Fed consent orders will hike mortgage servicing costs: BofA Merrill Lynch
Mortgage servicers forced to comply with federal enforcement orders on the foreclosure process will see an increase in servicing costs and longer timelines, Bank of America Merrill Lynch said in a research report Friday. The Federal Reserve, the Office of the Comptroller of the Currency and the Office of Thrift Supervision announced enforcement actions against Ally Financial [[Ally-PB]], Aurora Bank, Bank of America (BAC), Citigroup (C), EverBank, HSBC (HBC), JPMorgan Chase (JPM), MetLife (MET), OneWest, PNC (PNC), Sovereign Bank, SunTrust (STI), U.S. Bancorp (USB) and Wells Fargo (WFC) this week. "The biggest change will be the establishment of a single point of contact for borrowers," BofA said in its report "In addition, servicers will need to hire and train additional staff. Longer term, the additional staff should help to work through the backlog of foreclosures in the pipeline." With the enforcement orders containing 25 action items and 50 new policies, BofA-Merrill Lynch said servicers will "have to reallocate resources to first develop then implement the plans." The BofA Merrill Lynch report says the consent orders could give servicers leverage when negotiating with attorneys general who are pushing for a settlement with servicers over foreclosure processing issues. "Until an agreement with the AGs is completed, a cloud is expected to remain over the foreclosure process," BofA-Merrill Lynch analysts wrote. Write to Kerri Panchuk.