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By Emily Stephenson
WASHINGTON, Jan 31 (Reuters) - U.S. lawmakers on Thursdayasked bank regulators to turn over documents related to the $8.5billion settlement that ended a government-mandated review ofcrisis-era foreclosures, saying transparency was needed to boostconfidence in the settlement.
Senator Elizabeth Warren and Representative Elijah Cummings,both Democrats, said the Federal Reserve and the Office of theComptroller of the Currency (OCC) must address concerns thatfinancial institutions have not been held accountable formisdeeds during the 2007-2009 U.S. financial crisis.
In a separate letter also released on Thursday,Representative Maxine Waters, also a Democrat, said questionsremain about why the independent reviews were stopped and howborrowers will be evaluated for potential compensation.
The case-by-case reviews of foreclosures came in response tothe "robo-signing" scandal of 2010, in which banks were said tohave used defective or fraudulent documents to pursue homeforeclosures.
But after the review process got expensive without resultingin relief to consumers, regulators opted for a differentapproach.
They said settlements with mortgage servicers, which wereannounced earlier this month would replace the reviews with abroader framework that allows borrowers to receive compensationregardless of whether they faced actual harm.
"We believe that public confidence in the settlement - theconfidence necessary to speed recovery of the housing markets -will exist only if the OCC and the Federal Reserve provideadditional transparency into the process used and informationgathered during the Independent Foreclosure Review process,"Warren and Cummings said in their letter.
Cummings was critical of the settlement when regulatorsannounced it earlier this month and said the OCC and the Fed hadnot sufficiently answered questions, such as who would get thefunds.
The financial industry has been closely watching Warrensince she won election to the U.S. Senate in November.
She gained a reputation as an opponent of Wall Street excessby overseeing the financial system bailout and later setting upthe Consumer Financial Protection Bureau, and she would lend ahigh profile to whatever issue she chooses for her first bigpush as a lawmaker.
The pair called on regulators to turn over documents on theindependent contractors who reviewed borrower files, the totalnumber of reviews undertaken by each contractor and the numberof files in which unsafe practices were found.
Waters, who is the top Democrat on the House ofRepresentatives Financial Services Committee, criticized thesudden end of the reviews and asked the regulators to establishan independent monitor to oversee the settlement process.
Both letters were addressed to Fed Chairman Ben Bernanke andComptroller of the Currency Thomas Curry.
The initial settlement called for Bank of America Corp, Citigroup Inc, JPMorgan Case & Co, WellsFargo & Co, MetLife Bank, and five others to pay$3.3 billion directly to eligible borrowers, and $5.2 billion inloan modifications and forgiveness.
Separately, HSBC, Goldman Sachs and MorganStanley also reached similar settlements, bringing thetotal payout to $9.3 billion.
