Waters pressing for hearing on end of foreclosure review program

A top House Democrat is pressing for an immediate hearing on why the government ended a foreclosure review process. 

House Financial Services Committee ranking member Maxine Waters (D-Calif.) called for the panel to examine why the Independent Foreclosure Review (IFR) was abruptly ended and replaced by a $8.5 billion settlement with 14 banks, in a letter sent on Tuesday. 

"There are many unresolved details concerning how the settlement will be implemented, including the types of remediation available and how the direct payments and the indirect relief will flow to harmed borrowers," Waters wrote to panel Chairman Jeb Hensarling (R-Texas).

Last week, Waters along with Sen. Elizabeth Warren (D-Mass.) and House Government Reform and Oversight Committee ranking member Rep. Elijah Cummings (D-Md.) wrote letters to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry. They requested documents related to the government's multi-billion settlement with mortgage servicers that ended a process to review mortgage servicers involved in shoddy practices. 

The lawmakers have argued that the Federal Reserve and the Office of the Comptroller of the Currency (OCC) need to be more transparent and provide information that shows the settlement is helping homeowners. 

"Given these outstanding questions, it is imperative that both the OCC and the board testify before the committee to describe their reasons for canceling the IFR and explain how they anticipate structuring this hurriedly crafted settlement," Waters wrote. 

She said the panel also should hear from the General Accountability Office, which was looking into the foreclosure review program before it was canceled. 

The foreclosure review process was set up in April 2011 for 14 mortgage servicers that engaged in shoddy residential loan servicing and foreclosure processing.  

The new settlement, announced on Jan. 7, ended the process and required banks to provide cash payments and other assistance to borrowers who had homes in foreclosure in 2009 and 2010.

The banks — Aurora, Bank of America, Citibank, HSBC, Goldman Sachs, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo — will provide $3.6 billion in cash compensation while an additional $5.7 billion will be provided by the servicers for mortgage assistance to nearly 4.2 million borrowers. 

Critics of the program said the loan-by-loan review was taking too long and homeowners weren't getting reimbursed for mistakes made by banks.

Mortgage servicers also questioned the independent review process and the contractors involved in going through the loan paperwork. 

After announcing the Jan. 7 agreement, Curry said that although the agencies “learned a great deal from the reviews that have been conducted to date” under the IFR process, “it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers.”