New York City Comptroller John C. Liu, on behalf of the trustees of the New York City Pension Funds, is calling on directors at Bank of America, Wells Fargo, JPMorgan Chase and Citi to conduct an independent audit of their banks' mortgage and foreclosure practices.
Liu – the investment adviser, custodian and trustee of the New York City Pension Funds, collectively valued at $106 billion – made the request in a shareholder proposal filed at each of the four banks. The proposal calls for each bank to audit its internal controls related to loan modifications, foreclosures and securitizations and to report their findings to shareholders by Sept. 30, 2011.
"We raised concerns with the banks in July that misaligned incentives, inferior customer service and repeated requests for paperwork were undermining the loan modification process and leading to unnecessary foreclosures for homeowners," Liu says. "The magnitude of these problems suggests a larger systemic failure with consequences that have not only adversely affected homeowners and become a drain on regional economies, but also left shareholders vulnerable to substantial liabilities.