Congresswoman Waters Leads Colleagues in Calling for Bank Accountability for Foreclosure Practices
Congresswoman Waters (CA), Ranking Member on the Subcommittee on Capital Markets and Government Sponsored Enterprises, today led 11 of her colleagues in the House of Representatives urging U.S. bank regulators to publicly release information regarding the steps that mortgage servicers are taking to prevent illegal foreclosure practices. An identical letter was sent by U.S. Senator Robert Menendez (NJ), Chairman of the Senate Subcommittee on Housing, Transportation, and Community Development, and nine additional Senators.
"Recent news reports indicate that ‘robo-signing' and other improper, and potentially illegal, practices continue unabated despite mortgage servicers pledging to regulators months ago that they would stop," Congresswoman Waters noted. "It's clear that, despite claims that they take these issues seriously, the banking regulators have failed to put an end to these predatory practices. It is therefore essential that documents submitted by banks to regulators regarding their mortgage servicing practices be made public, so that Congress and the public can hold servicers accountable."
Enforcement actions were initiated by federal regulators because of the "robo-signing" scandal from last year, which revealed many servicers were wrongfully foreclosing on homeowners and not following existing foreclosure procedures and laws. Robo-signing is when banks falsely swear that they have reviewed property documents that are necessary to foreclose on a homeowner's house. Recently both the Associated Press and Reuters reported that despite regulators' assurances to the contrary, illegal robo-signing allegedly remains rampant in both foreclosure and non-foreclosure cases.
The request for disclosures is also based upon concern over the fact the consultants performing foreclosure reviews have conflicts of interest since they are chosen by the mortgage servicers they are hired to investigate and have done past or future business with those same mortgage servicers. Members of Congress are requesting public release of Engagement Letters, Action Plans, Foreclosure Reviews, and other plans, policies, or processes submitted by mortgage servicers or third-party servicers to ensure that abuses in foreclosure practices are not being ignored by the review process.
"When the consumer protection performance reviews of banks are being conducted by outside consultants hand-picked by the banks themselves, I must question the regulators' process. We need to shine more light on this issue to hold both the servicers, and their regulators, accountable," Congresswoman Waters said.
When news reports on robo-signing surfaced in November 2010, Congresswoman Waters immediately wrote to major mortgage servicers and the regulators of servicers asking for a foreclosure moratorium pending a comprehensive examination of servicer practices. Congresswoman Waters also held the first Congressional hearing in the House on robo-signing and wrongful foreclosures in November 2010, and she continues to press banking regulators for more aggressive action on servicing fraud.
The letter, which is below and attached, is signed by Representatives Frank, Ellison, Grijalva, Watt, Clay, Gutierrez, Miller (NC), Brown, Kaptur, Schakowsky, and Woolsey. The companion letter in the Senate has been signed by Senators Blumenthal, Franken, Akaka, Begich, Sanders, Cantwell, Tester, Rockefeller and Sherrod Brown.