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Full transcript of 4/17/13 Senate Independent Foreclosure Review and National Mortgage Settlement hearing, part II

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Senate hearing video here, length approximately 1-1/2 hours (hearing starts at about 19:45)

Previous week's foreclosure review hearing (Financial Institutions and Consumer Protection subcommittee: "Outsourcing Accountability? Examining the Role of Independent Consultants") transcript is here

Senate Banking, Housing and Urban Affairs Committee
Housing, Transportation and Community Development Subcommittee
Hearing: Helping Homeowners Harmed by Foreclosures: Ensuring Accountability and Transparency in Foreclosure Reviews, Part II
Wednesday, April 17, 2013, 10 AM - 12 PM

Senators present:
Chairman Robert Menendez, (D-NJ)
Jeff Merkley (D-OR)
Jerry Moran (R-KS)

Lawrance Evans, Director, Financial Markets and Community Investment, U.S. Government Accountability Office
Joseph Smith, Monitor of the National Mortgage Settlement, Office of Mortgage Settlement Oversight
David Holland, Executive Vice President, Rust Consulting, Inc.
Deborah Goldberg, Special Project Director, National Fair Housing Alliance


Chairman Robert Menendez (D-NJ): Good morning. This hearing of the subcommittee on Housing, Transportation and Urban Affairs will come to order. Let me thank you all for being here. I know that Senator Moran, the ranking member, will be here in short order.

Today’s hearing is about helping homeowners harmed by foreclosures and assuring accountability and transparency in foreclosure reviews. This issue is important to every homeowner, especially those harmed by illegal foreclosure practices. It is of particular concern to countless New Jerseyans who have contacted my office, almost all with heart-wrenching stories about their experiences going through the foreclosure process, stories in many cases of being either mistreated, neglected and in some cases insulted and embarrassed by their mortgage servicers.

In response to illegal foreclosure practices, regulators and the nation’s five servicers announced a national mortgage settlement in February of 2012. As part of the settlement, servicers are to provide about 25 billion dollars of relief to homeowners and individuals who were victims of such illegal practices. The Federal Reserve Board and the Office of the Comptroller of the Currency also announced the Independent Foreclosure Review process with 14 mortgage servicers. The goal of the IFR was to identify as many harmed borrowers as possible, to treat similarly situated borrowers across all 14 servicers in a consistent manner, and to help restore public confidence in the mortgage market. But challenges and the complexity of the IFR prevailed and regulators and 13 of the servicers abandoned the IFR process in January of this year and instead agreed to a new framework that would no longer evaluate each mortgage for actual harm.

As we attempt to correct these past illegal foreclosures, we must have transparency, consistency and accountability. After being hard-hit by the foreclosure crisis and other economic woes, American homeowners expect and deserve confidence in the mortgage market, and it is our job to give them that confidence.

First we must learn from the mistakes of the past and remain committed to not repeating them in the future. So I asked the Government Accountability Office to conduct a study on the IFR focusing on challenges to the achievement of the goals of the reviews, transparency of the process, and lessons that could be learned moving forward. It’s been nearly two years since the consent orders were signed, and in that time over a billion dollars went to third-party consultants but affected borrowers received nothing, even when there was documented evidence of bad practices. There is certainly plenty of blame to go around, but the American people will not accept excuses for the failures of our regulators. They expect our regulators to be up to the task, fully capable of overcoming the challenges of these settlements, and effective oversight of our financial system should be the number one priority. Over 4.5 million people were potentially impacted by these illegal foreclosure abuses and they deserve our best efforts and attention. The time to act is now, and that’s why we’re here today, to get to the bottom of some of these important issues. So, let me, in the absence of any member at this point to be here, let me start introducing our panel.

Mr. Lawrance Evans is the Director of Financial Markets and Community Investment at the Government Accountability Office. He directs a body of work in the area of banking and financial intermediation, including leading efforts on the GAO study on the Independent Foreclosure Review. In his prior role as a lead economist, he managed a diverse portfolio at GAO which included engagements on TARP, Dodd-Frank’s bank capital provisions, and Sarbanes-Oxley. So we thank you for your work and look forward to your testimony.

Mr. Joseph Smith is the monitor of the National Mortgage Settlement which was announced in February of 2012 by 49 state Attorneys General and the federal government to provide 25 billion dollars in relief for distressed borrowers.

Mr. David Holland is the Executive Vice President of Rust Consulting, Incorporated, a contractor that does outreach to homeowners for the foreclosure reviews and is administrating the payments for the amended consent agreement for the IFR.

And Miss Deborah Goldberg is the Special Project Director at the National Fair Housing Alliance, where she advocates before Congress and federal regulatory agencies on predatory lending and sustainable homeownership issues.

So, let me thank you all for appearing today. We look forward to getting your perspective on the situation and your view on the approach moving forward. I’m going to ask each of you, in the order that I introduced you, to synthesize your statement for about five minutes or so. Without objection, all of your entire statements will be entered into the record. And then we look forward to having a conversation with you. Mr. Evans.

Lawrance Evans, GAO: Thank you. Chairman Menendez, I am pleased to be here this morning to discuss GAO’s ongoing assessment of the Independent Foreclosure Review. Our remarks today are based on our March 2013 report developed in response to the amended consent orders that replaced the IFR for most servicers with a broader framework that will provide cash payments to all eligible borrowers.

The IFR was intended to identify as many harmed borrowers as possible, ensure consistent treatment, and help restore public confidence in the mortgage market. Our report highlighted issues stemming from insufficient planning, monitoring and communication that impeded the regulators’ ability to achieve the stated goals. I will briefly review our key findings including lessons learned, which if leveraged properly can lead to better outcomes for the ongoing reviews and activities under the payment agreements.

First, it is important to note that the IFR was indeed unprecedented, and the size and scope of the operation posed significant challenges to regulators. There were 4.3 million eligible borrowers across 14 different servicers, 7 consultants, and 10 law firms. The foreclosure files themselves were sizable and touched on a large number of complex issues ranging from state and federal laws to loan modification program guidelines. In testimony before the Senate last week, both OCC and the Federal Reserve noted that they underestimated the scale, scope and complexity of the reviews.

