At the request of Congress, the GAO issued a report detailing its review of and findings on the design and implementation of communications sent to borrowers about the independent foreclosure review. The review was part of two-step approach taken by federal regulators resulting from the April 2011 consent orders (see June 12, 2012 Alert for a discussion of the independent foreclosure review process). The first step involved a lookback review by servicers, and the second step allowed borrowers to request an independent review of their loan. The report found several flaws in the independent foreclosure review notice. Specifically the GAO found that the notices were: (1) far beyond the readability level of average consumers, containing complex, technical language; (2) too general, failing to provide specific information about the independent review process; and (3) uniform in nature and not targeted towards specific groups of eligible borrowers. Each was found to potentially hinder borrower participation in the independent foreclosure review. To address each area of concern, the GAO recommended that the FRB and OCC: (1) enhance readability of the request for review form on the independent foreclosure review website; (2) require servicers to include a range of potential remediation amounts or categories in the communication materials and other outreach; and (3) require servicers to identify trends in borrowers who have or have not responded using factors such as zip code, servicer, and borrower characteristics.
Alert July 10, 2012