Despite the fact that 10 major banks have forked over additional billions of dollars to the federal government recently in exchange for permission to abandon internal foreclosure reviews, some lawmakers remain skeptical that homeowners’ true interests were really served by the settlement. Senator Elizabeth Warren (D-MA) and representative Elijah Cummings (D-MD) recently sent a joint letter to the Office of the Comptroller of Currency (OCC) and the Federal Reserve expressing these concerns and requesting “the results of all performance reviews and reports from servicers and independent contractors hired to review borrower files.” In a similar vein, representative Maxine Waters (D-CA) wrote to the Independent Foreclosure Review (IFR), the entity that approved the $8.5-billion settlement and cessation of individual foreclosure reviews, questioning the methodology for compensating homeowners who were harmed by “abusive foreclosure practices.” Waters demanded more information about how the “4.4 million estimated eligible universe of borrowers will be evaluated for harm and compensated”. The IFR had previously stated that borrowers would be notified by letter if they were eligible and could receive several thousand dollars in compensation, depending on how the IFR reviewed their situations. (BEIL expressed skepticism about this process at the time of coverage and continues to do so.) The IFR left other spending options for the $8.5 billion wide open by stating in the settlement that the bulk of the money would go to assisting borrowers “in other ways [than compensation for foreclosure abuse] such as through loan modifications.”
As far as the OCC goes, comptroller of the currency, Thomas J. Curry, has made his position on the end of individual foreclosure reviews quite clear: he feels that his office has “fix[ed] what was broken.” Curry stated in the wake of the settlement announcement that the settlement, although a “significant change in direction…meets the original objectives [to fix what was broken, identify who was harmed, and compensate them for injury]”. Do you agree with Curry on this one, or do the senator and representatives have the right idea here?
by Carole VanSickle