Second, while some issues were inevitable, these challenges were exacerbated by overly broad guidance and limited monitoring for the consistency and sufficiency of the consultants’ review activities. For example, lack of clarity in sampling guidance resulted in variations in methodologies used by consultants which would have limited the ability of regulators to aggregate the results and pull together a statistically valid description of the extent of errors in foreclosure processing. Moreover, the guidance did not include mechanisms to facilitate oversight of the extent to which consultants would have identified as many harmed borrowers as possible or targeted the appropriate high-risk categories. In general, these issues limited the types of information regulators could know and report and increased the risk of inconsistent results for similarly situated borrowers. Overall, regulators missed opportunities to develop common criteria or reference documents to help consultants navigate complexities involving state foreclosure law and loss mitigation activities, among other issues. In the absence of such guidance, consultants developed their own test questions to determine harm and potential remediation, again raising the risk of inconsistent treatment.

Third, the absence of timely and useful communication at certain stages of the process undermined public confidence in the reviews. Although regulators released more information that is typically associated with consent orders, borrowers and the general public received limited information about the status of the reviews. Also, some stakeholders perceived informational gaps that raised concerns about how the reviews were being executed and the process for determining error in remediation.

Lastly, several issues emerged as lessons learned for regulators. Most notably, we observed that advance planning can enhance project design and better assure the achievement of goals. Important here is appropriate consultation with stakeholders in establishing mechanisms to systematically monitor progress toward goals. Consultation with organizations directly responsible for or familiar with particular aspects of the review before initiating the IFR may have allowed regulators to define the scope of activities more appropriately and issue more complete guidance. Had regulators incorporated monitoring mechanisms into the design, they would have been better equipped to produce reliable and relevant data for oversight and management. In the absence of systematic processes to monitor activities, regulators did not have an early warning mechanism to help identify problem areas. While the goals of the IFR were hampered, it is possible that the regulators could have taken steps to address some of these issues. In fact, regulators took a number of steps during the process to foster consistency. However, such actions are second best to up-front planning as they increase the risk of further delays, rework, including the retraining of reviewers.

The final lesson learned is that transparency is essential for public confidence, and advance planning should give consideration to the types of data required to credibly communicate useful information to the intended audience. Unfortunately the regulators are limited in what they can report because they did not plan for reporting in the design of the review.

Based on these findings, we offered three recommendations to the regulators aimed at using lessons learned to improve outcomes for the ongoing review and activities under the amended consent orders. Both OCC and the Federal Reserve were receptive to all three.

Chairman Menendez and members of the subcommittee, this concludes my prepared statement. I will be happy to answer any questions you may have.

Sen. Menendez: Thank you. Mr. Smith.

Joseph Smith, NMS Monitor: Chairman Menendez, Senator Merkley, good morning. Thank you for inviting me to testify about the implementation of the National Mortgage Settlement. In April 2012 the National Mortgage Settlement went into effect when the United States District Court for the District of Columbia entered five separate consent judgments that settled claims of improper mortgage servicing practices against five major mortgage servicing organizations, Bank of America, Citi, Chase, the ResCap parties which are the former GMAC and Wells Fargo. Government parties to the settlement included the Departments of HUD and Justice, Attorneys General from 49 states and the District of Columbia, various state financial services regulatory agencies, and other releasing parties including the CFPB and Treasury.

The settlement can be divided into three parts: Direct payments to borrowers and states, consumer relief, and servicing standards. While I have no oversight over the direct payments, I am responsible for reviewing and certifying the discharge of the servicers’ consumer relief obligations and monitoring implementation of the servicing standards. I am subject to oversight by a monitoring committee that is comprised of representatives of the Departments of HUD and Justice and representatives of 15 states.

Under the settlement, the servicers have agreed to provide specific dollar amounts of relief to distressed borrowers within a three-year period. In February, the servicers reported that during 2012, 550,000 borrowers benefited from some type of consumer relief totaling 46 billion dollars, which on average represents about $83,000 per borrower. The kinds of consumer relief for which a servicer can receive credit under the settlement are set out in detail in the consent judgments, and the credit varies based on the relief given. For that reason, the gross dollar amounts of relief the servicers reported far exceeds the total credited obligations under the settlement. To date, only the ResCap parties have requested a determination that they have completed their consumer relief obligations. In February of this year, after a review of their performance, I issued a report to the court that they had satisfied their minimum consumer relief obligations and partially satisfied their mandatory solicitation obligations under the settlement.

In addition to consumer relief, the settlement establishes 304 servicing standards, or rules of conduct, to which the servicers must adhere. Each servicer has been responsible for compliance with the standards since October of 2012. There are servicing standards related to document integrity, the loan modification process, dual tracking, single points of contact, and other customer service and more general requirements. Under the settlement, I measure servicer compliance with the servicing standards through 29 metrics, or tests. The servicers conduct these tests internally and report the results to me. Assisted by independent professionals in my employ, I assess the work of servicers and report my conclusions. If the internal review groups or I find noncompliance with the standards, the servicer has to implement a corrective action plan and, in the case of widespread error, to remediate. If it can’t or won’t correct the potential violations, injunctions or civil penalties can be sought through the United States District Court for the District of Columbia. My independent professionals and I are nearing completion of our reviews of servicer compliance with the metrics through year end 2012 and intend to issue our report on it to the court and the public next month. Our work will continue over the next two years.

To help me better understand the settlements’ impact in the marketplace, my colleagues and I closely review complaints we receive through my office as well as the complaints elected officials submit to the banks. I also have met with the Attorneys General, consumers and professionals who represent them in a number of hard-hit states. As a result of what I’ve heard from consumers and professionals, I am now working with the banks to establish additional metrics to address what I have learned.

In closing, the settlement has been successful in what I believe is a worthwhile effort, focusing resources on a specific problem in a targeted, time-limited way that augments and supports the work of policymakers and government agencies. I look forward to continuing my work toward that goal, and I welcome your questions. Thank you very much, Senator.

Sen. Menendez: Thank you. Mr. Holland.

David Holland, Rust: Chairman Menendez and Senator Merkley, thank you for the opportunity to appear today on behalf of Rust Consulting. Rust Consulting has been engaged by the servicers to administer certain aspects of the Alternative Resolution Settlement as directed by the Office of the Comptroller of the Currency and the Federal Reserve Board. Previously Rust was engaged by the servicers to administer the consent orders for the Independent Mortgage Foreclosure Borrower Outreach project, also known as the Independent Foreclosure Review or IFR.

Under the IFR consent orders, our responsibilities were to notify homeowners about the program, to answer their questions, to review their Request for Review forms, and to handle in- and outbound mail. From November 2011 through December 2012 we executed three mass mailings to homeowners along with a series of media notice campaigns. Over the same period and through January 2013 we received completed Request for Review forms and forwarded them to the servicers.

