I 

113TH CONGRESS 

1ST SESSION H. R. 1706 

To establish an Independent Monitor to maintain oversight of the settlement 

by mortgage servicing companies that were subject to enforcement actions 

for unsafe and unsound practices related to residential mortgage loan 

servicing and foreclosure processing, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 24, 2013 

Mr. CUMMINGS (for himself, Ms. WATERS, Mr. GEORGE MILLER of California, 

Mr. CONYERS, Mr. WAXMAN, Mr. TIERNEY, Ms. LOFGREN, and Ms. 

SCHAKOWSKY) introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To establish an Independent Monitor to maintain oversight 

of the settlement by mortgage servicing companies that 

were subject to enforcement actions for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Mortgage Settlement 

5 Monitoring Act of 2013’’. 


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1 SEC. 2. FINDINGS. 

2 The Congress finds the following: 

3 (1) In April 2011, the Federal Reserve System, 

4 the Office of the Comptroller of the Currency, and 

5 the then-Office of Thrift Supervision issued a joint 

6 report titled ‘‘Interagency Review of Foreclosure 

7 Policies and Practices’’ summarizing the results of 

8 ‘‘horizontal reviews’’ of the Nation’s 14 largest 

9 mortgage servicers finding ‘‘critical weaknesses in 

10 servicers’ foreclosures governance practices, fore11 closure document preparation processes, and over12 sight and monitoring of third-party vendors, includ13 ing foreclosure attorneys,’’ resulting in ‘‘unsafe and 

14 unsound practices and violations of applicable Fed15 eral and State law requirements’’. 

16 (2) As part of federal enforcement actions ad17 dressing these unsafe and unsound practices related 

18 to residential mortgage loan servicing and fore19 closure processing, fourteen mortgage servicing com20 panies entered into consent orders with the Board of 

21 Governors of the Federal Reserve System and the 

22 Office of the Comptroller of the Currency beginning 

23 on April 13, 2011. 

24 (3) The consent orders required these mortgage 

25 servicers to undertake an ‘‘Independent Foreclosure 

26 Review’’ in order to ascertain individual harms and 


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1 provide appropriate monetary relief to homeowners 

2 as a result of these business practice failures. Mort3 gage servicers contracted with third-party consult4 ants approved by the federal agencies to conduct 

5 these reviews. 

6 (4) During the tenure of the Independent Fore7 closure Review process, questions persisted con8 cerning the nature and adequacy of the reviews and 

9 expected remediation as well as the independence of 

10 the third-party reviewers. 

11 (5) On February 28, 2013, the Board of Gov12 ernors of the Federal Reserve System and the Office 

13 of the Comptroller of the Currency finalized amend14 ments to the April 2011 consent orders with 11 of 

15 the 14 mortgage servicers. Under the terms of these 

16 orders, mortgage servicers are to provide cash pay17 ments and other assistance to borrowers—including 

18 more than $3,000,000,000 in direct cash payments 

19 to borrowers who had homes in foreclosure in 2009 

20 or 2010—and the Independent Foreclosure Review 

21 process will cease for the mortgage servicers who 

22 agreed to enter into the amended consent orders. 

23 (6) On April 4, 2013, the Government Account24 ability Office (GAO) issued a report titled ‘‘Fore25 closure Review: Lessons Learned Could Enhance 


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1 Continuing Reviews and Activities Under Amended 

2 Consent Orders’’ which examined the Independent 

3 Foreclosure Review process. It found that the 

4 ‘‘[c]omplexity of the reviews, overly broad guidance, 

5 and limited monitoring for consistency impeded the 

6 ability of the Office of the Comptroller of the Cur7 rency (OCC) and the Board of Governors of the 

8 Federal Reserve System (Federal Reserve) to 

9 achieve the goals of the foreclosure review’’. The re10 port also stated that ‘‘limited communication with 

11 borrowers and the public adversely impacted trans12 parency and public confidence,’’ and the GAO rec13 ommended that the Board of Governors of the Fed14 eral Reserve System and the Office of the Comp15 troller of the Currency ‘‘identify and apply lessons 

16 from the foreclosure review process, such as enhanc17 ing planning, and monitoring activities to achieve 

18 goals, as they develop and implement the activities 

19 under the amended consent orders’’. 

