Independent reviews in mortgage servicer consent orders to stay sealed
When mortgage servicers signed consent orders with the Office of the Comptroller of the Currency and the Federal Reserve, these companies were required to hire outside firms to conduct "look back" evaluations of questionable foreclosure practices.
But these reviews will not be made public, according to an OCC spokesman.
Major servicing arms at Bank of America ($13.14 -0.07%), JPMorgan Chase ($53.37 0.02%), Wells Fargo ($39.96 -0.055%), Citigroup ($50.04 -0.49%), Ally Financial ($25.59 0.06%) and others agreed to the enforcement actions taken in April as a result of mishandled foreclosures still being corrected.
Servicers have to put in place new operations, add staff, establish a single-point of contact for borrowers and end the practice of pursuing a foreclosure while evaluating a possible modification.
The banks were also required to hire third-party firms to review foreclosure proceedings between Jan. 1, 2009 and Dec. 31, 2010. The reviews will be done to identify borrowers who suffered financial harm because of faulty foreclosure practices. The OCC and Fed will approve which companies conduct the reviews.
Federal Deposit Insurance Corp. Chairman Sheila Bair said in a Senate committee hearing this week that these reviews will be a major issue. The investigation conducted by the OCC and the Fed included a review of 2,800 case files between Jan. 1, 2009 and Dec. 31, 2010.
But the additional "look back" reviews could provide more meaningful details over the scope of the problems, and she told Congress it was vital for regulators to choose wisely.
"These independent companies may have other business with them and may want to conduct future business with them, so I think this is a huge issue," Bair said.
The OCC spokesman said the agency has a number of control points in the process.
"We will approve the third-party reviewer, and the action plan. We will also review and approve the 'look back' results and related actions to ensure compliance with the consent orders," the spokesman said, "however the results of individual look back reviews are supervisory materials that are not releasable."
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