We were recently engaged by 11 of the 14 original servicers along with two additional servicers to serve as a paying agent under the Alternative Resolution Settlement. Our responsibilities under the settlement are to notify homeowners about the program, answer their questions, and distribute settlement payments in the form of checks to eligible homeowners. Rust mailed postcards on March 18th, 2013 informing eligible homeowners that they were to receive a payment as a result of the settlement. Also we received relevant settlement data from servicers that identified loan classifications for each individual loan and subsequently received data from the OCC and FRB detailing the payment amounts for each loan classification. The first wave of checks were mailed on Friday, April 12th. Yesterday we became aware of check cashing issues that some payees encountered, and we are addressing those issues and will have solutions in place today and on a go-forward basis. The majority of the remaining checks will be mailed in three more waves occurring on April 19th, April 26th, and May 3rd. Rust continues to staff a call center to take incoming calls from homeowners with questions about the program. We also updated the IFR website to provide new information regarding the settlement.

At the direction of the servicers, the OCC and the FRB, Rust implemented a number of address correction processes in order to maximize the number of homeowners who receive notice as part of the IFR. Rust will continue to use address correction processes under the settlement. In both projects, the national change of address process was used to update addresses, and as part of the IFR Rust received undeliverable notices, ran the corresponding addresses through a skip-trace program, and remailed notices to new addresses. For any of the remailed notices that were returned as undeliverable a second time, Rust performed another, second type of address search and again remailed notices to new addresses. Under the settlement, Rust will receive undeliverable checks, attempt to find better addresses, and remail checks to new addresses.

During the IFR process, Rust provided comprehensive daily statistical reporting to the OCC, the FRB, independent consultants, and the servicers. Daily meetings were held with a consortium of the 14 servicers and independent consultants that covered the current state of project execution, future deliverables, and next-phase planning. As part of the settlement, Rust provides comprehensive daily statistical reporting to the OCC, the FRB and the servicers. Daily conference calls are held with the servicers covering project execution. Two times weekly, conference calls are held with the OCC and the FRB covering project execution and future deliverables.

Thank you, and I’d be happy to answer your questions.

Sen. Menendez: Thank you. Miss Goldberg?

Deborah Goldberg, NFHA: Thank you, Mr. Chairman. Mr. Chairman, Senator Merkley, thank you for inviting me here today to testify, and thank you too for your engagement in this issue. You have brought much needed attention and oversight to the Independent Foreclosure Review process.

The IFR is the only real federal effort to identify and compensate borrowers who were harmed by their mortgage servicers when their loans became unsustainable and they needed help to save their homes. While this and other programs seek to prevent future foreclosures, the IFR stands alone as an effort to begin to make borrowers whole. This is significant because of the harm caused by the foreclosure crisis. While foreclosures have affected virtually every community, certain communities have suffered more than others. During the heyday of subprime lending, communities of color were flooded with unsustainable subprime loans. Borrowers who should have gotten safer, cheaper prime loans were given subprime loans because they were more profitable. This happened to borrowers of color much more often than to white borrowers. Not surprisingly, these borrowers have suffered much higher rates of foreclosure and they and their neighbors have lost tremendous wealth as a result.

We hoped the IFR would begin to set things right, but from the beginning it’s been plagued with a lack of transparency and accountability that has undermined its success. It has failed to identify borrowers who suffered harm and in doing so to shed light on the nature and extent of the problems in the mortgage servicing industry. It has not provided adequate compensation to borrowers, and to date it has failed to bring about the kind of servicing reforms that are needed to prevent future unnecessary foreclosures.

With the announcement of the new settlement in January, the IFR game has changed. With the rest of my time I’d like to highlight some concerns with the settlement’s 5.7 billion dollars worth of non-cash assistance and some ways in which the regulators can increase the positive impact of their consent orders.

So this so-called soft-dollar side of the IFR agreement is similar to the structure of the National Mortgage Settlement, or NMS. Unfortunately, the particulars differ from the NMS in three key ways that severely deflate the value and limit the impact of these soft dollars.

First, it fails to make saving homes a priority. It places loan modifications, which can save homes, on an equal footing with short sales and deeds in lieu, which do not.

Second, it gives the servicers credit based not on the amount of loan principal they forgive but on the unpaid balance of the loan. This creates an incentive to modify loans with large balances, because that’s the fastest way for the servicers to get the most credit. It will likely mean that many fewer loans are modified than could have been the case.

And third, this approach places borrowers of color and low and moderate-income borrowers at a disadvantage because they tend to live in communities where home values and loan balances are smaller. Modifying their loans will put the servicers on a slower road to meeting their soft-dollar goals.

We are very disappointed that the settlement was structured this way and were concerned that many homes that could have been saved from foreclosure will be lost. However, there are two areas in which we believe the regulators can still make a positive impact in implementation of the IFR settlement.

The first is the area of transparency. We have asked the regulators to make public detailed information about who’s getting help as a result of this settlement, both through the direct cash payments and the non-cash assistance. These data must be broken out by servicer and by census tract so that the public can see whether the communities that have suffered the most are getting the assistance they need and deserve. The timely release of such information will help to hold the servicers accountable. It is also necessary to begin to rebuild public confidence in our regulatory system.

The second is the area of oversight. Despite all of the servicing rules that have been written and all of the scrutiny to which servicers have been subject, mortgage servicing abuses remain all too common. They must be brought to an end so that the millions of homeowners still at risk of foreclosure can get the help they’re supposed to get to save their homes. By stepping up their oversight and enforcement, the regulators can help accomplish this goal.

Recently the regulators have shown some interest in exploring these recommendations. I am hopeful that they will do so and that they’ll put them into action, but as long as problems persist in the mortgage servicing industry, we need you in Congress to keep up the pressure and continue your oversight. There are still some gaps in the servicing rules that must be closed, such as protections for people with limited proficiency in English, borrowers with disabilities, and the widows and heirs of deceased homeowners who can’t get help from their servicers. We look forward to working with you and the regulators to address these problems.

Thank you again for the opportunity to testify today. I look forward to your questions.

Sen. Menendez: Well, thank you all very much, and we’ll start with a round of questions. Mr. Evans, the report by the Government Accountability Office found the following things – correct me if I’m wrong in any of them.

Mr. Evans, GAO: Okay.

Sen. Menendez: The goals of IFR to identify as many harmed borrowers as possible and ensure similar results with similar borrowers were not met.

The regulator guidance did not specify key sampling parameters to consultants for file review, resulting in delays and difficulty assessing borrower harm.

Limited communication with borrowers and the public adversely impacted transparency and public confidence.

