Section 1 Short title
This Act may be cited as the “Mortgage Settlement Monitoring Act of 2013”.
Mortgage Settlement Monitoring Act of 2013
A BILL
To establish an Independent Monitor to maintain oversight of the settlement by mortgage servicing companies that were subject to enforcement actions for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing, and for other purposes.
Sec. 2 Findings
The Congress finds the following:
In April 2011, the Federal Reserve System, the Office of the Comptroller of the Currency, and the then-Office of Thrift Supervision issued a joint report titled “Interagency Review of Foreclosure Policies and Practices” summarizing the results of “horizontal reviews” of the Nation’s 14 largest mortgage servicers finding “critical weaknesses in servicers’ foreclosures governance practices, foreclosure document preparation processes, and oversight and monitoring of third-party vendors, including foreclosure attorneys,” resulting in “unsafe and unsound practices and violations of applicable Federal and State law requirements”.
As part of federal enforcement actions addressing these unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing, fourteen mortgage servicing companies entered into consent orders with the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency beginning on April 13, 2011.
The consent orders required these mortgage servicers to undertake an “Independent Foreclosure Review” in order to ascertain individual harms and provide appropriate monetary relief to homeowners as a result of these business practice failures. Mortgage servicers contracted with third-party consultants approved by the federal agencies to conduct these reviews.
During the tenure of the Independent Foreclosure Review process, questions persisted concerning the nature and adequacy of the reviews and expected remediation as well as the independence of the third-party reviewers.
On February 28, 2013, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency finalized amendments to the April 2011 consent orders with 11 of the 14 mortgage servicers. Under the terms of these orders, mortgage servicers are to provide cash payments and other assistance to borrowers—including more than $3,000,000,000 in direct cash payments to borrowers who had homes in foreclosure in 2009 or 2010—and the Independent Foreclosure Review process will cease for the mortgage servicers who agreed to enter into the amended consent orders.
On April 4, 2013, the Government Accountability Office (GAO) issued a report titled “Foreclosure Review: Lessons Learned Could Enhance Continuing Reviews and Activities Under Amended Consent Orders” which examined the Independent Foreclosure Review process. It found that the “[c]omplexity 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”. The report also stated that “limited communication with borrowers and the public adversely impacted transparency and public confidence,” and the GAO recommended that the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency “identify and apply lessons from the foreclosure review process, such as enhancing planning, and monitoring activities to achieve goals, as they develop and implement the activities under the amended consent orders”.
In light of the significant harm caused by mortgage servicers’ unsafe and unsound business practices, and the lack of transparency surrounding the Independent Foreclosure Review process and the amended consent orders that replace this process, it is essential that thorough oversight be conducted over these new orders to ensure that all terms are fully enforced. Creation of an Office of the Independent Monitor, which will provide reports directly to Congress, will aid in meeting this objective.
Sec. 3 Settlement defined
For purposes of this Act, the term “settlement” means—
the amended consent orders finalized on February 28, 2013, between the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency and 11 mortgage servicing companies that were subject to enforcement actions for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing; and
any future agreement between the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency and a mortgage servicing company, the terms of which are similar to the agreement described in paragraph (1).
Sec. 4 Independent monitor
Establishment—
In general— There is hereby established the Office of the Independent Monitor, to be headed by the Independent Monitor. The purpose of the Independent Monitor shall be to determine the compliance of all parties to the settlement with the terms of the settlement and to provide expanded transparency over the implementation of the amended consent orders to rebuild the confidence of the general public.
Appointment—
In general— The President shall appoint, not later than the end of the 45-day period beginning on the date of the enactment of this Act, the Independent Monitor from among individuals with extensive experience in consumer protection laws and practices, particularly in such areas as mortgage lending.
Vacancy— If at any point the position of Independent Monitor becomes vacant, the President shall appoint, not later than the end of the 60-day period beginning on the date such vacancy occurs, a new Independent Monitor from among individuals described under subparagraph (A).
Staff— Upon request of the Independent Monitor, any executive agency, including the Board of Governors of the Federal Reserve System or the Comptroller of the Currency shall detail, on a reimbursable basis, any employee to the Office of the Independent Monitor to assist it in carrying out its duties under this Act, but under no circumstances may the Office of the Independent Monitor have more than 16 employees, not including the Independent Monitor.
Funding— The costs of the Office of the Independent Monitor shall be paid out of the funds paid by mortgage servicing companies under the settlement, other than any funds designated for direct cash payments to borrowers who held loans during 2009 or 2010.
