Sen. Brown urges Fed to 'clean up' mortgage service industry

Brown called on regulators to ensure that relief is provided to homeowners who suffered abuses in the foreclosure process, particularly low-income and minority homeowners who may not have filed a claim in the initial Internal Foreclosure Review (IFR) process. Brown also asked the OCC and Federal Reserve to continue to address abuses in the foreclosure process.

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“Ending the IFR will reportedly stop more than $1.5 billion in payments to independent groups evaluating mortgage practices — money which could have been better spent helping homeowners. But it may well result in some borrowers being overcompensated, while others are undercompensated,” Brown wrote. “Given the extremely limited funds available for relief, the OCC must create equitable guidelines that will provide the maximum relief to homeowners and correct recognized flaws in the IFR process.”

Brown said that OCC and the Federal Reserve should make all information in the IFR settlement available to members of Congress so that they can draft laws that “will clean up the mortgage servicing market.”

“The OCC and the FRB should make all information from the IFR and settlement process available to members of Congress, other regulators and the public,” the letter stated. “To avoid future abuses in the mortgage servicing market, we must understand the scale and scope of the errors in 2009 and 2010.”

Brown has called on his colleagues to pass the Foreclosure Fraud and Homeowner Abuse Prevention Act, which would expand access to foreclosure prevention services, while increasing protections for homeowners and investors in mortgage-backed securities.