Regulators considered releasing more data but expressed concern that doing so might disclose private information.

Borrowers faced significant gaps in promised review documentation from regulators and consultants, with some waiting over a year.

No standard sampling method or process between servicers or their independent consultants led to reduced reliability of data.

Regulators stopped the IFR process without having a sufficient and objective method, a sufficient and objective method, to determine if the proper number of reviews had been sampled to uncover borrowers’ harm.

Limited regulator monitoring and inconsistencies in consultant methodology increased the risk of treating borrowers with similar types of harm differently.

And regulators did not rely on stakeholder consultation enough such as housing counselors, community groups with expertise in loss mitigation and loan modifications.

Is that an accurate synthesis of the GAO report?

Mr. Evans, GAO: I think so, in general. But there are just a few technical notes I will make.

Sen. Menendez: Okay.

Mr. Evans, GAO: Is that the regulators, the rationales that they gave us for stopping the Independent Foreclosure Review were due to concerns about potential outcomes and they wanted to get money out quickly to potentially harmed borrowers. So we, in our report we say that the achievement of the goals were hindered by a number of missteps by the regulators.

Sen. Menendez: So, let me ask you and maybe Miss Goldberg, one of the main purposes of the review is to have data to enable you to tell if a bank had a particular kind of file or type of mistake that it was repeating so you could dig deeper into their other files. Since the OCC and the Federal Reserve abandoned the review, to what extent will they be able to further examine whether certain banks committed systematic errors in their foreclosures, based on either preliminary results or based on information that they gathered through regular bank examinations or other sources?

Mr. Evans, GAO: And that is – I think that is the right question, and I think –

Sen. Menendez: I only ask the right questions.


Sen. Menendez: I’m just kidding. I think it is an important question, though.

Mr. Evans, GAO: It is. And I think that’s a good place for me to assert that any information based on the IFR at this point should be deemed incomplete, and the data does not allow us to render any conclusions about error rates at a particular servicer or make comparisons across servicers, despite what’s been reported in the press. They were at different degrees of completion, across the servicers, variations in the type of files that were reviewed varied, and also even if it were complete, depending on the sampling methods used, it’s possible that this information would still have limits. So it’s impossible to draw any inferences about the data, because they’re not representative. So it’s – you know, we’re limited in terms of what we actually know.

Now the regulators could have additional information and additional judgments that may help them make decisions about safety and soundness and corrective actions, but at this point we haven’t done that type of work to determine what we know and whether it’s statistically valid.

Sen. Menendez: Is that information that would be accessible to you if we asked you and charged you to do that?

Mr. Evans, GAO: As part of our ongoing review, we will start to look at those issues. We’re more than willing to discuss with your staff the protocols governing our audit documentation, including any legal or privacy considerations such as those concerning banking information or any agency determinations that might be relevant, but we will continue to do this work for you and to have conversations with your staff.

Sen. Menendez: Thank you. Miss Goldberg, do you have any comments about this? If you’ll put your microphone on, please.

Ms. Goldberg, NFHA: I would add one thing, which is that one concern we had all along with the methodology was the potential problem that the files themselves would not be enough to understand the problems that borrowers experienced. So, for example, one of the most common problems that borrowers encountered was servicers losing their documents and having to resubmit them over and over and over again. Or borrowers being told the wrong information. “You have to stop making payments before we can consider you for a loan modification.” You know, things along those lines. And it’s not clear that anybody examining just the files would be able to tease out that kind of information and understand those kinds of errors, and in order to do that what’s really necessary is for whoever’s doing the review to be talking, at least in selected cases, to homeowners themselves or to the advisers who work with them, housing counselors or attorneys. That’s something that never happened as part of this process. It would be wonderful if it were to happen as part of a follow-up review, because I think you are completely right that getting to the bottom of this and understanding more clearly what problems actually took place – you know, how widespread they were, where, what kind of borrowers were affected – is a really important lesson for us to be able to take away from this whole crisis in order to prevent it from happening again.

Sen. Menendez: One other – I have a ques– I have a whole host of questions, but one more before I turn to Senator Merkley. The OCC and the Federal Reserve determined that 8.5 billion would be enough to cover the harm caused to borrowers, yet we know from the GAO study that there were numerous issues with sampling and instruction to the independent consultants. So how could the OCC and the Federal Reserve possibly determine that 8.5 billion dollars, which would include 3.6 billion in direct payments to borrowers, is enough money to help these victims?

Mr. Evans, GAO: Mmhmm. And so that question was outside the scope of this particular study, but it is a question that we will be considering going forward.

Sen. Menendez: Well, it’s a question that we’re going to look to work with you. I know that Congresswoman Waters also is joining us in this effort from the House side, and I really want to know that. Because if people went through harm, then at the end of the day you have to have the resources to address the harm. And to come to a figure that is defective, from my perspective, because you don’t have the sound science, so to speak, to make that determination, is at best a guess. Miss Goldberg, do you have any comment on that?

Ms. Goldberg, NFHA: I’d say it’s probably a low-ball guess.

Sen. Menendez: Senator Merkley.

Sen. Jeff Merkley (D-OR): Thank you very much, Mr. Chairman. Thank you all for your testimony. Mr. Smith, I wanted to start with a feature that was well publicized of the National Mortgage Settlement which said in many cases banks essentially wrote off the second loan that they had in the portfolio while not lowering the first loan, which was the bulk of the challenge for the homeowner. Did this for families that were essentially headed for foreclosure, in other words, did little to help the homeowner. And how did this process of basically acting only for the loan you hold and not for the one that would affect the core of the family’s success come about? Why was that acceptable?

Mr. Smith, NMS Monitor: Well, Senator, the question you ask is important. The structure of the settlement itself as I got it – I’m administering it the way I found it. And so the settlement allows for different valuations, credits for different kinds of second loan forgivenesses. The highest credits would be for performing loans or for loans where there is a – where it is done in conjunction with a first loan reduction so that you have more affordability. But the data doesn’t show that a lot of that’s been done to date. The settlement does permit credit at 10 cents on the dollar, by the way, not dollar for dollar, for expungement of second liens as a goal, in the effort to – what the settlement documents say is to increase the prospects for future homeownership by the borrower. It has been brought to my attention that it has been in the public domain a discussion about the issue of whether in certain circumstances the second lien release does the borrower any good. I will say the fact that a loan has been written down, of course, does not mean it’s – the loan itself is still a legal obligation of the borrower. Even after foreclosure, the note itself, in some states, not all, will be an obligation. So it’s not clear that it won’t always benefit the borrower. But I think what the settlement does do is to credit second lien forgivenesses most where they do the most good from the perspective of the question you’ve just asked and least where it does the least good. And that’s about all I can say to answer your question.

