ProPublica investigation of watchdog shows that the dog is asleep. Also, it ate its own homework. That’s why it can’t provide documents responsive to ProPublica’s Freedom of Information requests:
The audits of GMAC, though revealing, give only a limited view into the program, because the Treasury has refused to release the documents for other servicers. For more than a year, through a Freedom of Information Act request, ProPublica has sought the audits of 10 of the largest program participants. The Treasury provided only GMAC’s audits, because the company consented to their release. ProPublica continues to seek all of the reports.
Abuses of the foreclosure process, in which banks and mortgage servicers cut corners or even created false documents to move troubled borrowers out of their homes, have been extensively documented, along with failures by government to regulate the industry. But the lapses revealed in the documents obtained by ProPublica stand out because they occurred within the government’s main effort to prevent foreclosures, the Home Affordable Modification Program.
Oversight shrouded in secrecy
For HAMP’s first two years, the government offered very little public detail about its oversight efforts. It was virtually impossible for the public — or even Congress — to know how well the banks and mortgage servicers were complying with the government’s effort to prevent struggling homeowners from losing their homes. Those years were crucial, because that’s when servicers evaluated the vast majority of homeowners eligible for a modification — about three million.
The documents obtained by ProPublica show auditors finding serious problems at a major servicer during that time. Instead of publicly revealing the findings, Treasury chose to privately request that GMAC fix the problems.
“For two years, they’ve known how abysmal servicers were performing, and decided to do nothing,” said Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, better known as TARP or the bank bailout, which provided the money for HAMP.