| WASHINGTON, March 28
WASHINGTON, March 28 A top Washington law firm
is suing regulators to hand over information about how it
selected consulting firms to participate in a
multi-billion-dollar review of banks' past foreclosures.
The reviews, mandated by regulators in 2011 after widespread
foreclosure shortcuts came to light, proved slow and expensive,
and earlier this year 13 banks agreed to pay $9.3 billion to end
them and compensate foreclosed borrowers.
But in a lawsuit in federal court in Washington, D.C., the
law firm Williams & Connolly revisited the original reviews.
It is seeking documents explaining how the Office of the
Comptroller of the Currency defined "independent" in its
requirements for mortgage servicers to hire "independent
consultants" to conduct the reviews.
The law firm declined to identify the client on behalf of
which it filed the complaint.
It is possible that a consulting firm that lost out on the
review contracts is behind the suit.
An OCC spokesman declined comment.
The lawsuit adds scrutiny to the foreclosure review, which
had already been criticized by lawmakers as a windfall for
consultants with little benefit to wronged homeowners. Critics
have also said the resulting settlement may not get relief into
the right hands.
Earlier this week Democratic Senator Elizabeth Warren and
Representative Elijah Cummings asked to meet officials at the
OCC and the Federal Reserve about their concerns over whether
the process was transparent and how the reviews were
In the new lawsuit, Williams & Connolly said it had sought
through a Freedom of Information Act request to the OCC any
documents or records about the independence requirements for the
consultants, and any documents about OCC standards for
independence within the context of the foreclosure reviews.
The OCC initially denied the law firm's request, then
provided limited information on a redacted basis, the law firm
said. The firm said in its filing that it went to court to
obtain all of the information.
David Aufhauser, the Williams & Connolly lawyer who filed
the action, and who is a former general counsel of the Treasury
Department and of investment bank UBS, declined to
comment on the case.
The reviews have cost the banks some $2 billion, paid out to
firms that conducted the reviews including Promontory Financial
Group, PricewaterhouseCoopers, Ernst & Young, and Deloitte &
Touche, amounting to nearly $20,000 per loan file.
One firm, Allonhill, which was originally hired to review
files for Aurora Bank FSB and Wells Fargo, was later
suspended in May 2012 by the OCC over conflict-of-interest
concerns. Regulators said the firm was told to stop its work
because it had previously reviewed some of the same loan files
for an unidentified third party.
A representative of Allonhill did not immediately respond to
a request for comment about whether it was behind the lawsuit.