Sen. Merkley: Thank you. Mr. Holland, I want to turn to the consultants who worked on the IFR, and we had testimony in front of Sherrod Brown’s subcommittee that the folks, the consultants who worked on it had no idea how it was that individual homeowners got placed into different categories of possible financial harm. It’s my understanding that that decision was actually made by servicers. How is it that the consultants who were doing the reviews had no idea of how individual homeowners got into different categories of financial harm?

Mr. Holland, Rust: When you say consultants, are you talking about the independent consultants?

Sen. Merkley: That is my understanding, yes.

Mr. Holland, Rust: I don’t have knowledge of how that process or how that process came about. We received the categorizations directly from the servicers and the OCC provided us with the dollar amounts that corresponded to those categorizations.

Sen. Merkley: How would the servicers, who had not been the ones reviewing the files and had been essentially at the heart of so many pieces of dysfunction, possibly be a responsible party for putting people in the categories of harm?

Mr. Holland, Rust: I don’t know. I don’t have an answer for that question. I wasn’t involved in that process.

Sen. Merkley: Miss Goldberg?

Ms. Goldberg, NFHA: I’d like to correct one thing, Senator Merkley, which is that when the independent reviews were stopped, the decision was made not to find harm, not to worry about finding harm. So the categories, as I understand it, the categories that borrowers were placed in for purposes of payments was based on how far along they had gotten in the loss mitigation process, or the foreclosure process, with their servicer. So the fact that a particular borrower was in a particular category wasn’t a reflection of whether they were actually harmed, but just kind of what stage of the process they had gotten to.

Sen. Merkley: I see.

Ms. Goldberg, NFHA: But I think that your fundamental question is a very good one. If we know that the servicers made the mistakes to begin with, and we know that their systems were highly flawed, putting them in the position of slotting people into different categories seems unwise.

Sen. Merkley: Miss Goldberg, when this IFR was announced, we had a hearing to have it explained to us and I raised the question on how is it that homeowners would feel confidence that their condition was going to be reviewed when they’d had so many frustrating experiences to date and that the reviewers were being hired not by an independent strategy but by the banks themselves, and that these reviewers weren’t third party, that they had clear financial connections to the banks themselves, and I think then the fact that homeowners were promised a review and didn’t get the review just kind of, if you look at it from the street level, it seems like just one more farce. Is this far off the mark? That’s a technical term, of course.

Ms. Goldberg, NFHA: (laughs) Well, I would say that the feedback that we hear is a lot of frustration and disappointment and confusion from borrowers on the street who I think don’t have confidence that this process played out in a fair and even-handed manner.

Sen. Merkley: I have more questions, but I’m over my time, so I’ll kick it back to the chair.

Sen. Menendez: And we’ll go through another round. Let me ask Miss Goldberg, if the settlement provides around 5½ billion dollars in other forms of consumer mortgage-related relief such as loan modifications and principal reduction – some people refer to that as soft dollars. So I’d like to hear, to the extent that you know, more about how those soft dollars are being used to help the borrowers, to keep borrowers in their homes, and how lenders are being credited under the IFR settlement for taking such actions. For example, if a borrower has a $200,000 mortgage and receives $20,000 in mortgage relief, how is that relief calculated under the IFR settlement, and are servicers doing all they can to keep homeowners in their homes? And I’d like to get a sense from Mr. Smith from the National Mortgage Settlement, how are those soft dollars calculated for that purpose under your settlement, and can you explain how each category is credited? So.

Ms. Goldberg, NFHA: Thank you, Mr. Chairman. So this process has not actually started yet, at least to the best of my belief, and I’m not sure what the launch date will be, but we’ll get hopefully more information as time goes by. But in terms of the way it’s structured, what we know is that there are some specified categories of activity for which the servicers will get dollar-for-dollar credit. So that includes principal reduction, you know, loan modifications with principal reduction on first liens and second liens, short sales and deeds in lieu of foreclosure. So for those four categories of activity, they’ll get dollar-for-dollar credit. So that’s a difference from the National Mortgage Settlement, and Mr. Smith can explain those details much more accurately than I. And in addition, another difference from the National Mortgage Settlement is that rather than getting credit for the amount – so, take a loan modification. The amount by which the principal is reduced, the $20,000 in your example, servicers will get credit for the full unpaid principal balance of that loan, or the $200,000 in your example. So the borrower is still going to owe $180,000 and presumably with the loan modification will be able to repay that $180,000, and the $20,000 is really the benefit that they’ve experienced but the servicer’s going to get credit for the entire $200,000.

Sen. Menendez: What’s the public policy idea behind that?

Ms. Goldberg, NFHA: I cannot answer that question. (laughs) I cannot answer that question. I think, you know, it raises a lot of very serious concerns, some of which I mentioned in my testimony, and for us, one of the key ones is –

Sen. Menendez: If I could get ten times my investment in write-off, I’d like to have that opportunity.

Ms. Goldberg, NFHA: Right. And it certainly would encourage you, if you were the servicer, to do the biggest loans, you know, work on the biggest loans that you can, because that’s going to be the fastest route to meeting your goal, whatever that might be, you know, for your soft-dollar credits. The down side of that is that, you know, the communities that we know experienced the most harm, low and moderate-income communities and communities of color, where housing prices are lower and therefore loan balances are lower – you know, it’s going to take more of those loans to get to the same soft-dollar goal and the chances are too big, in our estimation, that those loans will be put aside, that’s not where the priority will be focused, and instead it will be the higher-income, higher-balance loans that will get the first cut.

Sen. Menendez: That’s a real concern. That’s a real concern. Mr. Smith, how does it work under yours?

Mr. Smith, NMS Monitor: Very well. Under the National Mortgage Settlement, there are certain categories of relief that are required to be not less than a certain percentage of total relief. Now I’d like to exclude for a moment, only because it’s somewhat separate, refinancing assistance is also required in each of the settlements, a specific dollar amount based on – there is a formula there, but it’s essentially a multiplier based on yearly interest savings, given, multiplied by a multiplier affecting the remaining maturity of the loan. So that’s – the principal forgivenesses must comprise 60% of the total relief, soft-dollar relief credited otherwise. And I’d like to emphasize credited, because this is important. So, for example, and half of that 60% has to be first-lien principal forgiveness.

