Two more settlements over mortgage servicing practices have been reached with the nation’s central bank. The latest round involves a pair of venerable investment bankers.
On Jan. 7, the Office of the Comptroller of the Currency and the Federal Reserve announced that an $8.5 billion settlement had been reached with 10 of the country’s biggest mortgage servicers.
The agreement resolved independent reviews of foreclosure actions in 2009 and 2010 required by consent orders issued by the OCC in April 2011.
The OCC noted in last week’s announcement that similar agreements were in the works for other servicers.
On Wednesday, the Fed reported that settlements totaling $557 million were reached with Goldman Sachs and Morgan Stanley.
The agreements are expected to impact more than 220,000 borrowers.
Goldman settled with the Fed over foreclosure practices used by former subsidiary Litton Loan Servicing LP, which was acquired by Ocwen Financial Corp. in September 2011.
Morgan Stanley settled over the servicing practices of subsidiary Saxon Mortgage Services Inc. Ocwen acquired Saxon’s servicing assets in April 2012 — leaving only a shell of a company in place.
The two Wall Street firms will make a combined $232 million in direct payments to eligible borrowers and provide $325 million in other assistance.
Payouts will range from less than a thousand dollars to as much as $125,000 depending on the type of possible servicer error.
“The Federal Reserve continues to work to reach similar agreements in principle with other servicers that are not yet parties to the agreements, but that are also subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing,” today’s statement said. “Federal Reserve examiners are continuing to closely monitor the servicers’ implementation of plans required by the enforcement actions previously issued against the servicers to correct the unsafe and unsound mortgage servicing and foreclosure practices.”
