The consent orders are the result of regulators’ investigations into robo-signing allegations and represent a settlement with the firms involved, at least in part. Both the OCC and Fed say they believe monetary sanctions in these cases are also warranted, and they plan to pursue such actions separately.
The servicers include: Ally Financial, Aurora Bank, Bank of America, Citigroup, EverBank, HSBC, JPMorgan Chase, MetLife, OneWest Bank, PNC Financial, Sovereign Bank, SunTrust, U.S. Bancorp, and Wells Fargo.
Collectively, these 14 organizations represent 68 percent of the servicing industry, or about $6.8 trillion in mortgage balances.
The two service providers named in the actions are Lender Processing Services (LPS) and the Mortgage Electronic Registration Systems, Inc. (MERS).
The orders handed down “address a pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing … deficiencies [that] represent significant and pervasive
compliance failures and unsafe and unsound practices at these institutions,” according to the Federal Reserve.
The actions taken Wednesday require each servicer to make several changes to their mortgage servicing and foreclosure practices. As stated by the regulators, these reforms include:
providing borrowers the name of the person at the servicer who is their primary point of contact;
ensuring that foreclosures are not pursued once a mortgage has been approved for modification, unless repayments under the modified loan are not made;
establishing controls and oversight over the activities of third-party vendors that provide loan servicing, loss mitigation, or foreclosure-related support, including legal firms;
providing remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other process deficiencies; and
ensuring compliance with state and federal laws regarding servicing and foreclosures.
The regulators said the actions against the servicers third-party providers require LPS to address “deficient practices” related primarily to the document execution services provided to servicers through its subsidiaries DocX, LLC and LPS Default Solutions. MERS is required to address “significant weaknesses in, among other things, oversight, management supervision, and corporate governance.”
It was reported last week that federal regulators split from state attorneys general to pursue their own settlement deals with servicers. States’ counsels have said they plan to move forward with their own resolution. Federal officials said Wednesday that their consent orders do not preclude attorneys general or other agencies from taking additional enforcement action against the servicers.
Copies of the OCC’s statement and its consent orders to individual firms can be viewed here. The Federal Reserve’s orders can be found here, and the OTS’ can be accessed here.
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