Now somewhat to Senator Merkley’s point before, if a bank is a servicer and owner of a loan and forgives – and the loan has less than 175% loan to value – I’m going to simplify this slightly, but I mean it’s less than 175% LTV, owned and serviced – if let’s say $45,000 is written down, $45,000 of credit is given, so the amount of relief and the credited amount are the same. If on the other hand a bank has originated the loan, is still servicing it, sells it into a securitization, to get $45,000 of credit it has to write down $100,000. In other words, it’s 45 cents on the dollar, so that the thought again was, the theory as I understand it, was there is a concern about servicers getting credit for loans not owned by them, and so at the very least what the settlement does is to give less credit for that in that circumstance. There’s a different crediting for more than 175%.

Second liens, which have been discussed, forgiveness of a loan that’s less than 90 days past due, or not – 90 days delinquent, which is different, delinquent – is 90 cents on the dollar; 91 to 179 days is 50 cents on the dollar, and as I was saying before, 180 days or more past due is 10 cents on the dollar. So again, but those, the amounts credited have to be 60% of the credited relief has to be principal forgiveness and half of that at least has to be first-lien principal. In the case of ResCap, which we just did, actually it was more than 50% was first-lien forgivenesses –

Sen. Menendez: Well, that appears to be a far more equitable process than the –

Mr. Smith, NMS Monitor: And I could go on, but it’s pages. But I mean, for each category of relief, I do think you can argue about the price, you can argue about the number of cents on the dollar, but I do think the settlement attempts to give credit that mirrors the benefit to the borrower, roughly, in a pretty good way.

Sen. Menendez: That should, in my mind, be the principle.

Ms. Goldberg, NFHA: And if I could add one thing, Senator. One other difference is – so Mr. Smith talked about the 60% of the credits under the National Mortgage Settlement have to be for principal reduction on first liens, right? That’s what you said.

Mr. Smith, NMS Monitor: [muted sound, unclear]: Well, on total – 30% has to be –

Ms. Goldberg, NFHA: Okay. There’s no kind of limits like that under the IFR settlement. So it would be possible for a servicer to meet their entire goal by doing short sales and deeds in lieu. It’d be within, you know, the bounds of the settlement as it’s written.

Sen. Menendez: And that wouldn’t necessarily maximize the goal of keeping people in their home.

Ms. Goldberg, NFHA: It would not.

Sen. Menendez: Senator Merkley.

Sen. Merkley: Thank you very much, Mr. Chairman. I wanted to continue on this same issue. In your testimony, Miss Goldberg, on page 10, you note that on a loan with an unpaid balance of $500,000, a loan modification that provides any amount of principal reduction, be that $1,000 or $10,000 or $100,000, yields $500,000 worth of credit for the servicers. It’s hard for anyone apart from this process to truly believe that if you do a $1,000 reduction you get $500,000 of credit, yet are you saying absolutely that’s the way it works?

Ms. Goldberg, NFHA: That’s what it says in the settlement. I have to say, Senator, that when I first read the settlement I didn’t pick that up because it was so hard for me to believe it could be structured that way as well, but in fact that is the wording of the settlement.

Sen. Merkley: Mr. Holland, is this accurate, to your knowledge?

Mr. Holland, Rust: I have no knowledge of the way the settlement was written. In our role, you know, we have the administrative back office tasks at hand, mailing, phone calls.

Sen. Merkley: But you’ve heard this issue. You haven’t found anything that contradicts what Miss Goldberg has said?

Mr. Holland, Rust: No. No I haven’t.

Sen. Merkley: Okay. Well, I’d just to point out that the roughly 6 billion of small, in soft money that’s in the settlement, at that 500 to 1 rate, that is reduced down to 12 million dollars. Six billion goes to 12 million dollars. That’s a vast difference. Now you’ve pointed out, Miss Goldberg, that this creates a pure incentive to do reductions on large loans. Now, I live in a working-class neighborhood, three-bedroom ranch houses. There are no $500,000 mortgages where I live because there’s no $500,000 houses. So your point in your testimony is that working-class communities, and certainly communities of color, are essentially – there’s an incentive to kind of bypass them. Why would the Fed and the OCC agree to a structure that allows a 500 to 1 or more – for that matter, it could have been $1 under the argument you’re making rather than $1000. Why would they agree to such a fictitious form of accounting and a structure that incentivizes the bypassing of working Americans in this whole process?

Ms. Goldberg, NFHA: I think that’s an excellent question, Senator Merkley. I’m afraid I can’t answer it. It would be a good question to ask them to explain.

Sen. Merkley: Has anyone at the OCC or Fed explained, given a rational explanation, of what they were possibly thinking?

Ms. Goldberg, NFHA: At one point I heard one person say that they believed that this structure accurately reflected the value of the assistance that the borrower received. That’s the only explanation that I’ve heard, and it’s not one that I find credible.

Sen. Merkley: Well, I’m not sure how a borrower who gets $1,000 relief would feel if he’d gotten $500,000 of relief.

Ms. Goldberg, NFHA: That’s right.

Sen. Merkley: Well, and it’s our working-class neighborhoods have been hit so hard, and in our communities of color where folks might have been more recent homeowners and had less equity, they weren’t a case of losing a share of their equity, they were losing their entire house.

And that brings us to the third point you’ve raised, which is that essentially there’s no emphasis on saving the family, that a short sale gets the same value as preventing a foreclosure. Why would a settlement intended and publicized to help the homeowner put the same weight on a situation where a family loses a home as on a situation when a family is able to keep their home?

Ms. Goldberg, NFHA: It’s another excellent question to which I don’t have an answer. And it’s really because of those flaws which, you know, we view as being extremely serious and severely undermining the potential benefit of this settlement, that, you know, it’s a done deal, right? The ink has dried on these settlements, and I don’t have the sense that there’s any desire on the part of either the regulators or the servicers to go back and renegotiate them. And so for us that means it’s really important to try and think about the places where something good can be rescued from this. And we see the two avenues to that being putting detailed information about who is getting help out there in the public arena, doing it regularly and in a timely fashion so that all of us can see who is and isn’t getting help, and to hope to shape that a little bit.

Sen. Merkley: So you’re asking for data on a census-tract basis –

Ms. Goldberg, NFHA: That’s right.

Sen. Merkley: – so this can truly be evaluated, which is transparency and accountability.

Ms. Goldberg, NFHA: That’s right.

Sen. Merkley: Is that guaranteed now, or does that require some future decision, and where would that decision-making power lie?

