Thomas Curry, Comptroller of the Currency, publicly defended the agency’s mutual decision with other regulators to end a complex process of reviewing foreclosures for signs of deception and document mishandling on Wednesday.
While speaking in front of a Women in Housing and Finance conference, Curry said by November 2012, servicers spent $2 billion on consultants to review foreclosures, but no borrowers had been compensated.
The complexity of the review process, as well as the large cost, prompted the OCC and other regulators to settle with servicers for $8.5 billion, ending the foreclosure review process for good.
Curry said, agencies “came to the realization that maintaining our course would significantly delay compensation without appreciable benefit to the affected borrowers. I decided we needed to change direction, and the Federal Reserve came to the same conclusion.”
Yet, the move caught a wave of criticism from consumer advocates and members of Congress, who questioned the process of settling with borrowers without first determining the exact harms suffered and offering homeowners a full review.
This criticism was not lost on Curry.
The Comptroller told conference attendees, “This was not a decision I made lightly. I knew the servicers, independent consultants, community groups and even some members of Congress had made a personal and concerted effort to support the process and make it work as well as possible. In the end, changing course was the right thing to do, for borrowers, for servicers, for the federal banking system, and for the housing markets”
He added, “Our new approach will get more money to more people much more quickly. The modified consent orders will provide $3.6 billion in payments to 4.2 million eligible borrowers and $5.7 billion in additional foreclosure prevention assistance.”
Curry said foreclosure review outreach efforts ended up costing roughly $35 million, yet with 500,000 borrowers wanting a review, the process became a much larger undertaking.
“We’re talking about companies with tens of thousands of employees that were servicing 36.7 million mortgages when the orders were issued,” Curry said. “The largest of these institutions do business nationwide and were subject to state and local laws pertaining to foreclosure. This creates a very complicated compliance regime. That doesn’t excuse any of the lapses we found, but it does illustrate the scope of the problem and the magnitude of the corrective action that was required.”
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