WASHINGTON — Rep. Elijah Cummings said Thursday he wants Congress to legally force regulators to provide "engagement letters" between mortgage servicing companies and independent firms hired to review past foreclosure abuse.
In his letter, Cummings, the lead Democrat on the House Oversight and Government Committee urged Chairman Darrell Issa, R-Calif. to compel regulators to relinquish such documents by issuing a "friendly" subpoena. The panel agreed in January to rules that would permit the chairman to issue a subpoena without a vote by the committee.
"It is incumbent on our committee to ensure that appropriate oversight and remediation actions are taking place. We cannot fulfill our duty without reviewing the full, unredacted engagement letters concluded between mortgage servicing companies and the firms they engaged to review their foreclosure actions," Cummings wrote.
Cummings indicated that regulators would be willing to provide copies of the engagement letters, but must be legally compelled to do so.
"No agency has indicated a refusal to cooperate with this request," Cummings wrote. "Instead, they have explained that they need subpoenas in order to legally produce the requested documents."
The Federal Reserve Board, the Office of the Comptroller of the Currency and the Office of Thrift Supervision issued a joint report earlier this year on a horizontal review of the top 14 largest U.S. mortgage servicers which uncovered "critical weaknesses" in servicers' foreclosure governance practices, documentation preparation and oversight of third-party vendors.
To address such deficiencies, regulators entered into consent orders with the mortgage servicers that required them to take actions to fix several problems. Independent firms were also retained by servicers to conduct a review of the foreclosure actions that were pending from Jan. 1, 2009 through Dec. 31, 2010 to identify any borrowers that may have been financially harmed by the banks' deficient practices.
Additionally, banks were also directed by regulators to submit for their approval "engagement letters" establishing the terms of the reviews to be conducted by the independent firms.
This is not the first time Cummings has sought to obtain these documents. In May, he wrote to regulators requesting copies of the letters over concerns that mortgage servicing companies and their private consultants were the ones proposing how a foreclosure review would be conducted.
