Mortgage Daily Logo

Servicers Hit With Federal Orders

Mortgage News

Federal banking regulators have taken formal enforcement actions against the nation’s biggest mortgage servicers. The servicers are required to improve their foreclosure and modification processes, hire outside firms to verify if any borrowers unjustly faced foreclosure and compensate victims.

An announcement from the Federal Deposit Insurance Corp. indicated that the nation’s 14 largest mortgage servicers faced enforcement actions over their servicing practices.

Eight national bank-servicers have each voluntarily entered into consent orders with the Office of the Comptroller of the Currency, a government statement Wednesday said. In addition, two third-party service providers faced the consent orders.

The orders require the servicers to immediately correct deficiencies that were identified in fourth-quarter regulatory reviews. Those deficiencies included borrower communications problems and issues that arise when foreclosures and modifications are simultaneously pursued. The reviews were summarized in the Interagency Review of Foreclosure Policies and Practices produced by the OCC, the Federal Reserve Board and the Office of Thrift Supervision.

“Examinations of these eight national bank servicers identified significant weaknesses in mortgage servicing and foreclosure governance that resulted in unsafe and unsound practices,” the OCC statement said. “The scope and degree of these practices differed among the servicers.”

Under the order, servicers are required to suspend the foreclosure process once a loan modification is approved. They are also required to establish a single point of contact for borrowers as they move through the foreclosure process and the modification process.

The orders also require that the servicers hire independent firms to review their foreclosure actions between Jan. 1, 2009, and Dec. 31, 2010, to determine whether foreclosures were compliant with federal and state laws, if they happened when loans were current and whether any errors, misrepresentations or other deficiencies led the borrower to suffer financial injury.

“In addition, the actions require servicers to establish robust oversight and controls pertaining to their third-party vendors, including outside legal counsel, that provide default management or foreclosure services,” the OCC stated. “Each servicer must also 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.”

The regulatory actions are the result of “unsafe and unsound practices” related to servicing and foreclosure processing. They were coordinated among federal banking regulators.

Acting Comptroller of the Currency John Walsh said in the statement that the enforcement actions “fix” foreclosure processing problems and correct failures in governance and the loan modification process as well as compensate borrowers for financial harm suffered by borrowers.

Walsh said that the resulting mortgage servicing process should be “fair and orderly.”

The Federal Reserve Board announced consent orders against 10 bank-servicers, some of the same ones identified by the OCC.

In apparent support of the orders, the Mortgage Bankers Association issued statement indicating that its members “welcome progress on these difficult and critical issues” and highlighted that the top priority should be “getting the housing market back on the road to recovery.”

Citigroup Inc. issued a statement touting its foreclosure prevention efforts and indicating its intention to meet the new requirements by the implementation deadline.

“In 2009, we self-identified needed changes in our foreclosure processes and proactively undertook corrective actions to enhance our policies and controls and the effectiveness of our processes,” Citi stated. “These included: consolidating operations into one central unit; significantly reinforcing the size and training of our staff; and, tightening control processes, including limiting the ability to sign-off on initiation of the foreclosure processes to internal Citi personnel only.”

A statement from the Department of Housing and Urban Development indicated that senior officials from several federal agencies and state attorneys generals’ offices are still meeting with the servicers to continue settlement negotiations related to the foreclosure processing matter.

“The bottom line is that banks must follow the laws,” HUD Secretary Shaun Donovan stated. “Any bank that hasn’t done so should be held accountable and should take prompt action to correct its mistakes.”

Servicer Servicing Portfolio Consent Order
Ally Financial Inc. $355.7 billion Ally-Fed consent order
Aurora Bank $86.0 billion Aurora-OTS consent order
Bank of America, N.A. $2,056.8 billion Bank of America-OCC consent order
Citibank $599.9 billion Citibank-OCC consent order
EverBank na EverBank-OTS consent order
HSBC $63.3 billion HSBC-OCC consent order
JPMorgan Chase $1,190.6 billion JPMorgan-OCC consent order
Lender Processing Services and subsidiaries DocX LLC and LPD Default Solutions Inc. na LPS-OCC consent order
MERSCORP and wholly owned subsidiary Mortgage Electronic Registration Systems Inc. na MERS-OCC consent order
MetLife Bank $115.9 billion MetLife-OCC consent order
OneWest Bank $150.0 billion OneWest-OTS consent order
PNC $174.6 billion PNC-OCC consent order
Sovereign Bank na Sovereign-OTS consent order
SunTrust Banks Inc. $167.2 billion SunTrust-Fed consent order
U.S. Bank $223.5 billion U.S. Bank-OCC consent order
Wells Fargo $1,809 billion Wells Fargo-OCC consent order

read Interagency Review of Foreclosure Policies and Practices

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Mortgage Servicer Portfolios

servicing news | mortgages outstanding statistics | foreclosure news   Servicing Portfolios as of 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 Residential Servicing Portfolios by Servicer Last Updated December 14, 2018...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Fannie Mae Profile

Last Updated December 27, 2018 7:38 PM Central   full list | other directories | bank search | SEC filings | execs | m&a | production   Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move --...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Freddie Mac Profile

Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move -- which is likely to push mortgage rates lower and provide a sense of stability for the more than 10,000 employees at both companies -- is a...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam