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Rep. Waters: Regulators used “nonsensical system” to setup mortgage settlement fund

Rep. Waters: Regulators used “nonsensical system” to setup mortgage settlement fund

Congresswoman Maxine Waters, Ranking Member of theHouse Financial Services Committee, issued a response to the Governments Accountability Office’s report on the Independent Foreclosure Review, which was conducted by the Office of the Comptroller of the Currency and theFederal Reserve in 2011 and 2012.

The GAO report, which is detailed here, found that the OCC and Fed negotiated with 16 mortgage servicers (the list of impacted servicers can be read here) for a $3.9 billion payout to distressed borrowers based on an incomplete review of the foreclosure process. The GAO report also found that the regulators established a $6 billion fund to aid in foreclosure prevention without defining specific objectives for what to do with the money.

Waters said that she is “troubled by the GAO report” because it “shows that just as the Department of Justice deliberately overstated its investigation and prosecution of mortgage fraud cases, regulators claimed $6 billion dollars of settlement payments that never truly occurred.”

Waters said that the regulators “used a nonsensical crediting system for the largest portion of the settlement,” which was meant to provide additional foreclosure relief activities to victims of “unscrupulous practices.”

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