20 (7) In light of the significant harm caused by 

21 mortgage servicers’ unsafe and unsound business 

22 practices, and the lack of transparency surrounding 

23 the Independent Foreclosure Review process and the 

24 amended consent orders that replace this process, it 

25 is essential that thorough oversight be conducted 


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1 over these new orders to ensure that all terms are 

2 fully enforced. Creation of an Office of the Inde3 pendent Monitor, which will provide reports directly 

4 to Congress, will aid in meeting this objective. 

5 SEC. 3. SETTLEMENT DEFINED. 

6 For purposes of this Act, the term ‘‘settlement’’ 

7 means— 

8 (1) the amended consent orders finalized on 

9 February 28, 2013, between the Board of Governors 

10 of the Federal Reserve System and the Office of the 

11 Comptroller of the Currency and 11 mortgage serv12 icing companies that were subject to enforcement ac13 tions for unsafe and unsound practices related to 

14 residential mortgage loan servicing and foreclosure 

15 processing; and 

16 (2) any future agreement between the Board of 

17 Governors of the Federal Reserve System and the 

18 Office of the Comptroller of the Currency and a 

19 mortgage servicing company, the terms of which are 

20 similar to the agreement described in paragraph (1). 

21 SEC. 4. INDEPENDENT MONITOR. 

22 (a) ESTABLISHMENT.— 

23 (1) IN GENERAL.—There is hereby established 

24 the Office of the Independent Monitor, to be headed 

25 by the Independent Monitor. The purpose of the 


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1 Independent Monitor shall be to determine the com2 pliance of all parties to the settlement with the 

3 terms of the settlement and to provide expanded 

4 transparency over the implementation of the amend5 ed consent orders to rebuild the confidence of the 

6 general public. 

7 (2) APPOINTMENT.— 

8 (A) IN GENERAL.—The President shall ap9 point, not later than the end of the 45-day pe10 riod beginning on the date of the enactment of 

11 this Act, the Independent Monitor from among 

12 individuals with extensive experience in con13 sumer protection laws and practices, particu14 larly in such areas as mortgage lending. 

15 (B) VACANCY.—If at any point the posi16 tion of Independent Monitor becomes vacant, 

17 the President shall appoint, not later than the 

18 end of the 60-day period beginning on the date 

19 such vacancy occurs, a new Independent Mon20 itor from among individuals described under 

21 subparagraph (A). 

22 (3) STAFF.—Upon request of the Independent 

23 Monitor, any executive agency, including the Board 

24 of Governors of the Federal Reserve System or the 

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1 bursable basis, any employee to the Office of the 

2 Independent Monitor to assist it in carrying out its 

3 duties under this Act, but under no circumstances 

4 may the Office of the Independent Monitor have 

5 more than 16 employees, not including the Inde6 pendent Monitor. 

7 (4) FUNDING.—The costs of the Office of the 

8 Independent Monitor shall be paid out of the funds 

9 paid by mortgage servicing companies under the set10 tlement, other than any funds designated for direct 

11 cash payments to borrowers who held loans during 

12 2009 or 2010. 

13 (b) DUTIES.—The Independent Monitor shall— 

14 (1) issue a quarterly report covering all actions 

15 taken to date, with the first such report detailing ac16 tions taken from the date of the execution of the set17 tlement, to the Board of Governors of the Federal 

18 Reserve System, the Comptroller of the Currency, 

19 and the Congress containing— 

20 (A) a detailed description of— 

21 (i) the eligibility criteria used to deter22 mine who will receive direct and indirect 

23 aid provided under the settlement, includ24 ing information detailing instances in 


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1 which the criteria are not transparent, cer2 tain, objective, or equitably applied; 

3 (ii) the methodologies used to cal4 culate and allocate direct and indirect aid 

5 provided under the settlement, including 

6 information detailing instances in which 

7 the methodologies are not transparent, cer8 tain, objective, or equitably applied; 

9 (iii) the proof requirements applied to 

10 recipients of direct and indirect aid pro11 vided under the settlement, including infor12 mation detailing instances in which the re13 quirements are not transparent, certain, 

14 objective, or equitably applied; and 

15 (iv) the extent to which those receiv16 ing direct and indirect aid under the settle17 ment receive procedural due process, in18 cluding information detailing instances in 

