WASHINGTON Democratic lawmakers on Monday urged regulators to keep their promise to release a report by the end of the year that details an independent review of millions of borrowers who faced foreclosure.
In a letter to Federal Reserve Board Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry, Sen. Elizabeth Warren, Rep. Maxine Waters and Rep. Elijah Cummings said a public, detailed report of the investigation was important to ensure 4.2 million borrowers were well treated by a government settlement with lenders earlier this year.
"This information is critically important to addressing the continuing foreclosure processing problems in the mortgage servicing industry," the three lawmakers wrote in the letter. "An August 2013 [Consumer Financial Protection Bureau] report found that 'sloppy account transfers,' 'poor payment processing,' and 'loss mitigation mistakes' are still harming borrowers. Although the IFR process may be over, there are still many valuable lessons to be learned from it."
U.S. regulators reached a $9.3 billion settlement with 14 mortgage servicers in January 2013 over faulty residential mortgage loan servicing and foreclosure review practices. The settlement, however, put an abrupt end to a case-by-case review by regulators required under the independent foreclosure review process.
Democratic lawmakers have raised concerns that regulators ended the review process too soon before all potential harm to borrowers had been evaluated. According to the letter, roughly 105,000 borrower files had been evaluated out of a possible 4.2 million affected.
"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 wrote in a letter.
A Fed spokesperson said, "We have received the letter and we plan to respond." A spokesman for the OCC declined to comment.
The three lawmakers are seeking a summary of the financial remediation received by borrowers to date, a description of information that has been and will be released to borrowers whose foreclosure files were examined, and information on cases referred to the Department of Justice.
Earlier this year, Warren, D-Mass., also sought assurances that regulators would disclose more detailed information regarding checks sent to millions of families around the country to compensate for fraudulent mortgage practices.
She asked Bernanke at a Senate Banking Committee hearing in July how individuals would be able to know "the payments they're receiving are fair if the Fed and the OCC won't disclose details about what they uncovered in the investigation."
Bernanke said regulators were trying to find ways to provide that information to a portion of the borrowers whose files were evaluated by independent consultants.
"We hope to have a report on this whole thing" within the next couple of months, Bernanke said.
Borrowers who have received checks do not automatically yield their legal rights and can decide to pursue further action on a claim, he said.