On Monday, the Federal Reserve and the Office of the Comptroller of the Currency (OCC) were asked to schedule a meeting to discuss the process of reviews of past home mortgage foreclosure settlements. The request has been placed by 2 democrats – Senator Elizabeth Warren of Mass., member of the banking committee and Representative Elijah Cummings of Md., the top Democrat on the House Oversight Committee.
In Jan 2013, OCC and other banking regulators announced a foreclosure settlement deal with banks. The settlement, worth about $9.3 billion, involved 13 banks over the issue of deceptively seizing homes.
The foreclosure settlement deal will enable more than 3.8 billion homeowners whose property was wrongly foreclosed in 2009–2010 by the mortgage servicers to get cash compensation — ranging from a few hundred dollars to a maximum of $125,000.
Controversies pertaining to the foreclosure settlements cropped up as at the end of reviews by the Fed and the OCC, the banks expensed about $2 billion but to date consumers have not received any aid. The banks which were under review include Wall Street biggies such as Bank of America Corporation (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Wells Fargo & Company (WFC).
Therefore, these two lawmakers requested the Fed and the OCC for detailed information in January related to the reviews on the heels of the foreclosure settlement announcements. The request was based on public demand for more details to trust the review process conducted by the Fed and the OCC.
However, unsatisfied with the information from the Fed and the OCC, these lawmakers have demanded further information to be followed by a personal meeting in April on the status of their requests.
These lawmakers want the public to gain transparency on the matter so that these fraudulent activities are not safeguarded by the regulators. The Fed and the OCC plan to provide additional information related to the process of reviews and the costs associated with them publicly.
Though the foreclosure settlements marginally dented the fourth-quarter results of the banks, in the long run it is expected to bring relief. Further, the distressed homeowners would be benefited. We are hopeful that similar to the earlier foreclosure deal, this would be a decisive step toward restoring confidence in businesses and rejuvenating the crumbling housing market.
The stabilizing housing sector is likely to aid homeowners to avoid foreclosures in the near term. Also, the rate at which properties are entering the foreclosure procedure is expected to trend down gradually, lifting the housing prices.
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