A duo of Democratic lawmakers is pressing federal regulators to release documents related to the Independent Foreclosure Reviews of loans issued by the largest banks so that the government can conduct proper oversight of the process. Massachusetts Sen. Elizabeth Warren (D) and Maryland Rep. Elijah Cummings (D) sent a letter to the Federal Reserve and the Office of the Comptroller of the Currency this week asking for documents related to foreclosure abuses carried out by big banks and mortgage lenders.
Regulators halted the independent review process earlier this year when they reached a $10 billion settlement with the banks, a decision that largely let banks off the hook for problems with their foreclosures. In the letter, which was obtained by The Hill, Warren and Cummings said they were told by regulators that documents related to the process are “trade secrets” that can’t be released without violating confidentiality agreements. Warren and Cummings took issue with that argument, The Hill reports:
“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.”
A watchdog report from the Government Accountability Office (GAO) last week found that regulators at the Fed and OCC gave banks “too much leeway” in how the reviews were conducted, implying that the shoddy review process led to a hastened settlement instead of a complete review process. Warren and Cummings also assert that the review process failed to detail how many homeowners were subject to wrongful foreclosure practices.
The $10 billion settlement was the second major deal reached between the federal government and banks over foreclosure abuses, after federal regulators and state attorneys general reached a $25 billion settlement with the five largest banks related to mortgage fraud and abuse. That settlement too has had its problems, as banks have been able to game its requirements to keep from providing the required assistance to homeowners they wronged with widespread fraud and abuse before, throughout, and after the housing crisis.