In response to the problems described in the report, mortgage servicers have signed consent agreements promising to put in new oversight procedures and make other changes. The examinations were conducted by the Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision. During their review, the examiners said they saw an unspecified number of cases “in which foreclosures should not have proceeded due to an intervening event or condition,” including families in bankruptcy or those qualified for or in the middle of a trial loan modification.
The servicers include Bank of America, JPMorgan Chase, Citigroup and Wells Fargo none of whom had an immediate comment. Two firms that handle aspects of the foreclosure process, Lender Processing Services and Mortgage Electronics Registration Service, also signed the consent agreement.
“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 acting comptroller of the currency, John Walsh, said in a statement.
The report said that mortgage servicing departments of the banks did not properly oversee their own or third-party employees at law firms, had inadequate and poorly trained staffs and improperly submitted material to the courts.
As the enforcement actions have leaked over the last two weeks, they have been widely criticized by consumer and housing groups as little more than a slap on the wrist.
“The agreements are a huge disappointment,” said Alys Cohen of the National Consumer Law Center. “They rubber-stamp the status quo. The banks who caused the economic crisis and received government bailouts are getting a free pass while homeowners still struggle to save their homes.”
The release of the report and enforcement actions came six months after the servicers’ handling of foreclosures became a major issue. The servicers, under pressure from lawyers representing homeowners, admitted to lapses last fall and began foreclosure moratoriums.
State attorneys general, who started a separate investigation, are still working with the Obama administration to change the foreclosure process in a more fundamental way. About two million households are in foreclosure and another two million near it.
Article source: http://www.nytimes.com/2011/04/14/business/14foreclose.html?partner=rss&emc=rss
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