Mortgage tech firms warn investors about impact from regulatory consent orders
The nation's largest mortgage servicing technology providers warned investors Wednesday about a federal order that is forcing servicing platforms to implement new foreclosure processes. Lender Processing Services Inc., one of the companies forced to comply with the regulators' corrective consent order, told investors in securities filings it will hire an independent third-party to study the firm's default management businesses and document execution practices. The study will cover LPS' activities from Jan. 1, 2008 through Dec. 31, 2010. LPS said the third-party's probe will hone in on the firm's DocX and Default Solutions operations, according to SEC filings. Lender Processing Services is only one of the major servicing players that signed a consent order with the Federal Reserve and the Office of the Comptroller of the Currency. Other firms impacted by the regulator's order include, Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), Ally Financial (GJM), HSBC North America Holdings (HBC), PNC Financial Services (PNC), U.S. Bancorp (USB), MetLife (MET) and SunTrust Banks (STI). Ally Financial also warned investors Wednesday, saying in securities filings that the firm and its subsidiaries entered into the consent order which is "a result of the ongoing investigations into procedures followed by mortgage servicing companies." Meanwhile, Mortgage Electronic Registration Systems Inc., or MERS, issued a statement saying the electronic mortgage tracking registry is "already actively implementing changes that tighten corporate governance, improve internal controls, and address quality assurance issues identified by the company and the agencies in the course of this review." JPMorgan Chase (JPM) reported Wednesday that new servicing practices will cost the firm $1.1 billion in the first quarter. Write to Kerri Panchuk.