OCC: OCC Takes Enforcement Action Against Eight Servicers for Unsafe and Unsound Foreclosure Practices

Page 1 of 3

Home > News and Issuances > News Releases > 2011

NR 2011-47 FOR IMMEDIATE RELEASE April 13, 2011 Contact: Robert Garsson

OCC Takes Enforcement Action Against Eight Servicers for Unsafe and Unsound Foreclosure Practices WASHINGTON The Office of the Comptroller of the Currency today announced formal enforcement actions against eight national bank mortgage servicers and two third-party servicer providers for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing. The eight servicers are Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank, and Wells Fargo. The two service providers are Lender Processing Services (LPS) and its subsidiaries DocX, LLC, and LPD Default Solutions, Inc.; and MERSCORP and its wholly owned subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS). "These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations," said acting Comptroller of the Currency John Walsh. "These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers. 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 enforcement actions require the servicers to promptly correct deficiencies in residential mortgage loan servicing and foreclosure practices that examiners identified in reviews conducted during the fourth quarter of 2010. The actions require the servicers to make significant improvements in practices for residential mortgage loan servicing and foreclosure processing, including communications with borrowers and dual-tracking, which occurs when servicers continue to pursue foreclosure during the loan modification process. The enforcement actions require the servicers to ensure that foreclosures are not pursued once a mortgage has been approved for modification and to establish a single point of contact for

http://www.occ.treas.gov/news-issuances/news-releases/2011/nr-occ-2011-47.html

9/20/2011

OCC: OCC Takes Enforcement Action Against Eight Servicers for Unsafe and Unsound Foreclosure Practices

Page 2 of 3

borrowers throughout the loan modification and foreclosure processes. In addition, the actions require servicers to establish robust oversight and controls pertaining to their third-party vendors, including outside legal counsel, that provide default management or foreclosure services. The OCC's actions also require each servicer to engage an independent firm to conduct a multi-faceted review of foreclosure actions between January 1, 2009, and December 31, 2010. This requirement includes a comprehensive "look back" to assess whether foreclosures complied with federal and state laws, whether foreclosures occurred when grounds for foreclosure were not present, such as when loans were performing, and whether any errors, misrepresentations or other deficiencies resulted in financial injury to borrowers. The actions also require each servicer to establish a process for borrowers who believe they have been financially harmed by such deficiencies to make submissions to be considered for remediation. Each servicer must also submit a plan to remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies identified in the independent consultant's findings. The OCC based its enforcement actions on the findings of examinations conducted as part of the interagency horizontal reviews undertaken by the federal banking regulators in the fourth quarter of 2010. Examinations of these eight national bank servicers identified significant weaknesses in mortgage servicing and foreclosure governance that resulted in unsafe and unsound practices. The scope and degree of these practices differed among the servicers; however, based on the sample of files reviewed by OCC examiners, borrowers in the sample were seriously delinquent at the time of foreclosures and servicers held the notes and documents required to foreclose. A summary of the findings of the interagency reviews is available in the Interagency Review of Foreclosure Policies and Practices, which was produced by the OCC, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision. The enforcement actions do not preclude determinations regarding assessment of civil money penalties, which the OCC is holding in abeyance. Related Links Interagency Review of Foreclosure Policies and Practices (PDF) Consent Order for Bank of America (PDF) Consent Order for Citibank (PDF) Consent Order for HSBC Bank (PDF) Consent Order for JPMorgan Chase Bank, N.A. (PDF) Consent Order for LPS; DocX, LLC; and LPD Default Solutions, Inc. (PDF) Consent Order for MetLife Bank, N.A. (PDF) Consent Order for MERSCORP and Mortgage Electronic Registration Systems, Inc. (MERS) (PDF)

http://www.occ.treas.gov/news-issuances/news-releases/2011/nr-occ-2011-47.html

9/20/2011

OCC: OCC Takes Enforcement Action Against Eight Servicers for Unsafe and Unsound Foreclosure Practices

Page 3 of 3

Consent Order for PNC Bank, N.A. (PDF) Consent Order for U.S. Bank National Association, U.S. Bank National Association ND (PDF) Consent Order for Wells Fargo Bank, N.A. (PDF) ###

The Federal Reserve System, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and . the Office of Thrift Supervision (OTS), referred to as the agencies, conducted on-site investigation of foreclosure processing of the nations major institutions handling foreclosure processing and resulted in the the issuance of Consent Orders and Consent Cease and Desist Order against the following and all their subsidiaries: All bank and thrift holding company parents of Ally Bank/GMAC, Bank of America, Citibank, Everbank, HSBC, JPMorgan Chase,MetLife, OneWest, PNC, SunTrust, U.S. Bank, and Wells Fargo. The review uncovered unsafe and unsound practices, violations of law and foreclosure processes geared toward speed and quantity, instead of quality and accuracy. It was found that they engaged in patterns of filing or causing to be filed in state and federal courts false affidavits making various assertions, such as ownership of the mortgage note and mortgage; including numerous cases of notary fraud; initiated nonjudicial foreclosure proceedings without always ensuring that either the promissory note or the mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party at the appropriate time; failed to ensure proper administration of its foreclosure processes; failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services; and therefore, the Comptroller found by reason of such conduct, that these Bank, Thrifts, engaged in unsafe or unsound banking practices. The only way to get a feel for just how dishonest these institutions have been in persistent and routine patterns of fraudulent foreclosure practices is to click on the respective link for each institution above and read the specific Consent Order and Cease and Desist Order relative to each.

http://www.occ.treas.gov/news-issuances/news-releases/2011/nr-occ-2011-47.html

9/20/2011