Mortgage servicers, OCC meet privately on consent orders
The Office of the Comptroller of the Currency met with the 14 mortgage servicers Friday over details in the recently signed consent orders, sources familiar with the matter confirmed. The orders are meant to settle recent foreclosure investigations. According to the orders, servicers must retain an independent firm to review foreclosure actions pending between Jan. 1, 2009 and Dec. 31, 2010. The review will be conducted to determine any financial injury to borrowers caused by the errors, misrepresentations or other deficiencies. Mortgage servicers, HousingWire is informed, are raising questions about the way in which the independent reviews are implemented. The OCC and the Fed already conducted a review of 2,800 files between these dates, but servicers are also reportedly now asking about the sampling size for these reviews. The independent reviews, however, will not be made public as HousingWire reported last week. But Federal Deposit Insurance Corp. Chairman Sheila Bair said regulators must be diligent on what auditing firms are allowed to conduct the reviews. The nation's four largest servicers Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM) and Citigroup (C) declined to comment, citing regulatory restrictions against disclosure. Meanwhile, the regulators are working to establish a national mortgage servicing standard built upon the requirements in the consent orders, Acting Comptroller of the Currency John Walsh said in a speech Thursday. "The standards we’re looking at would apply to almost every aspect of the business," Walsh said. "They would govern the handling and crediting of borrower payments, ensure that borrowers receive full and accurate information about their accounts, and require servicers to respond promptly to borrower questions or complaints, among other things." Walsh did question the timing of the reams of new regulations for the mortgage industry. There are 15 to 20 new mortgage lending and servicing requirements coming down the pipeline from Dodd-Frank Act alone in what Walsh called "more tsunami than simple wave." "I believe comprehensive mortgage servicing standards are necessary, and that the standards proposed by the OCC all make good sense," Walsh said. "But they will change the servicing business in important ways, and it may be that some providers will decide that the high-volume, low-margin, technology-dependent model no longer works financially. If major players scale down or leave the business, how will that affect the mortgage markets and access to homeownership?" Kerri Panchuck contributed to this report. Write to Jon Prior. Follow him on Twitter @JonAPrior.