Letter to Eric Holder, Attorney General, US Department of Justice, Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, and John Walsh, Acting Comptroller of the Office of the Comptroller of the Currency - Requesting Investigations into Wrongdoing by Financial Institutions

Letter

Last week, the California Democratic Congressional Delegation, which I Chair, sent a letter to Attorney General Holder, Federal Reserve Chair Bernanke, and Acting Comptroller of the Currency Walsh requesting investigations into systemic wrongdoing by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures. Delegation members received thousands of complaints from their constituents, which appear to outline a clear pattern of misconduct on the part of lenders and servicers. After reviewing these complaints, it appears that we aren't dealing with isolated incidents and that a pattern of misconduct and obstruction is present. It's clear that even after promising to work with borrowers, and receiving government incentives to do so, financial institutions are simply stringing the American people along.

This week it appears that our call has been heard, a coalition of 50 state attorneys general, including California's, will launch an unprecedented probe into the activities of the mortgage-servicing industry. I look forward to the results of this investigation and urge that it be conducted as expeditiously as possible to ensure that the abuses we've seen in California are put to an end.

Letter:

October 4, 2010

Eric Holder, Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW, Room 1145
Washington, DC 20530

Ben S. Bernanke, Chairman
Board of Governors of the Federal Reserve System
Twentieth Street and Constitution Avenue, NW
Washington, DC 20551

John Walsh, Acting Comptroller
Office of the Comptroller of the Currency
U.S. Department of the Treasury
250 E Street, SW, Room 9048
Washington, DC 20219

Dear Attorney General Holder, Chairman Bernanke and Acting Comptroller Walsh,

As members of the California Democratic Congressional Delegation, we urge you and your respective agencies to investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures.

Over the last few years, thousands of our constituents have reported that many financial institutions, despite good faith efforts on the part of most homeowners to work out reasonable load modifications or simply seek forbearance of foreclosure, routinely fair to respond in a timely manner, misplace requested documents, and send mixed signals about the requirements that need to be met to avoid foreclosures. We are particularly perplexed by this apparent pattern in light of the many incentives Congress and the Obama Administration have offered to services and lenders to avoid foreclosures where financially viable, including subsidies and loan guarantees from taxpayers. Avoidable foreclosures end up being unnecessarily costly for homeowners, lenders and servicers, and our housing market, whose health is essential to our economic recovery.

The apparent pattern reported by our constituents leads us to conclude that their problems are not just personal anecdotes anymore. Recent reports that Ally Financial (formerly GMAC), JP Morgan, and Bank of America may have approved thousands of unwarranted foreclosures only amplify our concerns that systemic problems exist in the ways many financial institutions have dealt with homeowners who are seeking to avoid foreclosures.

We are now in the third year of the worst housing crisis we have seen in decades. Far too many families in California, and across the country, continue to lose their homes. While Congress and the Obama Administration have taken steps to help mitigate the housing problem, this devestation has persisted and, in fact, worsened as the country's unemployment rate increased. We have heard numerous stories of financial institutions being uncooperative at best or misleading and acting in bad faith at worst. These heartbreaking stories are commonplace, persisting across the state and across lenders and servicers. As you can see from the attached document which highlights examples of casework throughout California, it appears that banks have repeatedly misled and obstructed homeowners from receiving the help Congress and the Administration have sought to provide.

The excuses we have heard from financial institutions are simply not credible three years into this crisis. People in our districts are hurting. We have tried to help them in the face of the many challenges they have faced in their dealings with financial institutions. It is time that the banks are held accountable for their practices that have left too many homeowners without real help.

Sincerely,
Zoe Lofgren, Member of Congress
Nancy Pelosi, Member of Congress
Joe Baca, Member of Congress
Xavier Becerra, Member of Congress
Howard Berman, Member of Congress
Lois Capps, Member of Congress
Judy Chu, Member of Congress
Jim Costa, Member of Congress
Anna Eshoo, Member of Congress
Sam Farr, Member of Congress
Bob Filner, Member of Congress
John Garamendi, Member of Congress
Jane Harman, Member of Congress
Michael M. Honda, Member of Congress
Barbara Lee, Member of Congress
Doris Matsui, Member of Congress
Jerry McNerney, Member of Congress
George Miller, Member of Congress
Grace Napolitano, Member of Congress
Laura Richardson, Member of Congress
Lucille Roybal-Allard, Member of Congress
Linda Sanchez, Member of Congress
Loretta Sanchez, Member of Congress
Adam Schiff, Member of Congress
Jackie Speier, Member of Congress
Pete Stark, Member of Congress
Maxine Waters, Member of Congress
Diane Watson, Member of Congress
Henry Waxman, Member of Congress
Lynn Woolsey, Member of Congress
Mike Thompson, Member of Congress