Two Democrats ask Fed, OCC for meeting on foreclosure settlement

Reuters News
Posted: Mar 25, 2013 4:44 PM
Two Democrats ask Fed, OCC for meeting on foreclosure settlement

WASHINGTON (Reuters) - Two Democratic lawmakers on Monday stepped up their scrutiny of how regulators handled a botched review of past home mortgage foreclosures, requesting a meeting with regulatory officials as they seek further information about the reviews.

The Federal Reserve and the Office of the Comptroller of the Currency reached settlements worth about $9.3 billion with 13 banks earlier this year to end case-by-case reviews of whether they had wrongly seized homes.

Senator Elizabeth Warren of Massachusetts, who sits on the banking committee, and Representative Elijah Cummings of Maryland, who is the top Democrat on the House Oversight Committee, asked regulators for more information in January about the reviews after the settlements were announced.

The lawmakers said the public needed to know more about the process in order to trust it.

Unsatisfied with the response they received from the Fed and the OCC on Friday, the pair on Monday demanded further information and a personal briefing on the status of their requests.

"Criminal activity should not be shielded by regulators as if it constitutes proprietary information or trade secrets," the lawmakers wrote. "We continue to believe transparency is critical around the operations of the review and settlement processes."

The settlements proved controversial because they ended reviews that had already cost the banks some $2 billion but had not yet resulted in any relief to consumers. Banks including Bank of America Corp, JPMorgan Chase & Co and Wells Fargo were part of the reviews.

The agencies to date have provided little information about what those reviews produced and how the consultants who performed the reviews were monitored. Cummings and Warren had sought that information.

The $2 billion in fees amounts to nearly $20,000 per file, a "staggering amount," Warren and Cummings said.

"It is nearly five times the average payout that will go to homeowners as part of the settlement," they wrote.

Under the settlement, borrowers who were foreclosed on in 2009 and 2010 will receive between a few hundred dollars and $125,000, depending on the issues they dealt with.

Fed Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry said in their letter on Friday that the Fed and the OCC plan to make additional information public, such as the findings of reviews and the costs associated with them.

The agencies are in the process of analyzing some of that data for upcoming reports on the implementation of the settlement agreements, Bernanke and Curry said.

They also said that Fed and OCC staff could provide a briefing for the lawmakers' staffs to discuss the settlements.

Warren and Cummings said on Monday that they wanted to attend the briefing, and they asked to hold the meeting on April 9 after lawmakers return from the Easter recess.

(Reporting By Emily Stephenson and Aruna Viswanatha)