Duties— The Independent Monitor shall—
issue a quarterly report covering all actions taken to date, with the first such report detailing actions taken from the date of the execution of the settlement, to the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Congress containing—
a detailed description of—
the eligibility criteria used to determine who will receive direct and indirect aid provided under the settlement, including information detailing instances in which the criteria are not transparent, certain, objective, or equitably applied;
the methodologies used to calculate and allocate direct and indirect aid provided under the settlement, including information detailing instances in which the methodologies are not transparent, certain, objective, or equitably applied;
the proof requirements applied to recipients of direct and indirect aid provided under the settlement, including information detailing instances in which the requirements are not transparent, certain, objective, or equitably applied; and
the extent to which those receiving direct and indirect aid under the settlement receive procedural due process, including information detailing instances in which such due process has been denied;
information on the total number of borrowers who held loans in 2009 or 2010 who receive direct compensation under the settlement, disaggregated by each mortgage servicer subject to the settlement, including—
demographic and other data related to such borrowers, including race, gender, geography, and the property value of the property securing such loans;
the level of direct compensation provided to similarly situated borrowers, including a review of the methods used to determine the level of direct compensation provided and the adequacy of such direct compensation; and
total direct compensation provided to date;
information on the total number of borrowers with mortgage loans who receive loan modifications or other types of assistance, such as the forgiveness of a deficiency judgment, short sale, deed in lieu, or forbearance agreement, under the settlement, disaggregated by each mortgage servicer subject to the settlement, including—
demographic and other data related to such borrowers, including race, gender, geography, and the property value of the property securing such loans; and
the number of each type of loan modification or other assistance provided to borrowers, including the amount of principal reduction provided under modifications that include a principal reduction element, the level of interest reductions provided to borrowers who receive an interest reduction, and the total amount of deficiencies forgiven for each of the first, second, or any subsequent loans, and the number of borrowers receiving each type of relief who were already in a trial modification when offered assistance under the settlement and the number who were not in a trial modification, and whether there has been disparate treatment of those borrowers;
the credit that parties to the settlement have been given through the provision of loan modifications and other types of assistance to borrowers, including principal reduction modifications, disaggregated by each mortgage servicer subject to the settlement, and a determination by the Independent Monitor of whether such credit reflects the real dollar value of the modifications and has not been provided for modifications that have little or no economic value and that do not result in sustainable modifications;
a list of any instances in which the Independent Monitor has determined that a party to the settlement has substantially failed to comply with the terms of the settlement, including a description of the nature of each instance of noncompliance;
a list of any actions taken by the Board of Governors of the Federal Reserve System or the Comptroller of the Currency to compel compliance with the terms of the settlement;
a review of the efforts undertaken by parties to the settlement to locate borrowers who held loans in 2009 or 2010, including the adequacy of outreach methods used to contact such borrowers and the response rate of such borrowers;
information on the extent to which any assistance provided to borrowers under the settlement receives credit under both the settlement and also another settlement;
a detailed description of—
the dispute resolution procedures established by the Board of Governors of the Federal Reserve System and the Comptroller of the Currency, if any, to enable borrowers to seek either a formal review of the direct or indirect relief provided to them under the terms of the settlement, or a formal review of a determination that they are not entitled to direct or indirect relief under the terms of the settlement, including a review of the adequacy of these procedures in responding to borrowers’ concerns and complaints and in fairly and equitably resolving these requests for review; and
if such procedures have been established, the total number of borrowers who have requested a review under the dispute resolution procedures, the number of outstanding requests awaiting adjudication and the number of fully adjudicated claims, the average time required to adjudicate claims under the dispute resolution procedures, the number of cases in which the arbiter recommended changing the initial determination of relief offered to a borrower, and the number of cases in which the recommendations issued by the arbiter were affirmed and implemented by the Board of Governors of the Federal Reserve System and the Comptroller of the Currency;
the number of in-scope borrowers whose foreclosures are completed during the reporting period; and
any other information that the Independent Monitor deems necessary to discharge the duties of the Independent Monitor and to determine compliance with the settlement;
make each report described under paragraph (1) available to the public, including on a publicly accessible website; and
hold, at a minimum, five public meetings in which members of the public may give testimony regarding the administration of the settlement, and where such meetings—
being announced at least two weeks in advance; and
held in five different States.
Power To require production— Not withstanding any other provision of law, the Independent Monitor may require the production from any party to the settlement of any documents, information, and data related to the settlement that the Independent Monitor determines necessary to carry out the duties of the Independent Monitor.
Confidentiality of information— In carrying out the requirements under this Act, including the report requirement under subsection (b)(1), the Independent Monitor shall ensure that all personally identifiable information is kept confidential.
Enforcement—
In general— If the Independent Monitor determines that a party to the settlement substantially failed to comply with the terms of the settlement or otherwise violates any provision of this Act, the Independent Monitor shall refer a finding of noncompliance to—
the Board of Governors of the Federal Reserve System and the Comptroller of the Currency, for noncompliance involving conduct of mortgage servicers subject to the settlement;
the Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, for noncompliance involving conduct of the Board of Governors of the Federal Reserve System; or
the Inspector General of the Department of the Treasury, for noncompliance involving conduct of the Office of the Comptroller of the Currency.
Handling of referral— Upon receipt of a referral of noncompliance made under paragraph (1)(A), the Board of Governors of the Federal Reserve System and the Comptroller of the Currency shall, jointly—
within the 30-day period beginning on the date of receipt of the referral, issue a report to the Congress containing a plan of action to cure the noncompliance; and
within the 60-day period beginning on the date of receipt of the referral, take such action to cure the noncompliance.
Backup authority— If the Board of Governors of the Federal Reserve System and the Comptroller of the Currency fail to take the action required under subparagraph (A) or (B) of paragraph (2), the Independent Monitor may take any action available to the Board of Governors of the Federal Reserve System or the Comptroller of the Currency in order to cure the noncompliance.
Referral of criminal violations— If the Independent Monitor determines that evidence exists to suggest that a party to the settlement may have committed a violation of any Federal or State criminal statute, the Independent Monitor shall refer such determination to the appropriate law enforcement agency.
Sec. 5 Savings clause
Sec. 6 Sunset
In general— This Act shall cease to have any force or effect on and after the date that is the day after the end of the 90-day period beginning on the date that all parties fully satisfy the terms of the settlement.
Final report— Within the 90-day period described under paragraph (1), the Independent Monitor shall submit a final report to the Congress containing the information described under subsection (b)(1) and any other information the Independent Monitor feels is appropriate.