Banks must take second look at foreclosures - Military News | News From Afghanistan, Iraq And Around The World - Military Times

Banks must take second look at foreclosures

The eight largest national bank mortgage servicers have been ordered to review all of their foreclosures within the last two years — to include looking at their compliance with the Servicemembers’ Civil Relief Act — after regulators found allegedly unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing.

The Office of the Comptroller of the Currency announced Wednesday it is requiring Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo to each hire an independent firm to conduct a review of all their foreclosure actions between Jan. 1, 2009, and Dec. 31, 2010.

The reviews are broad-based; SCRA reviews are just one aspect.

The OCC also announced enforcement action against two third-party service providers: MERSCORP and its subsidiary Mortgage Electronic Registration Systems Inc., and Lender Processing Services and its subsidiaries DocX, LLC and LPD Default Solutions Inc.

The reviews must determine whether each foreclosure complied with federal and state laws, whether foreclosures were unwarranted, and whether any errors or other deficiencies resulted in financial injury to borrowers. The servicers must submit a plan to remedy all financial injury to borrowers caused by errors or other deficiencies, and establish a process for borrowers who believe they have been harmed to apply for remediation.

The servicers neither admitted nor denied the allegations of problems, which differed among the servicers. The OCC based its actions on the findings of examinations conducted as part of interagency reviews undertaken by federal banking regulators last year. That report noted that some foreclosures should not have gone forward because the borrowers were covered by the SCRA, but wasn’t specific about the number of such cases or which banks were cited for this issue.

At a House Veterans’ Affairs Committee seminar on service member protections Thursday, Dan Stipano, deputy chief council for OCC, said the regulator reviews banks for violations of the SCRA as part of its regular compliance activities. He said issues with SCRA compliance were found with some, but not all, of the servicers.

At the seminar, officials from Bank of America and Citibank cited actions they are taking to ensure service members’ rights are being protected, including Bank of America’s new cadre of 300 people dedicated to dealing with service members’ loans. A Citibank official said that bank is comfortable with its policies after an internal review, but said, “we’re very focused on this area right now.”

After these officials spoke, OCC’s Stipano said he wanted to note that both Bank of America and Citibank are subject to the enforcement actions he had mentioned.