WASHINGTON (4/30/14)--Federal regulators used incomplete data when they calculated a $9 billion mortgage settlement that replaced the Independent Foreclosure Review (IFR) process, the U.S. Government Accountability Office said in a report issued this month.
The IFR process started in 2011 as part of consent orders issued against 14 top mortgage servicers. The foreclosure review process was meant to provide foreclosed borrowers with an opportunity to have their cases reviewed for errors and misrepresentations on the part of servicers. Restitution was also a possibility for some foreclosed borrowers.
The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board in early 2013 announced that the IFR process would instead be replaced with a tentative $9.3 billion settlement. The settlement would allow all IFR-eligible borrowers "to receive compensation significantly more quickly," the OCC said in a release.
The incomplete nature of the reviews that those agencies examined in December 2012 limited the extent to which regulators could estimate the potential harm done to mortgage holders, and any potential remediation they were due, the GAO said.
Overall, the GAO said the report addresses:
The GAO also said that federal regulators risk reducing public confidence in the mortgage market if they do not make information on similar review processes more broadly available in the future.
In the review, the GAO recommends that the OCC and the Fed:
For the full GAO report, use the resource link.