Cummings Seeks “Engagement Letters” Due Today Between Mortgage Banks and Private Consultants
Ranking Member calls on federal bank regulators to provide copies of agreements to review widespread mortgage abuses
Washington, DC – Today, Ranking Member Elijah E. Cummings wrote to federal banking regulators to request copies of “engagement letters” between 14 mortgage servicing companies and the private consultants they hired to review their widespread foreclosure abuses. The deadline for federal regulators to approve these engagement letters is today.
The engagement letters were required after the Office of Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Department of Treasury’s Office of the Thrift Supervision issued a report on April 13 finding “critical weaknesses” and widespread risk” with the foreclosure practices of the 14 banks, and ordering more comprehensive reviews.
“After reviewing only a sampling of the banks’ files, the federal regulators found systemic problems, illegal foreclosures, and inflated fees. I’m worried that this is only the tip of the iceberg,” said Cummings.
The regulators directed the mortgage servicing companies to hire private consultants to conduct broader reviews, to determine any financial injury to borrowers caused by errors, misrepresentations, or other deficiencies, and to remediate those deficiencies. Some outside groups have criticized the federal regulators’ decision to allow banks to hire their own private consultants and set the terms of the reviews, asserting that their results will be biased and favor the banks.
“There has been a lot of concern with the idea of letting the banks hire their own private consultants to police themselves,” said Cummings. “The regulators say they are approving these agreements and holding banks accountable—we want to make sure.”
Ranking Member Cummings has requested copies of these letters by June 3. A copy of his letter follows.