Washington, D.C. (Apr. 25, 2013)—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, announced the introduction of H.R. 1706, The Mortgage Settlement Monitoring Act of 2013, to create an Independent Monitor to oversee the distribution of funds paid by mortgage servicers for illegal foreclosures and other abuses against homeowners under their settlement agreement with federal regulators.
Original co-sponsors of the legislation include Ranking Members Maxine Waters, George Miller, John Conyers, and Henry Waxman, as well as Representatives John F. Tierney, Zoe Lofgren, and Jan Schakowsky.
The bill has been endorsed by the Center for Responsible Lending, the National Consumer Law Center, the National Fair Housing Alliance, the National Association of Consumer Advocates, Americans for Financial Reform, National People’s Action, the Connecticut Fair Housing Center, and Consumer Action.
“Mortgage servicers have now admitted that they broke the law by illegally foreclosing on American families and committing numerous other abuses, but regulators refuse to provide even the most basic information about the extent of the abuses that were uncovered,” said Cummings. “Since federal regulators now plan to rely on these same banks to determine payouts and deliver settlement funds to borrowers, we need an Independent Monitor to bring transparency and accountability to this process.”
On February 28, 2013, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (OCC) entered into amended consent orders requiring 11 mortgage servicers that originally entered consent orders in 2011 to provide cash payments and other assistance to borrowers, including more than $3 billion in payments to borrowers who were in foreclosure in 2009 and 2010. This settlement prematurely ended the Independent Foreclosure Review that banks were ordered to conduct to identify harms suffered by individual borrowers.
The Mortgage Settlement Monitoring Act of 2013 would create an Independent Monitor appointed by the President to review the compliance of all parties to the settlement—including both the mortgage servicers and the Federal Reserve and the OCC—and issue quarterly reports to Congress and the public. These reports must include:
On January 31, 2013, Cummings and Senator Elizabeth Warren launched a joint investigation of the settlement and requested that the Federal Reserve and the OCC provide documents relating to illegal actions by mortgage servicers identified during the Independent Foreclosure Review. The Federal Reserve and OCC refused to provide these documents, arguing that they are the “trade secrets” of mortgage servicers.
On April 4, 2013, the Government Accountability Office issued a report examining the Independent Foreclosure Review, finding: “Complexity of the reviews, overly broad guidance, and limited monitoring for consistency impeded the ability of the Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) to achieve the goals of the foreclosure review.” The report concluded that “limited communication with borrowers and the public adversely impacted transparency and public confidence” and recommended that regulators “apply lessons from the foreclosure review process, such as enhancing planning and monitoring activities to achieve goals, as they develop and implement the activities under the amended consent orders.”
Last week, the New York Times editorialized about the need for an independent monitor to oversee, analyze, and publicly report on the implementation of the settlement after some borrowers were unable to cash the checks they received as part of the deal.
source: democrats.oversight.house.gov