The letter comes a day after the lawmakers, including House Financial Services ranking member Maxine Waters (D-Calif.), met with staffers from the Fed and the Office of the Comptroller of the Currency (OCC) about bank documents detailed foreclosure actions in 2009 and 2010.
They made 14 specific requests in a Jan. 31 letter and say, to date, have only received one full response, three partial or minimal responses, and no responses to the remaining nine of the requests.
“Given the circumstances of this case — in which your offices have identified systemic and widespread violations of federal law, including wrongful foreclosures, excessive fees, and fraudulent affidavits filed in court — access by Members of Congress to additional information about these violations is not only warranted, but imperative,” they wrote.
“For these reasons, we hope that you will reconsider your staff’s positions and work with us to achieve a mutually agreeable accommodation that serves both of our interests.”
Earlier this year, regulators ended the Independent Foreclosure Review (IFR) process after reaching a nearly $10 billion agreement with 13 mortgage servicers to provide compensation to homeowners who were wronged by the practices.
The process was created about two years ago following a report by the regulators showing “violations of applicable federal and state law” and that the abuses have “widespread consequences for the national housing market and borrowers.”
The only details lawmakers say they have received are that mortgage servicing companies spent approximately $2 billion on the independent review, only 114,000 loans of out more than 800,000 identified actually received an examination, and borrowers who were harmed by the practices are expected to begin receiving compensation — between $300 and $125,000 — by the end of the week.
At the Tuesday meeting, the lawmakers say that Fed staff argued that the documents are considered “trade secrets” of mortgage servicing companies.
In addition, they say, staff from the OCC argued that these documents should be withheld from lawmakers because producing them “could be interpreted as a waiver of their authority to prevent disclosure to the public of confidential supervisory bank examination information.”
“We strongly believe that documents should not be withheld from any Member of Congress based on the flawed argument that illegal activity by banks is somehow their proprietary business information,” they wrote.
“Breaking the law is not a corporate trade secret. As regulators, you identified systemic and widespread abuses two years ago, and concealing important information about these violations limits our ability to fulfill our responsibility to conduct oversight over the actions of mortgage servicing companies and to develop legislation to protect our constituents from further abuse.”
They said more information is needed especially in the light that the violations were more widespread that initially thought — some of the nation’s biggest banks wrongfully foreclosed on at least 1,000 servicemembers, up from an initial estimate of 700.
In fact, they say the staffs said that the performance of one of the independent consultants conducting foreclosure reviews was “so poor that you issued a letter faulting the company and directing it to cure its deficiencies.”
“Your staff would not elaborate, however, and they declined to identify the independent consultant or the mortgage servicing company involved,” the lawmakers wrote.
Curry has argued that the process was taking too long and keeping already long-delayed compensation out of the hands of homeowners.