A top House Democrat said Thursday that new documents show that an independent review of foreclosures was terminated before the full damage to consumers was known.
Rep. Elijah Cummings (Md.), ranking member of the House Oversight and Government Reform Committee, sent a letter to Chairman Darrell Issa (R-Calif.) requesting a hearing to examine why federal regulators ended the Independent Foreclosure Review (IFR) and agreed to a $25 billion settlement agreement with mortgage servicing companies in January 2013.
Cummings wrote that the documents show widespread foreclosure abuses, including charging improper and excessive fees.
For example, Bank of America’s independent consultant, Promontory Financial Group, found the bank had a 60 percent error rate in loan modification efforts; a 19 percent error rate in charging fees; and a 16 percent error rate in loans involving bankruptcy that were reviewed, according to Cummings's release.
Promontory said that “the peak of engagement was at the end of December 2012” and estimated that the projected time to complete its review of Bank of America was about 10 months.
The new documents show that the independent consultants had made significant preparations to examine bank documents.
But, at the time the settlement was announced, those overseeing the agreement said the process would take too long to compensate borrowers affected by the shoddy policies.
A March report showed that Bank of America, Chase, Citi and Wells Fargo had completed their consumer relief obligations ahead of schedule with 52 percent, or more than $10.5 billion, devoted to principle forgiveness, $1.4 billion more than anticipated on the first liens.
Overall, the National Mortgage Servicing Settlement provided more than $50 billion in assistance, $20.7 billion in credited relief, which helped more than 631,000 families.
The banks were required to offer $19.1 billion in help.
In his letter, Cummings requested that the committee talk to representatives from the Federal Reserve, the Office of the Comptroller of the Currency, mortgage servicing companies, and independent consultants.