Groups appeal to federal judge for fair lending data on homeowner relief

By Jessica M. Karmasek | May 30, 2013

WASHINGTON (Legal Newsline) -- More than a dozen housing and consumer advocates, in a letter to a federal judge last week, questioned whether homeowner relief given under the requirements of a nationwide mortgage settlement is being given fairly to borrowers in communities hardest hit by the foreclosure crisis.

In their letter to U.S. District Judge Rosemary Collyer, who is assigned to the case, 17 groups, including Americans for Financial Reform, Consumer Federation of America, Woodstock Institute, Empowering and Strengthening Ohio's People, and others requested fair housing data on the implementation of the settlement.

"We are writing because we work with and are concerned about the communities and families who should be seeing improved processes, fairer mortgage servicing outcomes and compensation for illegally completed foreclosures as a result of the federal/state mortgage servicing settlement," the groups wrote in their May 23 letter.

"We are deeply worried that the goals of the settlement are not being met fairly, and we urge you to require full public disclosure of the distribution of principal reduction and other loan modification benefits under the settlement so that you, the signatory parties, and the public can evaluate the outcomes adequately."

The groups say in their two-page letter that they are particularly concerned that servicer-defendants may not be complying with state and federal fair housing laws.

Read the groups' letter here.

This is not the first time the groups have voiced their concerns.

Previously, they asked Joseph A. Smith Jr., head of the Office of Mortgage Settlement Oversight, to:

- Use his access to loan-level servicer data to show which neighborhoods are receiving homeowner relief under the settlement;

- Aggressively, immediately and regularly monitor fair lending concerns, and make that process transparent to the public; and

- Fully audit fair lending compliance before relieving any of the servicers from their obligations under the settlement.

So far, Smith, nor the lenders, have provided the information, the groups say.

"We want to make sure the communities that were devastated by the crisis get their fair share of the relief mandated under the settlement," Paul Bellamy, director of Research and Development for Empowering and Strengthening Ohio's People, said in a statement Thursday.

ESOP is a HUD-approved foreclosure prevention counseling agency.

Earlier this month, Michigan Attorney General Bill Schuette wrote to Smith, saying he, too, is concerned that certain terms of the settlement are not being met by the five banks that signed on to the deal.

"As we continue to sort through the aftermath of the mortgage foreclosure crisis, Michigan homeowners can rest assured that we will hold all five banks accountable to the terms of the national mortgage settlement," the attorney general said in a statement.

In February 2012, 49 state attorneys general, including Schuette, and federal officials reached a deal with Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp. worth $25 billion.

The agreement, which institutes new protections for homeowners and nationwide reforms to mortgage servicing standards, only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac.

In his letter to Smith, Schuette, who is a member of the monitoring committee, said he takes any violations of the settlement's requirements "very seriously."

Schuette also acknowledged New York Attorney General Eric Schneiderman's own concerns in his letter to Smith.

Schneiderman announced this month he intends to sue Wells Fargo and Bank of America for allegedly engaging in repeated violations of the terms of the settlement.

Schneiderman's office said it has documented 339 alleged violations of new mortgage servicing rules, known as the servicing standards, by the two banks since October.

Bank of America, in response, said it was "surprised and disappointed" by the attorney general's plans to sue.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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