19 which such due process has been denied; 

20 (B) information on the total number of 

21 borrowers who held loans in 2009 or 2010 who 

22 receive direct compensation under the settle23 ment, disaggregated by each mortgage servicer 

24 subject to the settlement, including— 


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1 (i) demographic and other data re2 lated to such borrowers, including race, 

3 gender, geography, and the property value 

4 of the property securing such loans; 

5 (ii) the level of direct compensation 

6 provided to similarly situated borrowers, 

7 including a review of the methods used to 

8 determine the level of direct compensation 

9 provided and the adequacy of such direct 

10 compensation; and 

11 (iii) total direct compensation pro12 vided to date; 

13 (C) information on the total number of 

14 borrowers with mortgage loans who receive loan 

15 modifications or other types of assistance, such 

16 as the forgiveness of a deficiency judgment, 

17 short sale, deed in lieu, or forbearance agree18 ment, under the settlement, disaggregated by 

19 each mortgage servicer subject to the settle20 ment, including— 

21 (i) demographic and other data re22 lated to such borrowers, including race, 

23 gender, geography, and the property value 

24 of the property securing such loans; and 


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1 (ii) the number of each type of loan 

2 modification or other assistance provided 

3 to borrowers, including the amount of prin4 cipal reduction provided under modifica5 tions that include a principal reduction ele6 ment, the level of interest reductions pro7 vided to borrowers who receive an interest 

8 reduction, and the total amount of defi9 ciencies forgiven for each of the first, sec10 ond, or any subsequent loans, and the 

11 number of borrowers receiving each type of 

12 relief who were already in a trial modifica13 tion when offered assistance under the set14 tlement and the number who were not in 

15 a trial modification, and whether there has 

16 been disparate treatment of those bor17 rowers; 

18 (D) the credit that parties to the settle19 ment have been given through the provision of 

20 loan modifications and other types of assistance 

21 to borrowers, including principal reduction 

22 modifications, disaggregated by each mortgage 

23 servicer subject to the settlement, and a deter24 mination by the Independent Monitor of wheth25 er such credit reflects the real dollar value of 


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1 the modifications and has not been provided for 

2 modifications that have little or no economic 

3 value and that do not result in sustainable 

4 modifications; 

5 (E) a list of any instances in which the 

6 Independent Monitor has determined that a 

7 party to the settlement has substantially failed 

8 to comply with the terms of the settlement, in9 cluding a description of the nature of each in10 stance of noncompliance; 

11 (F) a list of any actions taken by the 

12 Board of Governors of the Federal Reserve Sys13 tem or the Comptroller of the Currency to com14 pel compliance with the terms of the settlement; 

15 (G) a review of the efforts undertaken by 

16 parties to the settlement to locate borrowers 

17 who held loans in 2009 or 2010, including the 

18 adequacy of outreach methods used to contact 

19 such borrowers and the response rate of such 

20 borrowers; 

21 (H) information on the extent to which any 

22 assistance provided to borrowers under the set23 tlement receives credit under both the settle24 ment and also another settlement; 

25 (I) a detailed description of— 


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1 (i) the dispute resolution procedures 

2 established by the Board of Governors of 

3 the Federal Reserve System and the 

4 Comptroller of the Currency, if any, to en5 able borrowers to seek either a formal re6 view of the direct or indirect relief provided 

7 to them under the terms of the settlement, 

8 or a formal review of a determination that 

9 they are not entitled to direct or indirect 

10 relief under the terms of the settlement, 

11 including a review of the adequacy of these 

12 procedures in responding to borrowers’ 

13 concerns and complaints and in fairly and 

14 equitably resolving these requests for re15 view; and 

16 (ii) if such procedures have been es17 tablished, the total number of borrowers 

18 who have requested a review under the dis19 pute resolution procedures, the number of 

20 outstanding requests awaiting adjudication 

21 and the number of fully adjudicated 

22 claims, the average time required to adju23 dicate claims under the dispute resolution 

24 procedures, the number of cases in which 

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1 tial determination of relief offered to a bor2 rower, and the number of cases in which 

3 the recommendations issued by the arbiter 

4 were affirmed and implemented by the 

5 Board of Governors of the Federal Reserve 

6 System and the Comptroller of the Cur7 rency; 

8 (J) the number of in-scope borrowers 

9 whose foreclosures are completed during the re10 porting period; and 

11 (K) any other information that the Inde12 pendent Monitor deems necessary to discharge 

13 the duties of the Independent Monitor and to 

14 determine compliance with the settlement; 

15 (2) make each report described under para16 graph (1) available to the public, including on a pub17 licly accessible website; and 

18 (3) hold, at a minimum, five public meetings in 

19 which members of the public may give testimony re20 garding the administration of the settlement, and 

21 where such meetings— 

22 (A) being announced at least two weeks in 

23 advance; and 

24 (B) held in five different States. 


