WASHINGTON, DC - Today, after the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and other regulators announced they have entered into consent orders with several large banks over questionable foreclosure practices, U.S. Senator Jack Reed (D-RI) called the settlement "too little, too late."

Reed, a senior member of the Banking Committee and the author of the Preserving Homes and Communities Act, issued the following statement:

"This enforcement action is a first step that should have been taken years ago.  Today it comes off as too little, too late. 

"The vague and toothless remedies outlined by the OCC's consent orders merely require banks to do what they should have already been doing.

"These banks deserve more than a slap on the wrist, and I hope the regulators will eventually exercise the discretion it has left themselves in these consent orders to act and regulate more vigorously.

"All banks that acted improperly, incompetently, and possibly illegally in creating the foreclosure crisis must be held accountable.  I will continue to push for legislative fixes to the broken foreclosure system. 

"I am pleased that this agreement does not preclude state attorneys general from aggressively pursuing a financial settlement against banks and mortgage servicers that broke the law."

Reed's Preserving Homes and Communities Act of 2011 (S. 489) was introduced in the House (H.R. 1477) yesterday by Rep. Elijah Cummings (D-MD).  The bill seeks to protect consumers, increase transparency in the foreclosure process, and hold banks and servicers accountable for providing relief to qualified homeowners. 

Specifically, the Preserving Homes and Communities Act of 2011 will:

•  Expand and improve loan modification programs by requiring lenders and servicers to evaluate homeowners for sustainable modifications prior to initiating foreclosure, and to offer approved modifications to qualified homeowners.

• Eliminate the dual track of simultaneously being evaluated for a loan modification and being foreclosed upon.  While consumers are being evaluated, foreclosure proceedings stop or should not be initiated.

• Respond to robo-signing allegations by requiring servicers, if they deny a modification, to prove that they actually have the legal right to foreclose.  The bill also establishes meaningful penalties and prohibits improperly processed foreclosures.

•  Place reasonable limits on when foreclosure fees can be charged and prohibits costly mark-ups.

•  Create an appeals process for those who are denied a loan modification to ensure that loan modification decisions are fair and accurate.  And create a mediation program so that a neutral third party can facilitate the loan modification process.