A federal regulator announced Wednesday it has terminated enforcement actions against Charlotte, North Carolina-based Bank of America, N.A., and two other big U.S. banks it had cited for deficient foreclosure practices.
The Office of the Comptroller of the Currency, however, placed new restrictions on Wells Fargo Bank, N.A., and five other banks for not meeting requirements of similar orders.
The OCC said it has lifted its consent orders against BofA, Citibank, N.A., and PNC Bank, N.A., after the regulator in 2011 faulted those lenders and others for unsafe and unsound home-loan servicing and foreclosure practices. The comptroller’s office said Wednesday the three have complied with the orders and amendments made to them in 2013.
The regulator took action against the banks after revelations of shoddy mortgage servicing and foreclosure practices, including lost paperwork and “robo-signing” — the mass signing of paperwork without reading it.
Mortgage servicing involves collecting home loan payments from borrowers and working with them when they go into default.
“Each of the three banks that have satisfied the requirements of the order has completed a significant transformation of their operations, but even the six banks that are getting amended orders have undertaken a significant volume of work,” Morris Morgan, the OCC’s deputy comptroller for large banks, said in a conference call with reporters.
Morgan said the six banks placed under new restrictions will be expected to make corrections in a matter of months, not years.
“We have reserved the ability to take additional action against the six, and we plan to do so based on how quickly and effectively they remediate the remaining actions,” he said.
In addition to Wells Fargo, the OCC said it has imposed new restrictions on EverBank; HSBC Bank USA, N.A.; JPMorgan Chase Bank, N.A.; Santander Bank, N.A.; and U.S. Bank, N.A. Wells and HSBC faced the most severe restrictions of the six.
Wells is banned from entering into new contracts to perform mortgage servicing for other lenders until the consent order is terminated and from shipping new work overseas. It can still make new mortgages and service those loans.
Wells, the largest U.S. mortgage lender, is based in San Francisco but has its largest employment hub in Charlotte. Its mortgage operations are headquartered in Iowa.
“We will continue to work with the OCC to address the remaining items, and we have an action plan in place to complete that work in the coming months,” Mike Heid, president of Wells Fargo Home Mortgage, said in a statement.
The bank said it is in compliance with 83 of 98 items listed in the original 2011 consent order.
BofA became a major mortgage lender and servicer when it bought subprime lender Countrywide Financial Corp. in 2008, and it has spent the past seven years wrestling with problem loans and spending billions to settle government probes and lawsuits. The OCC’s action Wednesday is a sign of progress for the nation’s second-largest bank.
“Regulators recognized Bank of America’s improvement in the way we operate our mortgage business to better assist customers, particularly in times of financial difficulty,” bank spokesman Dan Frahm said. “We have helped more than 2 million customers avoid foreclosure and put legacy mortgage issues behind us, including products and programs inherited from Countrywide.”
As part of the OCC’s initial agreement with the banks, the institutions have paid $2.7 billion to more than 3.2 million eligible borrowers. An additional $280 million is expected to remain unclaimed by the end of the year and will be turned over to state programs that will allow borrowers to receive their claims.
