Federal Reserve Chairman Ben Bernanke took responsibility for the costly delays in getting compensation to 4 million homeowners who were victims of wrongful actions by lenders under the so-called Independent Foreclosure Review.
In a hearing before the House Committee on Financial Services Wednesday, Bernanke only spoke briefly about the 18-month failed reviews of foreclosures undertaken by more than a dozen mortgage services.
Congresswoman Carolyn Maloney, D-New York, provided heated questioning, trying to get answers from Bernanke as to why it took more than $1.5 billion in payments to independent consultants and 18 months to scrap the Independent Foreclosure Review in favor of the recently announced $9 billion settlement.
“We can put a person on the moon; why can’t we solve this?” asked Maloney.
Bernanke acknowledged the Fed’s responsibility for not taking action sooner, but said that the process of getting payments to victims is now streamlined, bypassing consultants.
Checks are suppose to go out this month to the borrowers, many of whom lost their homes during improper foreclosures taken in 2009 and 2010.
“They (the consultants) had not made all that much progress, frankly, and at a very expensive cost per file evaluated,” Bernanke explained. “We were on a track where the money going to the consultants would be some multiple of the money that was suppose to go to the borrowers, and we take responsibility for this. We changed the process to be much more streamlined… and we will have checks going out to borrowers in just a few weeks.”
But Bernanke was not able to explain to Maloney the criteria used to determine how much each borrower would get in compensation. And the official site for the settlement does not offer such details.
A news release Thursday from the other regulator overseeing the settlement, the Office of the Comptroller of the Currency, said the settlement’s paying agent “will send payments and correspondence” by the end of March. The paying agent is Rust Consulting, Inc.
But borrowers still don’t know the precise payment structure, except that compensation ranges from hundreds of dollars up to $125,000, based on the seriousness of the wrongdoing by the mortgage servicer.
“The federal bank regulators overseeing this process are currently working on the details as to how payments will be determined,” the settlement site’s FAQs section states.