OCC directs banks to internally assess foreclosure practices by Sept. 30
The Office of the Comptroller of the Currency directed national banks to conduct a self-assessment of foreclosure practices by Sept. 30. In April, 14 major mortgage servicers signed consent orders with the OCC, the Office of Thrift Supervision and the Federal Reserve. The agreements settled an investigation into questionable foreclosure practices that came to light at the end of 2010. The consent orders require servicers, including Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Ally Financial (GJM), to hire a third party for a review of foreclosure files in order to determine if homeowners were harmed directly from any insufficiencies. However, the regulators said the reviews will not be made public. The OCC said Thursday all banks under its supervision must complete the self-assessments, even those that did not sign consent orders. "Banks that identify weaknesses in their foreclosure processes through the self-assessment should take immediate corrective action," the OCC said. "Banks should determine if the weaknesses resulted in any financial harm to borrowers and provide remediation where appropriate." The OCC also put out a set of foreclosure management standards for all banks as well. The standards mirror servicing guidelines in the consent orders. According to the standards, servicers must suspend foreclosure proceedings while a borrower is in a trial-period modification. Management must ensure employees properly review and sign documentation according to law. Servicers also must install better oversight of third-party vendors. Lender Processing Services (LPS) and Mortgage Electronic Registration Systems signed consent orders as well for mishandled and allegedly fraudulent documentation. Federal Deposit Insurance Corp. Chairman Sheila Bair said there is still the possibility of aligning OCC and Fed servicing standards in the consent orders with the settlement struck between servicers and the 50 state attorneys general. However, negotiations remain ongoing. As for the self-assessments, the OCC likely will not release those publicly either but will monitor the results. "Examiners will review the self-assessments, corrective actions, and any determinations of financial harm and related remediation in the next quarterly review or examination of the bank," the OCC said. Write to Jon Prior. Follow him on Twitter @JonAPrior.