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Hearing to probe federal oversight of mortgage servicers

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Two House subcommittees will hold a hearing Thursday to examine the role of federal regulators in the months-long settlement negotiations with the nation’s largest mortgage servicers over flawed foreclosure practices.

“Since we first heard reports of charges that major mortgage servicers were not doing proper due diligence in their mortgage servicing practices, many questions and concerns have been raised about the role of federal regulators in strengthening oversight of this industry,” said Rep. Shelley Moore Capito (R-W.Va.), head of one of the House Financial Services subcommittees that organized the hearing, aimed at addressing those lingering questions.

Since revelations last fall about widespread problems in foreclosure practices, from shoddy documentation to fraudulent signing practices, mortgage servicers have faced investigations by state and federal officials.

They also have been embroiled in ongoing settlement talks with federal authorities and a coalition of state attorneys general. Those efforts are aimed at overhauling the industry’s business practices and potentially creating funds that could be used to aid troubled homeowners facing foreclosure.

Some lawmakers have questioned the direction of the talks and warned that a settlement that punishes banks too harshly or creates incentives for homeowners to default could actually deepen the housing crisis.

Among those set to testify at the 10 a.m. hearing are officials from the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the newly created Consumer Financial Protection Bureau.

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