Federal Deposit Insurance Corp. Chairman Sheila Bair said there is a possibility the servicing standards from both the recently signed consent orders and the ongoing negotiations with the 50 state attorneys general can be combined. In April, major servicers signed consent orders with the Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision to settle an investigation into mishandled foreclosures. The agreements required servicers to develop plans for how they would handle troubled borrowers in the future. Servicers and the 50 AGs made progress during their recent settlement talks, specifically on those servicing standards. A group of Senators sent a letter to the OCC this week asking both the regulators and the AGs to work together on the reform. The OCC and the Fed pushed back the deadline for when servicers would have to submit plans for implementing new standards. “This is being coordinated with the Justice Department and the state AGs,” Bair said in testimony before the House Financial Services Committee Thursday. “There’s some hope that this can all be packaged together so that there is one set of standards for both the prospective reforms to make sure we don’t have these kind of problems going forward and the look back review that would identify which borrowers were harmed and could receive redress.” New Mortgage Bankers Association CEO David Stevens stressed to Congress in May to combine the variety of efforts establishing new servicing standards into one set these companies can more easily comply with. OCC Deputy Comptroller David Wilson testified before Congress on Wednesday that regulators were careful not to interfere with the ongoing negotiations but that they are coordinating with the Justice Department and the states. Rep. Maxine Waters pressed both Bair and John Walsh, the head of the OCC, on the look-back reviews. Regulators found foreclosure problems spread industry-wide through their own review of 2,800 foreclosure files and required servicers to hire third-party firms to conduct a more robust audit. “The sampling that was done in those exams was to establish whether there were sufficient grounds to determine if the servicers had failed in significant ways and that remediation actions, cease and desist orders were needed,” Walsh said. Bair said she wanted to see an interagency examination team review these upcoming third-party audits. “I think everyone is working in good faith here, but an extra set of eyes, given the importance of the project would be helpful,” Bair said. Write to Jon Prior. Follow him on Twitter @JonAPrior.
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