Mortgage Foreclosures: Documentation Problems Reveal Need for Ongoing Regulatory Oversight Page: 3 of 16
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Franken, and Ranking Members Conyers, Gutierrez, and Capuano
requested.4
To conduct the work for our report, we reviewed relevant federal laws,
regulations, examination guidance, and other agency documents. We also
reviewed relevant literature, examples of reported court cases involving
these issues, congressional testimonies, and other relevant publicly
available documentation. In addition, we examined agency documentation
on current oversight activities, such as an examination worksheet,
checklists, and supervisory letters summarizing examination findings. We
conducted interviews with representatives of federal agencies, including
the Bureau of Consumer Financial Protection (CFPB), Federal Deposit
Insurance Corporation (FDIC), Board of Governors of the Federal Reserve
System (Federal Reserve), Office of the Comptroller of the Currency
(OCC), and Office of Thrift Supervision (OTS). We also interviewed legal
experts and representatives of the mortgage industry, investor groups, and
consumer advocacy groups. We conducted the work for the report from
October 2010 through April 2011 in accordance with generally accepted
government auditing standards.
In summary, until the problems with foreclosure documentation came to
light, federal regulatory oversight of mortgage servicers had been limited,
because regulators regarded servicers' activities as low risk for banking
safety and soundness. However, regulators' recent examinations revealed
that servicers generally failed to prepare required documentation properly
and lacked effective supervision and controls over foreclosure processes.
Moreover, the resulting delays in completing foreclosures and increased
exposure to litigation highlight how the failure to oversee whether
institutions follow sound practices can heighten the risks these entities
present to the financial system and create problems for the communities
in which foreclosures occur. As a result, we recommended in our report
that the financial regulators take various actions, including
* developing and coordinating plans for ongoing oversight of servicers,
* including foreclosure practices as part of any national servicing standards
that are created, andGAO-11-649T
4GAO, Mortgage Foreclosures: Documentation Problems Reveal Need for Ongoing
Regulatory Oversight, GAO-11-433 (Washington, D.C.: May 2, 2011).Page 2
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United States. Government Accountability Office. Mortgage Foreclosures: Documentation Problems Reveal Need for Ongoing Regulatory Oversight, text, May 12, 2011; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc293092/m1/3/: accessed March 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.