The one-two punch on mortgage fraud from the President and the top Democrat on the House oversight panel shows a concerted effort on behalf of Democrats to punish the mortgage giants who allegedly tried to dupe Americans into bad mortgages.
Unlike his Republican counterparts on the committee, Cummings is in the minority and lacks the power to subpoena these documents so the mortgage companies will not be forced to comply. But as Rep. Darrell Issa (R-CA), the hard-charging chairman of the oversight committee, discovered while serving in the minority, members can still leverage their power on the committee and through the media to press for cooperation.
Issa did so when conducting a probe into Countrywide's notorious VIP lending program and eventually pressured Democrats on the committee to issue subpoenas. He also led an investigation into Fannie Mae and Freddie Mac before becoming chairman and has agreed to hold a hearing on mortgage fraud March 8. Cummings is worried that Republicans will use the hearing to bash Fannie Mae and Freddie Mac not crackdown on mortgage lender abuses and their unwillingness to modify loans. Maryland Gov. Martin O'Malley, Baltimore Mayor Stephanie Rawlings-Blake and state regulatory agency officials will be on hand to testify.
Democrats and Republicans diverge on what they believe caused the foreclosure crisis with Democrats blaming reckless corporate greed unleashed by deregulation and Republicans pointing to government intervention through Fannie Mae and Freddie Mac and the years of lobbying in favor of allowing more low-income citizens to buy a home.
Cummings wrote Issa on Friday, thanking for holding the hearing and offering to focus on "examples where housing lenders have committed violations of law or contractual agreements."
As part of the probe, Cummings sent letters to 11 mortgage and legal service companies throughout the country, seeking documents regarding allegations of wrongful foreclosures, deficient record-keeping, inflated fees, deceptive practices, noncompliance with federal housing policy, improper foreclosures and fees charged to military families, as well as the revelation that loan servicers were rapidly signing foreclosure documents without even reading them, a practice known as robo-signing.
Cummings also sent a letter to the Neil Barofsky, special inspector general for the Troubled Asset Relief Program, requesting an audit of reports by homeowners of servicer abuses. In the Oversight Committee's first hearing this Congress, the special inspector general testified that the performance of mortgage servicing companies has been "abysmal."
During the hearing, Barofsky described "daily accounts of errors and more serious misconduct," and he testified that his hotline has "received more than 24,000 contacts," many of which "are complaints from homeowners dealing with mortgage servicers."
In addition, Cummings is asking the new inspector general of the Federal Housing Finance Agency to investigate attorneys who specialize in handling foreclosures and working with servicers. Many of these attorneys have been accused of wrongdoing in their attempts to speed foreclosures through the legal system.