OCC Orders Largest Lenders to Review Foreclosure Processes
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The Office of the Comptroller
of the Currency (OCC), one of the country’s most
important banking regulators, issued a directive to some of the largest
mortgage servicers, ordering them to reassess their procedures for foreclosing
on defaulted debts.
As you may have read or heard in the news, a fiasco exposed administrators
at the lenders, who were signing approvals for foreclosure without taking the
time to review them at all. The so called “robo-signers” would simply rubber
stamp anything on their desk in order to cut through the overwhelming piles of
paperwork caused by the groundswell of defaulting loans.
John Walsh, acting chief of the OCC contacted seven
institutions the agency supervises, after GMAC Mortgage and JPMorgan Chase both
announced a freeze on foreclosures in states, where filings might contain
erroneous paperwork, and preparers may have broken the law in cutting corners. The
latest bank to halt its foreclosure processing was Bank of America.
The following lenders were on John Walsh’ short list: JPMorgan, Bank of
America, Citibank, HSBC, PNC
Bank, U.S. Bank, and Wells Fargo.
Reports suggest OCC sent teams to be permanently
stationed at each one of these banks, in close contact with senior management,
in order to ensure the reviews are completed as mandated.
Walsh said it was clear that some lenders had “deficiencies” in their
foreclosure processing. Walsh’s stated goal was to not only to fix any current processing
problems, but also to examine what specific damage may have already been caused
in individual cases.
Freddie Mac, likewise, expressed deep concern about recent reports. Freddie
Mac stated that the alleged practices in these reports were clearly not in
compliance with Freddie Mac’s guidelines, and directives, to its servicers. They
also said it was essential that the industry work together to protect
borrowers’ rights and ensure the integrity of the foreclosure process.
Federal Housing Finance Agency (FHFA), said the
deficiencies in foreclosure documentation by GMAC and
JPMorgan raise concerns for homeowners and mortgage investors alike. FHFA does support
efforts by Fannie and Freddie to remind servicers and other parties engaged in
processing foreclosures to do so in accordance with their seller-servicer
agreements and applicable laws. FHFA directed Fannie
and Freddie to work collectively to develop and implement a consistent approach
to address any problems where deficiencies have been identified.
The Treasury Department has asked federal regulators to investigate, what
they termed “troubling developments”, in foreclosure processing. Attorneys
general in at least six states have launched their own inquiries.