Lawmaker Calls for Further Examination of Servicers in 2013 Foreclosure Settlement

U.S. Representative Maxine Waters (D-California) has written a letter to the inspectors general for both the Federal Reserve and the U.S. Department of Treasury asking for further investigation to determine if any of a group of mortgage servicers missed paying additional borrowers that were owed compensation as part of a 2013 foreclosure settlement.

The letter was prompted by news reports that surfaced earlier this month stating that Citigroup, one of the servicers named in the settlement, had missed paying some 24,000 borrowers who were owed money from the settlement. Waters, the Ranking Member of the House Committee on Financial Services, sent her letter on Friday to Fed Inspector General Mark Bialek and Treasury Inspector General Eric Thorson asking them to perform further examinations to see if other borrowers were missed. The original settlement was reached more than two years ago between 15 mortgage servicers and the Fed and Office of the Comptroller of the Currency (OCC) to resolve claims of servicing violations during foreclosures.

Those 24,000 Citigroup borrowers will receive a combined total of approximately $20 million with payments ranging from a few hundred dollars to $62,500 depending on the harm done to the borrower and the type of servicing error that was committed. One news report, citing an OCC spokesperson, stated that Citigroup was originally told by the OCC that it did not have to include those 24,000 borrowers in the settlement. It was discovered that Citigroup owed those 24,000 borrowers money only after one borrower filed a complaint on an OCC Customer Assistance website, which was stated in Waters' letter and confirmed by the OCC.

"As we said in the past, we are fully committed to fulfilling our obligations under the independent foreclosure review," Citigroup spokesperson Lynn Fogarty said.

Earlier this month when it was reported that 24,000 borrowers were still owed money by Citigroup, spokesman Mark Rodgers told DS News that "We want to make sure that everyone eligible for compensation under the agreement receives what they are due."

An Independent Foreclosure Review concluded in January 2013 with 10 mortgage servicers reaching an agreement with the Fed and the OCC to pay a combined total of $8.5 billion to more than 3.8 million homeowners whose homes were in foreclosure in 2009 and 2010. The claims allege that the servicers mishandled loan paperwork and robo-signed documents related to the foreclosures.

The settlement totals were later increased to 15 servicers and a total of $10 billion in payments, according to the Fed. Citigroup has made cash payments of about $300 million to more than 350,000 borrowers and spent about $500 million on foreclosure prevention, according to an OCC report.