(Updates with industry and
regulator comments starting in the sixth paragraph.)
The reviews, announced by
the OCC in a statement today, are required under a settlement regulators
reached with 14 of the biggest mortgage-servicing firms to resolve complaints
over mishandled home seizures. The OCC was joined by the Federal Reserve and
the Office of Thrift Supervision in the reaching the April accord with
companies including JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo
& Co.
The companies have hired
independent consultants to review foreclosure actions to determine whether
borrowers were harmed and recommend appropriate remediation where necessary,
the OCC said today. Letters explaining the review process are being sent to an
estimated 4.5 million eligible borrowers, who may request reviews through April
30, 2012, the agency said.
“The challenge is
substantial, but the steps we have required the servicers to take are vitally
important to resolving these issues in a way that respects the rights of those
who have been harmed and helps to restore confidence in the system,” John
Walsh, acting Comptroller of the Currency, said in the OCC’s statement.
A record 2.87 million
homeowners received foreclosure filings in 2010, surpassing the 2.82 million
total for 2009, according to Irvine, California-based RealtyTrac Inc.
The first letters went out
today, according to Joe Evers, the OCC’s deputy comptroller for large banks.
Borrowers also can request a review at www.independentforeclosurereview.com.
Mortgage servicers will run
an advertising campaign later this year and work with housing counselors to get
word out to eligible borrowers, said Paul Leonard, a Financial Services
Roundtable lobbyist who is serving as a spokesman for the firms.
It’s impossible to predict
how many borrowers might be awarded compensation or when they might receive it,
Leonard said today on a conference call. Regulators will make the final
decision on whether borrowers have suffered harm and the amount of any
remediation, he said.
The Fed and the OCC, which
absorbed the OTS in July, haven’t offered said what might constitute harm to
borrowers. Consultants will review company records and homeowner information to
make decisions about compensation, according to Evers.
“Between the two sets of
information, they should be able to determine if there’s injury or harm,” he
told reporters on a conference call.
Robo-signing
Companies are being
required to conduct the reviews under terms of the consent agreement they
reached with regulators to resolve claims that they botched foreclosure
paperwork amid the wave of foreclosures stemming from the subprime mortgage
crisis. Reports of document robo-signing prompted several lenders to
temporarily suspend foreclosures last year.
Servicers signing the
accords included JPMorgan, Wells Fargo, Bank of America Corp., Citigroup, Ally
Financial Inc.’s GMAC unit, Aurora Bank FSB, EverBank Financial Corp., HSBC
Holdings Plc, OneWest, MetLife Inc., PNC Financial Services Group Inc.,
Sovereign Bank, SunTrust Banks Inc. and US Bancorp.
In addition to compensating
harmed borrowers, the banks agreed to improve their foreclosure, loan
modification and refinancing procedures by hiring staff, upgrading tracking
systems, assigning each borrower a single point of contact, and policing
lawyers and vendors.
State attorneys general and
the U.S. Justice Department are continuing their own talks with servicers to
seek additional relief for homeowners.
