GAO Recommends Enhanced Oversight Of HAMP Servicers’ Fair Lending Compliance

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On February 6, the GAO released a report of its review of Making Home Affordable (MHA)/Home Affordable Modification Program (HAMP) servicers’ compliance with fair lending laws. The GAO states that while the Treasury Department requires MHA servicers to develop internal control programs that monitor compliance with fair lending laws, Treasury has not assessed the extent to which servicers are meeting this requirement. Treasury noted that it shares HAMP loan-level data with the federal agencies responsible for fair lending enforcement. GAO states that its analysis of HAMP loan-level data from four large MHA servicers identified some statistically significant differences in the rate of denials and cancellations of trial modifications as well as in the potential for redefault between populations protected by fair lending laws and other populations. GAO acknowledges that its analysis alone cannot account for all factors that could explain these differences. It states that reviewing the fair lending internal controls of MHA servicers could give Treasury additional assurance that servicers are complying with fair lending laws. The report recommends that Treasury should (i) assess the extent to which servicers have established internal control programs to monitor compliance with fair lending laws, (ii) issue guidance to servicers on working effectively with limited English proficiency borrowers, and (iii) monitor servicers’ compliance with that guidance. Treasury noted that it was considering GAO’s recommendations and agreed that it should continue to strengthen its program.