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The Federal Reserve Thursday released a set of detailed plans banks have put together to correct problems in their mortgage-servicing and foreclosure-processing operations.
The Fed released so-called action plans for Citigroup Inc. (C) and HSBC Finance Corp, a unit of HSBC Holdings PLC (HBC, HSBA.LN, 0005.HK), as well as a legal agreement between Ally Financial Inc. and the independent consultant the company retained to review its foreclosure process.
The Fed also published an agreement with Ally on its foreclosure review that was made necessary by the recent bankruptcy filing of the company's mortgage subsidiary.
More than a year ago, the Fed and the Office of the Comptroller of the Currency required 14 large mortgage-servicing companies to hire consultants to evaluate their foreclosure practices. Consumers who suffered "financial injury" could be in line for compensation after the consultants review homeowners' cases.
The review process is one of several efforts to compensate consumers, after revelations surfaced in the fall of 2010 about banks' use of so-called robo-signers--bank employees who signed off on thousands of foreclosure filings and falsely claimed to have personally reviewed each case.
Federal and state officials earlier this year announced a $25 billion settlement of foreclosure-abuse allegations with the nation's five largest mortgage-servicing firms: Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), J.P. Morgan Chase & Co. (JPM), Citigroup Inc. and Ally.
In addition to the 14 banks cited last year, the Fed has ordered Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS), to review foreclosures conducted by mortgage-servicing units they have sold to Ocwen Financial Corp. (OCN). The Fed said it would also release similar agreements with those two firms.
Consumers have until July 31 to request a review of their foreclosure cases under the bank regulators' process. In addition, they are eligible for compensation through the separate state and federal settlement, which doesn't subject consumers to a thorough review and is expected to provide homeowners with $1,500 to $2,000 each.
-By Alan Zibel, Dow Jones Newswires; 202-862-9263; email@example.com