department on suspicion of criminal activities.

They cited an August report from the Consumer Financial Protection Bureau that found many borrowers are still being harmed by bad practices.

“Although the IFR process may be over, there are still many valuable lessons to be learned from it,” they wrote. 

“This information is critically important to addressing the continuing foreclosure processing problems in the mortgage servicing industry.” 

In 2011, the Fed and the Office of the Comptroller of the Currency (OCC) entered into consent agreements with 14 mortgage servicers setting up the IFR process and requiring mortgage servicers to hire outside consultants to examine foreclosures initiated in 2009 and 2010 to determine whether there had been illegal or improper practices and, if so, fix the problems and compensate homeowners. 

On Jan. 7 the settlement was announced that ended the IFR process.

At the time, regulators “promised Congress that information relating to the IFR process would be forthcoming.”  

In April, Daniel Stipano, deputy chief counsel at the OCC, testified before the Senate Banking Committee that “we do anticipate doing public reporting” on the lessons learned from the IFR.

Bernanke said in July before the same committee that “we hope to have a report on this whole thing within the next couple of months that will lay out basically all the information we have” and that “we will try to provide as much transparency as we have.”