GAO REPORT | FORECLOSURE REVIEW Opportunities Exist to Further Enhance Borrower Outreach Efforts

FORECLOSURE REVIEW Opportunities Exist to Further Enhance Borrower Outreach Efforts

What GAO Found

Regulators and servicers have gradually increased their efforts to reach eligible borrowers and have taken steps to improve communication materials. Conducting readability tests or using focus groups are generally considered best practices for consumer outreach, but regulators and servicers did not undertake these activities. Staff at the Board of Governors of the Federal Reserve System (Federal Reserve) said that this was, in part, a trade off to expedite the remediation process. Regulators also did not solicit input from consumer groups when reviewing the initial communication materials. Readability tests found the initial outreach letter, request-for-review form, and website to be written above the average reading level of the U.S. population, indicating that they may be too complex to be widely understood. Regulatory staff noted limitations to such readability tests and told us they discussed using plain language, but that the use of some complex mortgage and legal terms was necessary for accuracy and precision. Clear language on the independent foreclosure review website is particularly important as current outreach encourages borrowers to submit requests for review online. Communication materials developed by mortgage servicers with input from regulators and consultants included information about the purpose, scope, and process for the foreclosure review and noted that borrowers may be eligible for compensation. However, the materials do not provide specific information about remediation—an important feature to encourage responses as suggested by best practices and reflected in notification examples GAO reviewed. Without informing borrowers what type of remediation they may receive, borrowers may not be motivated to participate.

The outreach planning and evaluation targeted all eligible borrowers with some analysis conducted to tailor the outreach to specific subgroups within the population. In approving the outreach plan, regulators considered the extent to which the plan promoted national awareness and was appropriate to reach the demographics of the target audience. The outreach process was largely uniform with some targeted outreach to Spanish-speaking and African-American borrowers. GAO has previously found that effective outreach requires analysis of the audience by shared characteristics, but regulators did not call for servicers to analyze eligible borrowers by characteristics, such as limited English proficiency, that may have affected their response. While regulators have identified community groups as effective messengers and encouraged servicers to reach out to them, servicers have leveraged these groups to varying degrees. According to consumer groups, borrowers may have ignored communication materials because they did not understand who provided the information and believed the materials were fraudulent. Regulators regularly monitored the status of the outreach activities and analyzed the effect of advertising on response rates. GAO has previously found that analyzing past performance when expanding activities is important. Regulators did not analyze characteristics of respondents and nonrespondents in introducing a second wave of outreach activities. Without this analysis, regulators may not know if certain groups of borrowers are underrepresented in the review. As a result, whether additional outreach to target these groups or changes to the file review process are need.

Why GAO Did This Study

In April 2011 consent orders, the Office of the Comptroller of the Currency (OCC), Federal Reserve, and the Office of Thrift Supervision directed 14 mortgage servicers to engage third-party consultants to review 2009 and 2010 foreclosure actions for cases of financial injury and provide borrowers remediation. To complement these reviews, the regulators also required servicers to establish an outreach process for borrowers to request a review of their case. This report examines (1) the extent to which the development of the outreach approach and content of the communications materials and website reflected best practices, and (2) the extent to which the planning and evaluation of the outreach and advertising approach considered the characteristics of the target audience. To conduct this work, GAO reviewed the design and implementation of borrower outreach activities and materials against best practices and federal guidelines and interviewed representatives of servicers, consultants, community groups, and regulators.

What GAO Recommends

OCC and the Federal Reserve should enhance the language on the foreclosure review website, include specific remediation information in outreach, and require servicers to analyze trends in borrowers who have not responded and, if warranted, take additional steps to reach underrepresented groups. In their comment letters, the regulators agreed to take actions to implement the recommendations, while the Federal Reserve took issue with GAO’s criteria. OCC also took issue with GAO’s criteria in its technical comments.

For more information, contact Lawrance L. Evans, Jr. at (202) 512-8678 or evansl@gao.gov.

