UPDATE: US OCC Says It Is Examining Banks' Foreclosure Procedures
October 14 2010 - 9:55PM
Dow Jones News
The Office of the Comptroller of the Currency is examining big
mortgage servicers' foreclosure practices.
The regulator's action means banks could face regulatory
reprimands for botched foreclosure documentation.
The OCC, which regulates the nation's largest banks, has
initiated "examinations" of foreclosure and loss-mitigation
procedures at big banks, "to be conducted over the next several
weeks to confirm compliance and that banks have remedied any
identified issues," an OCC spokesman said.
"At the same time bank supervision staff conduct these exams, we
are investigating allegations of procedural breakdowns at these
large institutions," he said.
Several mortgage servicers belonging to large banks have
revealed in recent weeks that some employees signed foreclosure
documents they had not personally reviewed. Such employees, who
processed hundreds of foreclosure documents daily, have become
known as "robo-signers" and have attracted the ire of 50 state
attorneys general.
Regulators, chief among them the OCC, are also signaling their
interest.
Sheila Bair, the chairman of the Federal Deposit Insurance
Corp., said Wednesday FDIC-supervised banks "have limited exposure
to loans signed by 'robo-signers,"' but the agency continues "to
closely monitor the situation."
Richard Neiman, the Superintendent of Banks for New York State,
said in a statement Thursday, "It is incredibly irresponsible that
some servicers are not doing the bare minimum of following existing
laws and properly verifying foreclosure documents." His department
required 20 mortgage servicers to conduct internal reviews.
Jane M. Azia, the director of consumer protection and
non-depository institutions at the State of New York Banking
Department, on Oct. 8 sent a letter to banks the department
regulates requesting that they suspend foreclosures in New York
until conducting a thorough analysis of their practices.
Ally Financial Inc. said on Sept. 20 it discovered "potential
issues" at its GMAC Mortgage unit. Four days later, it said it
"suspended evictions and post-foreclosure closings in the 23
states."
After concerns surfaced at Ally, the OCC ordered large national
bank servicers to review their procedures before foreclosing, and
"several announced temporary suspensions of their foreclosure
proceedings," the OCC spokesman said.
J.P. Morgan Chase & Co. (JPM) and Bank of America Corp.
(BAC) have imposed widespread, temporary foreclosure moratoriums.
Spokesmen for both banks on Thursday wouldn't say whether their
actions were influenced by the OCC.
On Thursday, Wells Fargo & Co. (WFC) said it was "doing some
additional reviews" of foreclosure affidavits. But Wells Fargo said
it is "satisfied that our foreclosure affidavit process is
sound."
Banks are regularly examined, but examinations initiated when
regulators suspect problems can lead to serious enforcement actions
that dictate change inside banks.
On Thursday, Jerry Selitto, the chief executive of mortgage
servicer PHH Corp. (PHH), said his company "completed a
comprehensive review of its foreclosure procedures" in response to
regulators, and "has no plans" to halt foreclosures. Citigroup Inc.
(C) has said it has no reason to believe a foreclosure "suspension
is necessary."
-By Matthias Rieker, Dow Jones Newswires; 212-416-2471;
matthias.rieker@dowjones.com
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