Regulators consider releasing foreclosure reviews
A group of senators are meeting with federal regulators Friday to discuss making independent reviews of the banks' foreclosure files available to the public. Sen. Robert Menendez (D-N.J.) and others on the Senate Banking Committee arranged meetings with the Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision. As part of the agreements major mortgage servicers signed with these regulators, independent firms will be approved in June to conduct a more thorough review of foreclosure files. For now, the reviews will not be made public. In late 2010, servicers and their third-party contractors were found to be mishandling foreclosures and suspended operations to correct the problems. Federal regulators and the 50 state attorneys general launched investigations to find out far the problems went. The Fed, the OCC and the OTS settled their investigation in April, requiring the banks to provide detailed plans for new servicing and foreclosure practices. The 50 state AGs settlement negotiations remain ongoing. The independent reviews are being done to pinpoint how many borrowers were harmed with an improper foreclosure. The regulators conducted their own review of roughly 2,800 files among the 14 servicers, which include Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C). Problems, they said of the study, were widespread among the largest firms. However, the banks said few if any foreclosures were initiated on homeowners who were not in default. Steve Gillian, the executive director of the American Alliance of Home Modification Professionals, said transparency is crucial to keep homeowners and consumer advocates from pushing the idea that the consent orders circumvent the AG settlement. "If the results of the sampling are not made public the detractor’s position that this is just another effort by the regulators to protect the banks will be supported," Gillan said. "That is not good for the process and will lead to more people going to the courts for relief." Mortgage servicers are required to send letters to regulators by June 12, notifying the agencies of who they will hire to conduct the reviews. The Senators aren't the only ones concerned with the decision to keep the reviews private. Rep. Elijah Cummings (D-Md.) wrote a letter to the regulators asking for copies of those letters and to unseal the reviews. "After reviewing only a sampling of the banks’ files, the federal regulators found systemic problems, illegal foreclosures, and inflated fees. I’m worried that this is only the tip of the iceberg," Cummings said. Write to Jon Prior. Follow him on Twitter @JonAPrior.