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Senators urge holding mortgage servicers accountable

MEDIA RELEASE

A dozen U.S. Senators have sent a letter to the Office of the Comptroller of the Currency (OCC) urging the agency to work with State Attorneys General, the U.S. Department of Justice (DOJ), and the U.S. Department of Housing and Urban Development (HUD) to hold mortgage servicers accountable for deficient servicing procedures and improperly foreclosing on homeowners and to develop a comprehensive solution to fix the broken foreclosure process.

Sens. Jack Reed (D-RI), Richard Blumenthal (D-CT), Banking Committee Chairman Tim Johnson (D-SD), Judiciary Committee Chairman Patrick Leahy (D-VT), Sheldon Whitehouse (D-RI), Bob Menendez (D-NJ), Daniel Akaka (D-HI), Chuck Schumer (D-NY), Sherrod Brown (D-OH), Dick Durbin (D-IL), Al Franken (D-MN), and Jeff Merkley (D-OR) are calling for the OCC to use the full extent of its significant authority to ensure that the banks and mortgage servicers which created the foreclosure mess help clean it up.

After several federal agencies and State Attorneys General opened investigations into unscrupulous mortgage practices by major banks, including the use of improperly prepared legal documents and “robo-signers” to sign hundreds of unread foreclosure documents a day, the OCC entered into consent orders with several large banks outlining the widespread problems in mortgage servicing and requiring the servicers to take steps to address those problems.

The OCC has announced that at the request of DOJ and to allow coordination of actions with other agencies at the state and federal level, it was giving banks an additional 30 days to file “Action Plans” for how they will comply with the new foreclosure requirements laid out in the OCC’s consent orders.

Because the consent orders announced by the OCC on April 13th did not preclude State Attorneys General from aggressively pursuing a comprehensive solution against banks and mortgage servicers that wrongly foreclosed upon homeowners, the Senators are urging the OCC to work with the State Attorneys General and other regulators to arrive at a comprehensive and robust solution.

Full text of the letter from the Senators:

Mr. John Walsh
Acting Comptroller of the Currency
Office of the Comptroller of the Currency
Independence Square
250 E Street, SW
Washington, DC 20219-0001

Dear Mr. Walsh:

Amid recent reports that housing prices are experiencing a double dip, we write to urge you to make every effort to bring a comprehensive resolution to the foreclosure crisis, which has continued for far too long. According to economists and experts of all stripes, a persistently weak housing market represents one of the greatest threats to a sustained and lasting economic recovery.

It is clear that we need to stabilize our housing market, and the Office of the Comptroller of the Currency (OCC) has a pivotal role to play in utilizing the full scope of its authority to correct the weaknesses of servicers in terms of foreclosure governance and foreclosure document preparation and in their ability to vigorously oversee and monitor third-party vendors, including foreclosure attorneys.

Recently, several servicers under your jurisdiction have agreed to submit, in a matter of days, Action Plans which are supposed to contain complete explanations of all the steps that will be taken, including efforts to strengthen foreclosure and foreclosure prevention controls and procedures, to be in full compliance with the OCC’s Consent Orders. As the OCC assesses these Action Plans to determine whether they are acceptable, we urge you to work with the State Attorneys General, the Department of Justice, the Department of Housing and Urban Development, and the other authorities who are involved.

Ideally, these Action Plans will not only clarify and improve the roles of mortgage servicers, but will also help homeowners for whom foreclosure can be prevented. In this regard, we urge you to consider the servicing standards proposed by the State Attorneys General, and to incorporate appropriate provisions of introduced legislation that will support the work that must be done to improve the foreclosure process and help homeowners avoid foreclosure. Taken together, these policies would be a better basis for a more fair and equitable system going forward.

We are at a critical moment to achieve a better sense of stability and confidence in the administration and processing of our nation’s mortgages. In short, your efforts are needed to help lay a foundation for our housing markets to firmly recover. As such, we urge you to take every opportunity to ensure that servicers not only account for past harms, but also take steps to prevent future servicing deficiencies so that homeowners going forward are treated fairly.

We thank you for your consideration and attention to this important matter, and we look forward to your response.

Sincerely,

Reed
Blumenthal
Tim Johnson
Leahy
Whitehouse
Menendez
Akaka
Schumer
Sherrod Brown
Durbin
Franken
Merkley

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