Ms. Goldberg, NFHA: So, as I understand it, and I think as actually reflected in the settlement itself, the servicers are required to report on a 45-day schedule to the regulators. I believe that they’re still in the process of deciding which information that they will ask servicers to collect and report, and they have told us they are prepared to put some data out there in the public arena but we don’t know yet exactly what that will look like or how often that will be made available to the public, you know, when and how often.

Sen. Merkley: Mr. Chairman, I would be interested in pursuing this in partnership with you, that we should ask for such data to be part of this process for at least evaluation, looking back at what worked and what didn’t. Thank you.

Sen. Menendez: Thank you. I’m in agreement with the Senator and will be happy to work with him. Let me recognize our distinguished ranking member, Senator Moran, for any comments or questions.

Sen. Jerry Moran (R-KS): Mr. Chairman, thank you. I apologize for my lack of presence this morning. I’m also the ranking member on an appropriation subcommittee that’s meeting this morning with Secretary Duncan. But I wanted to at least make an appearance here at our first subcommittee hearing and express my desire to be an active and full participant in this subcommittee and look forward to working with you, Mr. Chairman. Real estate, housing, is such an important component of the economy, but on a personal level so important to individuals in their lives, their families. So I’m only here for a few moments to make certain that you and others understand the desire on my part to work with you to see that our subcommittee fulfills its responsibility in oversight as well as in pursuing legislative proposals to meet the real estate and housing needs of our country, and I look forward to working with you, Chairman Menendez.

Sen. Menendez: Well, thank you very much, and we look forward to working with you as well and through a robust agenda and hopefully can continue to spur our housing market and solidify those who are in their homes, try to keep as many as possible, and continue to make this a cornerstone of our American success with families. So thank you for coming by today.

I have another question or two, if I may. The foreclosure review payment agreement provides almost two times the amount of relief to borrowers who requested a review compared to those who did not. In my previous hearing and throughout this process, I have expressed concerns about outreach efforts to our underbanked communities, and without documentations from these reviews I believe it’s safe to say we still don’t know whether folks in these communities who were greatly impacted were ever aware of their right to review. So my question is, are we giving the borrowers who may have never been contacted, therefore who never requested a file review, the short end of the stick by offering them almost half of the relief as those who did request a review? Do you have any experience with that, Miss Goldberg?

Ms. Goldberg, NFHA: Yeah, thank you, Senator. So I think the GAO did an excellent job of outlining some of the problems in the outreach efforts around particularly the Request for Review part of the Independent Foreclosure Review, and we certainly had lots of concerns about communities in which people just weren’t aware that this process was going on, and I suspect if you stopped the average person on the street today, most of them would never have heard of the Independent Foreclosure Review. I think as the result of the GAO’s work, late in the game the regulators made some very helpful changes in the way that they were doing outreach, in particular working much more closely with community groups who could reach directly into communities where response rates had been low and do a better job of making sure people knew that they had the opportunity to file a Request for Review. And indeed in the last I guess six weeks or so of the year, right before the final deadline, the number of requests that came in went up significantly. But even at its high point, it was only, as I understand it, a little bit over 500,000 folks who filed a Request for Review out of 4 point some odd million. So it’s still 11%, or something like that, of the overall kind of in-scope population who ever filed a Request for Review. And my guess is that a great many people just never knew that was an option. They certainly, even if they knew it was an option, they didn’t know that it would have any impact on the amount of compensation that they would receive, because that decision wasn’t made until after the deadline passed to file a Request for Review. So I have a grave concern about the level of differential in payment that is being awarded to people who filed a Request for Review and those who didn’t. As you point out, in many cases it’s double, and I think there are a lot of people who never knew this was an option for them who are suffering as a result.

Sen. Menendez: As do I. If you knew that a review was likely to result in an increase in the relief that you received, then, number one, if you knew about the review process, and secondly you knew that as a metric it would be more likely that you would receive greater relief, then it would be overwhelming that people would respond to receive the greater relief.

Ms. Goldberg, NFHA: You would think so.

Sen. Menendez: So this is a part of transparency that lacks here, because had that standard been set, we would have known. Mr. Evans, did you find this in your GAO report?

Mr. Evans, GAO: Well, what I can say here is that in terms of the recommendations we offered about the borrower outreach, the regulators did respond by targeting communities based on various characteristics and they did increase their outreach efforts in terms of the print advertisements, the radio and television spots, and they also did some type of market analysis to identify areas and ethnic groups.

Sen. Menendez: This is as a result of your –

Mr. Evans, GAO: As a result of our recommendations. So that, that is someplace we can give the regulators credit, but –

Sen. Menendez: All right, so let me – in the same vein, let me follow with Mr. Holland and Mr. Smith. I don’t want you to feel out of the conversation, Mr. Holland, so I have a few – there’s a reason you’re here. I understand it’s a very large undertaking for your firm, and certainly the pressure on getting these payments out in a proficient manner, so I appreciate you coming before the committee today. But as you may know, the IFR had many flaws related to outreach, to materials, to assistance for those who speak languages other than English as their main language. Can you provide an update on the efforts that your company is taking to make sure we don’t make the same mistakes this time around as we did with the IFR? For example, what channels are available to homeowners who contact Rust if they have questions or issues that need to be addressed? What steps or action plans are in place to actively or effectively communicate with borrowers? If somebody calls Rust and English is not their dominant language, is there other language abilities to be dealt with? Give me a sense of how you’re working your job of this.

Mr. Holland, Rust: We have a call center and we’re taking calls, you know, currently from people who have received the postcard notice as part of the settlement and now our first wave of checks that went out on Friday. So we do have a phone bank ready to answer any and all questions that we get from affected borrowers. We have on-site Spanish-speaking operators that can assist Spanish-speaking people, and there is a process by where we can use a third party to help translate I believe it’s up to 200 languages if somebody calls, you know, and has a language that we’re not supporting live with Spanish or English, and we can get an operator on the phone that can help them. In terms of the – your other question about, you know, are we making efforts to reach out to people? You know, we’ve had the data, the mailing data, for this group of people going back to the IFR and it went through several levels of mailing address correction that we performed. So when we had the settlement, we started with that address information and once again ran it through the national change of address database, and we’re mailing checks, you know, to the best address that we have currently. Some of those will be returned as undeliverable, and we will make other attempts to find better address information for those that are undeliverable. And there’s nothing in place yet, but we’ve had conversations about taking additional steps beyond what we’ve done in terms of address trace. We could implement an outbound calling program, e-mail blasts. There’s all sorts of things that may be available to us. Nothing’s set yet, but those discussions are happening.

Sen. Menendez: Those are discussions with the servicers?

Mr. Holland, Rust: With the OCC and the FRB.

Sen. Menendez: With the OCC and the FRB.

Mr. Holland, Rust: Yeah. And to the extent that, you know, the – even to the extent that somebody may receive a check and lose it, we will have information from the bank that shows us which checks are cleared and which checks aren’t. The regulators have said they want to leave the account open for up to two years, so that’ll give us ample time to even investigate those who don’t cash checks, and we can reach out to them to make sure that they received it and that they get a chance to cash it.

Sen. Menendez: Mr. Smith, with the National Mortgage Settlement, it required those five major mortgage servicers to comply with extensive servicing standards including requiring a single point of contact for borrowers, adequate staffing levels and training, better communication with borrowers, appropriate standards for executing documents in foreclosure cases, ending improper fees, ending dual-track foreclosures for many loans. Now there have been some reports that there are abuses that are still occurring even for borrowers that are part of the settlement. Can you provide an update on what you’re seeing and hearing as it relates to these mortgage servicing standards? How far along have the lenders come in terms of implementing the new standards? And give us a sense of how that’s moving forward.

Mr. Smith, NMS Monitor: I will, Senator. Well, the standards were in place effective October 2nd or 3rd, 2012, so they are all to be applicable now. I think what needs to be understood about the settlement is that my enforcement capacity, as I’ve said in my written and oral testimony, is based on metrics, which are tests of particular aspects of the standards. We will issue our first report – I am – we intend to issue a report on our initial testing of that performance in May. I mean I say, I say intent only because these are, we’re doing a very thorough job, and I don’t – if I’ve learned one thing from what I’ve heard today, it’s don’t rush to judgment. We’re going to be sure we do a thorough job before we issue a report to the court and to the public. But I think I’m hopeful that we will get done by the end of May. This will give us the beginning of insight based on sampling under the settlement, which by the way will be done under consistent standards so it will be comparable across servicers, so we will be able to compare performance. And so I’m hopeful that will begin to be some answers for you. In our work this year, and because I’ve gone out and talked to a number of people who represent distressed borrowers, we believe we need additional metrics, that the metrics we have are good but we need to fill in some spaces, and so I’m hopeful within the next month also to get some additional metrics out, including an additional one. We have one on single point of contact that will be tested, will be in our first report. We need more. The metric’s okay but it needs supplementation, and I think on a couple of other topics we’ll do the same thing.

I think it’s – I’m going to tell you about a conversation one of my colleagues – to answer your question generally how are they doing. One of my colleagues, Josh Stein, had a Skype conversation with New Jersey advocates and counselors this last week, and what he heard were two things, and I want to make sure we – I’ll tell you both. The first was that they are beginning to see an increase in responsiveness by the servicers over what they had experienced in the past. Quicker responses – they may not like the responses but they’re getting it quicker. Less lost documents, less static – not no static, but less. They did not say they were satisfied. There are still issues of concern and contention that need to be worked out. We’ve got a long way to go.

And so I think the fair thing to say is I believe we’re better off now than we were a year ago, at least with regard to the five, as a result of the settlement, but I’m not declaring victory. I think we’ve got a lot more work.

Sen. Menendez: And just to follow up in your answer, all the elements that I mentioned that are part of the settlement, do you have metrics as it relates to all of those elements?

Mr. Smith, NMS Monitor: No. I can’t honestly say that. I think the metrics – I think it’s fair to say that the metrics cover a broad enough representation of what’s required under the settlement to be pretty representative, but the short answer to your question is there are – I’ve got it here actually – 113 of the 304 are mapped to particular – of the standards are mapped to metrics. That leaves a number not mapped. So what we’re doing, Senator, I think it’s fair to say, is to give, I believe, a good insight and a good – will give a good representation of where the servicers are, but it is supplemental to what their primary regulators, what the CFPB and others need to be doing going forward.

Sen. Menendez: So let me close to one other question to you which is in line with some of what we’re talking about. I understand that most of the information that you are now able to report has been self-reported by the banks. Is that accurate?

Mr. Smith, NMS Monitor: Yes.

Sen. Menendez: Okay. And while I’m somewhat troubled by that idea, because that hasn’t been a particularly good record by some of these institutions, can you explain what authority you have as the monitor to verify the information you receive from these servicers? How are you able to determine from the data that your recent reports will be accurate, and is there any policy in place that would allow you to verify information in cases where you felt the self-reporting data lacked accuracy?

Mr. Smith, NMS Monitor: Yes, the short answer – first, the self-reporting is the servicer, that is to say the firm, reports responses to these metrics, the questions on the metrics tests. The servicers are required by the settlement to establish an internal review group which is to be separate from the mortgage servicing and the mortgage line of business. So it is – I would analogize it to the independent audit capacity in most organizations which is to be to report separately outside the business operation. That independent review group will itself assess whether it agrees. It will test itself, and will test whether it agrees with the servicers’ assertion of compliance. I then have an accounting firm of my own which reviews the work papers that the IRG has produced and has the capacity – and we have done additional tests, and we’ve asked additional questions, and we’re going to – we’re doing our best to tease out of all of what we’ve gotten all the information you can get to assure that what they’re telling us is true. One reason I can’t tell you for sure we’re going to report in May is because we’re having prayer, shall I say, over a bunch of items now with regard to some of the servicers. So we will – what we’ve got is what I would say is a targeted approach to determine compliance, but we’re going to do our very best to assure that we get everything we can out of that process and publicly report it so you can review and see what you think, how you think we did. I mean, I think, I’m under no illusion that what we report won’t be widely read and discussed, and that’s good, that’s intentional.

Sen. Menendez: Well I can assure you it will be widely read by this committee.

Mr. Smith, NMS Monitor: I’m sure it will.

Sen. Menendez: Let me thank you all for your testimony. I – it’s been very elucidating in many respects. I have real concerns, as I have expressed early on to the regulators about this, and unfortunately my concerns that were expressed going back some time ended up being unfortunately the reality. It is the intention of this committee to continue to pursue all the elements of this as we move forward with the regulators. I think that Miss Goldberg’s suggestions, making the best of what we have right now, are important ones and I look forward to pursuing that as well. At the end of the day, those who were harmed should have the appropriate relief. They should know what that relief can be, they should be able to maximize that relief, and it seems to me a little perverse that you can get a lot – that the servicers, the institutions, can get a lot but do a little in comparative ways, much different than the National Mortgage Settlement process. So those are real concerns to me as the chair, and I will look forward to continuing to pursue this.

This record will remain open for two days for any members who have questions for the record, and with the thanks of the committee this hearing is adjourned.

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