Feds Slap Collective $9.3 Billion Hit on Big Banks for Deficient Mortgage Servicing
Thirteen big banks were collectively handed a $9.3 billion penalty from the Office of the Comptroller of the Currency and the Federal Reserve Board for “deficient practices in mortgage loan servicing and foreclosure processing.”
The regulators said amendments that memorialize agreements in principle announced in January will increase the previously announced penalty to $3.6 billion in cash payments and $5.7 billion in other assistance to borrowers, such as loan modifications and forgiveness of deficiency judgments.
In providing the $5.7 billion in assistance, the 13 servicers are expected to undertake well-structured loss mitigation efforts focused on foreclosure prevention, particularly those designed to keep borrowers in their homes “through affordable, sustainable, and meaningful home preservation actions,” the OCC said this week in a release.
Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo are the 13 banks that received the enforcement actions, which replace the requirements related to the Independent Foreclosure Review.
For GMAC Mortgage, Everbank and OneWest, which did not enter agreements in principle with federal regulators, the Independent Foreclosure Review process continues, the OCC said.
The OCC and Federal Reserve said their examiners will continue to monitor the banks’ implementation of corrective actions.
Borrowers covered by the amendments include 4.2 million people whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the companies listed above. The paying agent, the Minneapolis-based Rust Consulting Inc., will contact affected borrowers by the end of March with payment details, the agencies said.
Rust will send payments and correspondence regarding the settlement, which will range from hundreds of dollars up to $125,000. Borrowers are not required to take any additional steps to receive the payments, or execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment.
Borrowers can call Rust Consulting at 1-888-952-9105 to update their contact information or to verify that they are covered by the amendments.