U.S. bank regulators settled with mortgage lenders over seedy foreclosure practices.
The 14 mortgage servicers including Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank, and Wells Fargo have not admitted or denied wrongdoing and are not being hit with monetary penalties.
The Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision have spent the past few days completing the settlement, and the good news for homeowners is that the 14 servicers have agreed to pay back homeowners for losses from foreclosures or loans that were mishandled.
The banks must determine the financial injury to borrowers submit a plan for reimbursing them within the next 6 months.
They are also agreeing to conduct a review of all loans that went into foreclosure in 2009 and 2010. From the announcement:
In a statement from the OCC, acting Comptroller of the Currency John Walsh said, “These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations. These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers. Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward.”
The settlement is more substantial than what some expected the OCC to require of the banks. There were reports that the banks were simply promising to change their mortgage and foreclosure practices.
Yesterday, Representative Elijah Cummings of Maryland told the comptroller’s office that he was “deeply concerned” that the consent orders “would allow mortgage servicers to continue disregarding their legal and contractual obligations.”
Today’s settlement isn’t the end of the foreclosure mess for the mortgage lenders. State attorneys general continue to push for a settlement with the mortgage servicers that includes a substantial fine.