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1 (c) POWER TO REQUIRE PRODUCTION.—Not with2 standing any other provision of law, the Independent Mon3 itor may require the production from any party to the set4 tlement of any documents, information, and data related 

5 to the settlement that the Independent Monitor deter6 mines necessary to carry out the duties of the Independent 

7 Monitor. 

8 (d) CONFIDENTIALITY OF INFORMATION.—In car9 rying out the requirements under this Act, including the 

10 report requirement under subsection (b)(1), the Inde11 pendent Monitor shall ensure that all personally identifi12 able information is kept confidential. 

13 (e) ENFORCEMENT.— 

14 (1) IN GENERAL.—If the Independent Monitor 

15 determines that a party to the settlement substan16 tially failed to comply with the terms of the settle17 ment or otherwise violates any provision of this Act, 

18 the Independent Monitor shall refer a finding of 

19 noncompliance to— 

20 (A) the Board of Governors of the Federal 

21 Reserve System and the Comptroller of the 

22 Currency, for noncompliance involving conduct 

23 of mortgage servicers subject to the settlement; 

24 (B) the Inspector General of the Board of 

25 Governors of the Federal Reserve System and 


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1 the Bureau of Consumer Financial Protection, 

2 for noncompliance involving conduct of the 

3 Board of Governors of the Federal Reserve Sys4 tem; or 

5 (C) the Inspector General of the Depart6 ment of the Treasury, for noncompliance involv7 ing conduct of the Office of the Comptroller of 

8 the Currency. 

9 (2) HANDLING OF REFERRAL.—Upon receipt of 

10 a referral of noncompliance made under paragraph 

11 (1)(A), the Board of Governors of the Federal Re12 serve System and the Comptroller of the Currency 

13 shall, jointly— 

14 (A) within the 30-day period beginning on 

15 the date of receipt of the referral, issue a report 

16 to the Congress containing a plan of action to 

17 cure the noncompliance; and 

18 (B) within the 60-day period beginning on 

19 the date of receipt of the referral, take such ac20 tion to cure the noncompliance. 

21 (3) BACKUP AUTHORITY.—If the Board of Gov22 ernors of the Federal Reserve System and the 

23 Comptroller of the Currency fail to take the action 

24 required under subparagraph (A) or (B) of para25 graph (2), the Independent Monitor may take any 


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1 action available to the Board of Governors of the 

2 Federal Reserve System or the Comptroller of the 

3 Currency in order to cure the noncompliance. 

4 (4) REFERRAL OF CRIMINAL VIOLATIONS.—If 

5 the Independent Monitor determines that evidence 

6 exists to suggest that a party to the settlement may 

7 have committed a violation of any Federal or State 

8 criminal statute, the Independent Monitor shall refer 

9 such determination to the appropriate law enforce10 ment agency. 

11 SEC. 5. SAVINGS CLAUSE. 

12 Nothing in this Act shall be construed as— 

13 (1) limiting the ability of any Federal or State 

14 entity to examine or bring action pertaining to any 

15 aspect of the settlement; or 

16 (2) limiting the ability of any borrower to take 

17 any action arising under State or Federal law. 

18 SEC. 6. SUNSET. 

19 (a) IN GENERAL.—This Act shall cease to have any 

20 force or effect on and after the date that is the day after 

21 the end of the 90-day period beginning on the date that 

22 all parties fully satisfy the terms of the settlement. 

23 (b) FINAL REPORT.—Within the 90-day period de24 scribed under paragraph (1), the Independent Monitor 

25 shall submit a final report to the Congress containing the 


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1 information described under subsection (b)(1) and any 

2 other information the Independent Monitor feels is appro3 priate. 

Æ 


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