GAO Report

GAO REPORT: FORECLOSURE REVIEW – Lessons Learned Could Enhance Continuing Reviews and Activities Under Amended Consent Orders

What GAO Found

Complexity of the reviews, overly broad guidance, and limited monitoring for
consistency impeded the ability of the Office of the Comptroller of the Currency
(OCC) and the Board of Governors of the Federal Reserve System (Federal
Reserve) to achieve the goals of the foreclosure review—to identify as many
harmed borrowers as possible and ensure similar results for similarly situated
borrowers. Regulators said that coordinating among foreclosure review
participants was challenging, and consultants said that the reviews were
complex. In spite of regulators’ steps to foster consistency, broad guidance and
limited monitoring reduced the potential usefulness of data from consultants and
increased risks of inconsistency. For example, GAO found that guidance was
revised throughout the process, resulting in delays. Other guidance did not
specify key sampling parameters for the file reviews and regulators lacked
objective monitoring measures, resulting in difficulty assessing the extent of
borrower harm. Good planning and collecting objective data during monitoring
provide a basis for making sound conclusions. Without using objective measures
to assess sampling or comparing review methods across consultants, regulators’
ability to monitor progress toward achievement of foreclosure review goals was

Although regulators released more information than is typically associated with
consent orders, limited communication with borrowers and the public adversely
impacted transparency and public confidence. To promote transparency,
regulators released redacted engagement letters and guidance on remediation.
In addition, OCC released two interim progress reports. However, some
stakeholders perceived gaps in key information and wanted more detailed
information about how the reviews were carried out. Regulators stated they
considered publicly releasing additional information, but expressed concerns that
releasing detailed information risked disclosure of confidential or proprietary
information. Further, borrowers who requested reviews experienced gaps in
communication. For example, borrowers who submitted requests when the
submission period opened waited nearly a year before receiving an update.

The foreclosure review activities to date highlight key lessons related to planning,
monitoring, and communication. GAO’s prior work shows that assessing and
using lessons learned from previous experience can benefit the planning of
future activities. The foreclosure review produced lessons in advanced planning
and establishing mechanisms to monitor progress toward goals. Without
assessing and applying relevant lessons learned, regulators might not address
challenges in the continuing reviews or similar challenges in activities under the
amended consent orders. In particular, regulators announced the agreements
that led to the amended consent orders without a clear communication strategy.
Although the regulators plan to release reports on the results of the amended
consent orders and the continuing foreclosure reviews, neither regulator had
made decisions about what information to provide to borrowers. GAO’s internal
control standards and best practices indicate that an effective communication
strategy and timely reporting can enhance transparency and public confidence.
Absent a clear strategy to guide regular communications with individual
borrowers and the general public, regulators face risks to transparency and
public confidence similar to those experienced in the foreclosure review.

Full report below…



Lessons Learned Could Enhance Continuing Reviews and Activities Under Amended Consent Orders