Formal enforcement action was taken against eight large bank mortgage servicers and two third-party service providers today by the Office of the Comptroller of the Currency.
The banks, which include Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank, and Wells Fargo, along with Lender Processing Services and MERS, were found to be involved in “unsafe and unsound practices” related to loan servicing and foreclosure processing.
However, the OCC noted most of the homeowners who were foreclosed on were in seriously delinquent status, and that the banks/mortgage lenders held the notes and documents required to foreclose.
Still, these loan servicers will be required to clean up their act as a result of the investigation, which took place in the fourth quarter of 2010 after allegations of robosigning surfaced.
Each servicer must:
– Hire an independent firm to conduct a multi-faceted review of foreclosure actions between January 1, 2009 and December 31, 2010.
– Ensure foreclosures are not pursued once a borrower has been approved for a loan modification.
– Establish a single point of contact for borrowers throughout the loan modification/foreclosure process.
– Establish “robust oversight and controls” of their third-party vendors, including outside legal counsel that provide default management or foreclosure services.
– Establish a process for borrowers who believe they have been financially harmed by such deficiencies to make submissions to be considered for remediation.
– Submit a plan to remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies identified in the independent consultant’s findings.
Hopefully this will make a meaningful difference, though as the OCC noted, most affected borrowers seemed to be past the point of no return anyways…
The companies involved also face possible civil money penalties.