OCC Releases Status Report on Fixing Deficient Foreclosure Practices

The ""Office of the Comptroller of the Currency"":http://www.occ.gov (OCC) issued a report Tuesday on actions taken to correct deficiencies in mortgage servicing and foreclosure processing by the 12 national banks and federal savings associations it oversees.

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The ""report outlines progress"":http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-139a.pdf made by the companies to comply with the ""consent orders issued"":http://dsnews.comarticles/regulators-hand-down-enforcement-actions-to-servicers-and-their-vendors-2011-04-13 in April 2011 in response to regulators' investigation into alleged robo-signing practices.

""Work is well under way on the actions necessary to comply with the consent orders,"" the OCC said in its report. ""Efforts to correct deficiencies in foreclosure processes, management oversight, and internal audit are furthest advanced.""

Mortgage servicers under the OCC’s jurisdiction include: Aurora Bank, Bank of America, Citibank, EverBank, HSBC, JPMorgan Chase, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, U.S. Bank, and Wells Fargo.

The ""Federal Reserve"":http://www.federalreserve.gov has supervisory responsibility over the two other servicers subject to the April regulatory consent orders â€" Ally Financial and SunTrust.

A key component of the consent orders involves independent reviews of any case subject to foreclosure during the 2009 and 2010 calendar years. Servicers submitted their engagement letters for independent consultants, as well as action plans to the OCC in July. The OCC has reviewed and accepted proposals submitted by all 12 of its wards, and made the ""engagement letters public on its website"":http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/independent-review-foreclosure-letters.html.

OCC officials note that during the selection process, regulators rejected some proposed consultants and law firms to avoid potential conflicts of interest.

The independent consultants for each servicer are:
* AllonHill for Aurora Bank
* Clayton Services for EverBank
* Deloitte & Touche for JPMorgan Chase
* Ernst & Young for HSBC and MetLife
* Navigant Consulting for OneWest

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* PricewaterhouseCoopers for Citibank and US Bank
* Promontory Financial Group for BofA, PNC, and Wells Fargo
* Treliant Risk Advisors for Sovereign Bank

The engagement letters describe how the independent consultants will conduct their file reviews and claims processes to identify borrowers who suffered financial injury as a result of procedural deficiencies.

The letters include language stipulating that consultants will take direction from the OCC and specifically prohibiting servicers from overseeing, directing, or supervising the reviews. The OCC says it is working to ensure a consistent process for all servicers.

An integrated claims processor has already begun mailing letters to more than 4 million borrowers who were in foreclosure at any point during the 2009-2010 timeframe. Those mailings will continue through the end of the year. ""IndependentForeclosureReview.com"":http://www.IndependentForeclosureReview.com and a toll-free phone number (1-888-952-9105) were also launched on November 1st to provide information about the reviews and claims process.

Borrowers who believe they were hurt financially as a result of servicer errors or deficiencies in the foreclosure processes may request a review of their case. Requests for review must be received by April 30, 2012.

In addition to the coordinated, integrated claims process, independent consultants began reviewing certain files in October based on criteria outlined in their engagement letters and accepted by the OCC.

The federal regulator says reviews are expected to take several months to complete.

Under the consent orders, servicers are also required to correct what regulators describe as “deficient and unsafe or unsound practices” in their mortgage servicing activities, as well as institute stronger management procedures for third-party service providers, and implement tighter controls over activities related to the electronic registry MERS.

The OCC says each servicer has already established policies and procedures for providing single points of contact (SPOC) to assist borrowers throughout the loan modification and foreclosure processes. All servicers have also implemented controls to prevent “dual-tracking” of loans to ensure no foreclosure occurs when a borrower’s loan has been approved for modification on a trial or permanent basis.

According to the OCC, much of the work to correct identified weaknesses in foreclosure policies, procedures, controls, and audit processes will be “substantially complete” in the first part of 2012, but other longer term initiatives will continue through the balance of 2012.