Full report below…

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4closureFraud.org

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FORECLOSURE REVIEW Opportunities Exist to Further Enhance Borrower Outreach Efforts

Comments
3 Responses to “GAO REPORT | FORECLOSURE REVIEW Opportunities Exist to Further Enhance Borrower Outreach Efforts”
  1. David C Breidenbach says:

    of course its complicated–and the most desriable result for the reviewrs was to put the faulty claim in the dustbin. But more telling was that they put barriers before attorneys who were trying to obtain the forms and prepare to represent homeowners by “peparing themselves ” —–but the reviewers literally would not give the attorneys the time of day. An attorney was required to didclose the name of his client address ss # etc etc as a pre-condition to simply obtain the form……. my sense was that this was an intentional interference with a persons right to redress greievances and general deprivation of Due Process. Why did the reviewers want to avoid involvement by attorneys? Why did it compromise them to simply give out a form to attorneys to study and use as a template? Sort of like having civil rules of court–except nobody can see em until after the complaint is filed—and hope it meets them. Further failures include listing all the companies the reviewers were represnting—the actual lis of names published was much smaller than the list in the reviewers drawer–supposedly because of tradenames and acquisitions. But it was not published–you had to rely on the discretion of the reviewer to tell you if your client was qualified????/ Talk about deprivation of due process—–maybe just fine for east africa–but not the US. But that is what we have and we are supposed to be thankful for it.

  2. illiterate says:

    even people who can’t read are smart enough to avoid this “Dog & Pony” show..

    with Barclays news surfacing, I sure hope all those suits on wall st. are sleeping well..

    this is just more of an attempt to further dumb down America..

    • charley rice says:

      THIS IS ALL A SMOKESCREEN! THERE WAS NEVER ANY MONEY TO THE BORROWER BECA– USE IT’S ILLEGAL FOR THE BANKS TO LOAN MONEY.

      THE MONEY WAS CREATED BY THE BORROWERS SIGNATURE…

      THERE’S NO NEED FOR A 4CLOSURE REVIEW BECA– USE ALL THE SUBPRIME LENDERS THAT ORIGINATED THE BORROWERS LOANS HAD SOLD ALL THE MORTGAGES TO WALL STREET HAD LOST THE RIGHT TO 4CLOSE BECA– USE THE PROMISSORY NOTE WAS CONVERTED INTO A STOCK AND PLACED INTO A TRUST.

      IT’S IMPOSSIBLE FOR THE ORIGINAL LENDERS TO ASSIGN THOSE MORTGAGES TO BANKS BECA– USE IT’S SECURITIZED.

      THOSE SUBPRIME LENDERS HAVE ALREADY BEEN PAID, AND CLOSED THEIR BUSINESS WENT BANKRUPT IN 2008.

      THOSE WAS THE ONLY SUBPRIME LENDERS THAT COULD HAVE 4CLOSED IF THEY DIDN’T SELL THE MORTGAGES TO WALL STREET.

      SECURITIZATION HAVE CREATED A TRAIL OF FRAUD WITH THESE BANKS BECA– USE BOA, WELLS FARGO BANK, HAVE ALL BROUGHT THE LIES, DECEPTION OF ROBOSIGING TO STEAL HOMES THAT THEY KNEW THAT THEY DIDN’T OWN.

      WAKE UP PEOPLE!!! AND THE COURTS!!! THESE BANKS ARE BACKDATING DOCUMENTS ARE 4CLOSING ON OUT OF BUSINESS BANKS, AND CLOSED SECURITIZED TRUST BY ACTING AS TRUSTEE FOR NON EXISTENT BANKS WHICH CLOSED YEARS AGO. THEY HAVE NO STANDING!

      THIS VIOLATES THE PSA TRUST BECA– USE TRUSTEE ARE NOT ALLOWED TO TAKE OR SELL PROPERTY AFTER THE CUT OFF DATE. YOUR LENDER NEVER GAVE A CHAIN OF ASSIGNMENT BECA– USE ONCE THEY SOLD IT THEY ALSO LOST THE RIGHT TO ASSIGN MORTGAGES.

      NO COURT, JUDGE, GOVERNMENT, STATE, ARE NOT ALLOWED TO SEIZE A PROPERTY THAT IS NOT THEIRS.

      THE BORROWER AND ORIGINAL LENDER CREATED THE CONTRACT AND NO OTHER BANK CAN’T STEP IN AND ACT AS A LENDER ON A DEAD BANK IS FRAUD…THIS GAME IS OVER WITH THESE BANKS, AND IT’S JUST A MATTER OF TIME YOU’RE GOING DOWN!!

      SOON EVERYONE WILL KNOW THAT WELLS FARGO BANK, BOA, AND THE OTHERS CONSPIRED TO WRONGFULLY 4 CLOSE ON MILLIONS BECA– USE THEY KNEW THAT THE FHA GOVERNMENT WOULD PAY UP TO 70%- 80% VALUE OF THE HOME MORTGAGE INSURANCE IN THE EVENT OF A DEFAULT ON THE HOMES. THAT’S WHY THERE’S NO REMOD

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