Flaws in Bank of America Corp.’s foreclosure paperwork haven’t caused the bank to seize any homes improperly, the president of the company’s home-loan division said in testimony prepared for Congress today.
Barbara Desoer of Bank of America, who will appear before the Senate Banking Committee, is among at least seven banking officials who will face lawmakers’ questions today and Thursday in the first Congressional hearings on the problems with foreclosure documents that surfaced publicly in September. Also scheduled to testify today is David Lowman, chief executive of JPMorgan Chase & Co.’s home loan division.
Lawmakers, who are returning to Washington for a post- election session before a new Congress takes office in January, said they will ask federal regulators as well as banking officials about what actions they have taken to ensure that foreclosures were fair and legal.
“Thus far we have confirmed the basis for our foreclosure decisions has been accurate,” Desoer said in her prepared testimony. “At the same time, however, we have not found a perfect process.”
Desoer and Lowman are to appear today along with Iowa Attorney General Tom Miller, who is leading a 50-state investigation into the way mortgage-servicing firms handled foreclosures.
“Our process was not what it should have been; quite simply, it did not live up to our standards,” Lowman said in testimony prepared for the hearing.
Because the congressional session lasts only a few more weeks and the calendar is already full, any legislative action related to foreclosures will likely wait until the new session in January.
‘Myth From Reality’
“This will be the chance for Congress on both sides of the Capitol to get their oar in the water relative to what’s happened since the news broke,” said Bill Killmer, senior vice president of legislative and political affairs at the Mortgage Bankers Association. “It’s also an opportunity for those who have been called forward to separate myth from reality.”
Today’s hearing will be conducted by Senator Christopher Dodd, a Connecticut Democrat who is chairman of the banking committee and is retiring from the Senate this year. South Dakota Democrat Tim Johnson, who is in line to succeed Dodd, said in an e-mailed statement: “I look forward to learning more about the situation, including what problems allowed for the breakdown in the process, what companies have done to fix problems and whether homeowners could have been foreclosed upon improperly.”
Ally Financial Inc.’s GMAC Mortgage unit, JPMorgan Chase and Bank of America temporarily halted foreclosures amid claims that legal documents were mishandled.
A coalition of state attorneys general announced an investigation on Oct. 13 in response to revelations that banks used so-called “robo-signers,” or people who sign affidavits without actually reviewing the facts underlying foreclosures.
On Thursday, Democrats on the House Financial Services Committee will hold one of their last hearings before they turn over control of the committee to Republicans, who gained a majority in the House in the midterm election.
The hearing will include officials from Bank of America, Wells Fargo & Co., Citigroup Inc., Ally Financial, and JPMorgan Chase.
Both the House and Senate panels will hear testimony from R.K. Arnold, CEO of Mortgage Electronic Registration Systems, or MERS, an electronic registration system for mortgage transfers which foreclosure and bankruptcy attorneys have accused of muddying ownership of titles. MERS is being investigated by the Office of the Comptroller of the Currency and several other regulators, Acting Comptroller John Walsh said in a Nov. 10 letter to Congress.
Democrats said they are concerned not only about foreclosures, but also about whether mortgage servicers are properly handling mortgage modifications intended to keep some homeowners from losing their properties.
“If many banks and servicers are not handling even basic foreclosure procedures correctly, it is likely that many are also not correctly evaluating homeowners for mortgage modifications,” Senator Robert Menendez, a New Jersey Democrat who is a member of the Banking Committee, said in a letter to Treasury Secretary Timothy F. Geithner that is scheduled to be sent today.
In the House, lawmakers will also call in overseers and regulators from government agencies, including the OCC and the Federal Housing Finance Agency.
Republicans on the committee said they want to examine government agencies responsible for overseeing mortgage lending. Republicans gained a majority in the House of Representatives, and will take charge of the chamber and its committees in January.
“I specifically want to know how this became a rampant problem without the federal and state regulators raising concerns until it was widespread,” Representative Shelley Moore Capito of West Virginia, the senior Republican on the subcommittee holding the hearing, said in an e-mailed statement.
The problems with paperwork at many of the nation’s largest mortgage servicers has led to a slowdown in foreclosures, which fell 9 percent in October from a month earlier, the biggest decline in a year.
RealtyTrac Inc., based in Irvine, California, reported on Nov. 11 that the number of foreclosures fell to 93,236 in October, from 102,134 in September.
Alabama Republican Spencer Bachus, who is likely to take over the chairmanship of the House Financial Services Committee in January, said Republicans will continue to meet with regulators and mortgage servicers next year.
“We must be diligent in ensuring that the regulators complete their investigations promptly to remove the uncertainty that is currently plaguing the market,” he said.