Banks dark on previous work with foreclosure reviewers
The Office of the Comptroller of the Currency posted the actual engagement letters Tuesday between the major mortgage servicers and their third-party consultants hired to perform reviews of foreclosures that took place over the past two years. The letters reveal how the consultants will conduct their reviews and approximately how long it will take. According to the Bank of America (BAC) engagement letter with Promontory Financial Group, the process must not take more than 423 days from when the engagement letter was signed on Sept. 6. Promontory will use more than 200 file reviewers working on an assumed 10 hours per file, according to the letter. The letter between JPMorgan Chase (JPM) and its consultant Deloitte & Touche gave a similar timeline of 469 days to review any claims brought by borrowers. The reviews will determine if documents were signed properly, if federal and state laws were followed, even if the Home Affordable Modification Program and private program guidelines were correctly implemented for individual cases. But when it comes to any potential conflict of interest, the OCC and the 14 major servicers are keeping the public in the dark. Below are images taken of the letter between BofA and Promontory over the firm's past work with the bank. (For a complete list of the engagement letters go here.) The letter reads: "Promontory and BAC agree that the success of the Foreclosure Review will require Promontory to conduct itself with a high degree of independence." But many other segments of the letter are blacked out as well, including the names of certain attorneys that will trigger an automatic review. Some attorneys have come under investigation by the state attorneys general for their involvement in the robo-signing mess. Some like David J. Stern in Florida and Steven J. Baum in New York are winding down or already shut down completely. Rep. Maxine Waters recently led a letter from 15 other lawmakers asking for all information be revealed in the foreclosure reviews. "The only way this process will be fair is if the regulators shine a bright light on mortgage servicers, and make them demonstrate to the public how they’re being held accountable. To date, this entire exercise has been conducted in the shadows," Waters said. "I fear that without greater transparency, we’re setting homeowners, and foreclosed-upon families, up for more disappointment." The parent banks of the 14 of the largest servicers received nearly $125 billion in bailouts combined under the Troubled Asset Relief Program. These institutions and their chief regulator now ask for complete trust on any potential conflicts of interest sorting out the foreclosure debacle committed since the bailout. "The OCC closely evaluated and approved consultants to prevent conflicts of interest with regard to issues the independent consultants are charged to review, and to ensure that reviews are conducted consistently and fairly across all servicers," the agency said. "This language specifically prohibited servicers from overseeing, directing or supervising any of the reviews." Write to Jon Prior. Follow him on Twitter @JonAPrior.