The ranking member of the House Oversight Committee has called on the committee's chairman, Rep. Darrell Issa, R-Calif., to issue so-called ‘friendly’ subpoenas to federal financial regulators to obtain copies of the engagement letters they have approved between major servicers and third-party firms hired to review past foreclosure cases.
Rep. Eljiah E. Cummings, D-Md., asked that the issue be added to the committee's agenda for next week if Issa decides against issuing the subpoenas.
"It is incumbent on our committee to ensure that appropriate oversight and remediation actions are taking place," Cummings wrote. "We cannot fulfill our duty without reviewing the full, unredacted engagement letters concluded between mortgage servicing companies and the firms they engaged to review their foreclosure actions."
Consent orders issued in April by the Federal Reserve Board, the Office of the Comptroller of the Currency and the Office of Thrift Supervision require 14 major servicers to hire private consultants to conduct the reviews. The regulatory orders allow servicers to propose the terms, including the methodology of the reviews, the criteria for cases to be reviewed, and any proposed sampling techniques, Cummings says.
Cummings previously sought copies of the engagement letters in late May. At that time, the regulators declined his request, explaining they cannot produce the documents until they are legally compelled to do so.
In his letter to Issa, Cummings cited the committee's first business meeting this Congress, in which Issa reportedly explained that subpoenas might be necessary to overcome certain legal barriers to disclosure.
"This is one of these cases," he wrote. "No agency has indicated a refusal to cooperate with this request. Instead, they have explained that they need subpoenas in order to legally produce the requested documents."
The first subpoena Issa issued as chairman was a "friendly" subpoena to Bank of America requesting information on internal bank records regarding Countrywide mortgages, according to Cummings.
The Oversight Committee voted unanimously in February to investigate foreclosures and other alleged abuses by servicers.