Written by Biloxi
Rep. Elijah Cummings (D-Md.),Ranking Member of the House Committee on Oversight and Government Reform, has launched an investigation into increasingly widespread allegations of foreclosure fraud and abuse by banks. Rep. Cummings is seeking documents, audits, and investigations in order to provide the Committee with a more comprehensive understanding of these allegations and the national foreclosure picture. Rep. Cummings has sent letters to 11 mortgage servicers and legal service companies to seeking documents regarding allegations of abuse to homeowners. These specific allegations include:
• wrongful foreclosures
• deficient recordkeeping
• inflated fees
• deceptive practices
• fraud in lending
• noncompliance with federal housing policy
• improper foreclosures and fees charged to military families
In addition, Rep. Cummings sent a letter to Special Inspector General for TARP Neil Barofsky requesting an audit of reports by homeowners of servicer abuses. Rep. Cummings has referenced Mr. Barofsky's first hearing of the 112th Congress where Mr. Barofsky testified on the performance of mortgage servicing companies. Mr. Barofsky described “daily accounts of errors and more serious misconduct” and his hotline “receiving more than 24,000 contacts,” many of which “are complaints from homeowners dealing with mortgage servicers.” Read more on Cummings' letter to Barofsky. Click here.
Moreover, Rep. Cummings sent a letter to the new Inspector General of the Federal Housing Finance Agency requesting an investigation into attorneys and law firms who specialize in handling foreclosures and working with servicers. Click here
to read the letter.
Chairman Darryl Issa has scheduled a hearing on mortgage servicer abuses for March 8th in Baltimore, Maryland. Maryland Governor Martin O’Malley, Baltimore Mayor Stephanie Rawlings-Blake, and state regulatory agency officials have agreed to testify.
While Rep. Cummings launches an investigation of mortgage servicer abuses, Congresswoman Maxine Waters (D-CA)is troubled by a reported $20 billion foreclosure fraud deal from the Obama Administration. Rep. Waters provides recommendations to protect borrowers:
My bill from the last Congress, The Foreclosure Prevention and Sound Mortgage Servicing Act of 2009 (H.R. 3451), which I plan to reintroduce, contained borrower protections that I believe could have prevented many of the servicing failures we see today. I urge regulators to insist on meaningful borrower protections that satisfy all of the servicing reforms described below:
• Provide that servicers have a duty to engage in reasonable loss mitigation activities, as outlined in H.R. 3451;
• Adopt servicer compensation structures that result in servicers having an interest as to whether the loan remains current, and separates simple transaction processing from actual loss mitigation activities;
• Require that a formula govern how second lien holders are required to modify second liens in the event of a first lien modification;
• Mandate that servicers establish a single-point-of-contact for each borrower seeking a loan modification, and provide that single-point-of-contact with actual decision making authority;
• Require that an independent master servicer provide oversight and resolve disputes regarding servicers’ actions;
• End the foreclosure “dual track,” which often results in borrowers being foreclosed upon by one division of a servicer while they are simultaneously attempting to negotiate a loan modification with another division of the servicer;
• Require servicers to foreclose in their own names;
• Change payment structures for law firms and other servicer contractors so that compensation is not tied to the speed at which these contractors foreclose; and
• Require servicers to disclose the complete chain of title as well as a full accounting of all fees (both upon request and in the Notice of Default), and the use of lost note affidavits in their foreclosures.
An investigation is badly needed from many reported mortgage servicer abuses statewide. More importantly, mortgage servicing reform must be implemented.