Federal bank regulators yesterday announced settlements with the nation’s largest mortgage lenders for unethical foreclosure practices that were identified in 2010 Q4.
Government agencies reached settlements with Citibank, Metlife Bank, PNC, U.S. Bank, HSBC, Bank of America Corp., JPMorgan Chase, and Wells Fargo & Co., as well as two service providers. The lenders agreed to compensate borrowers who were wrongly foreclosed upon and to restructure their foreclosure practices. Financial penalties will be considered at a later time.
“These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations,” said acting Comptroller of the Currency John Walsh. “These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers.”
To facilitate the review of unethical foreclosure practices, each lender will be required to enlist an outside firm to analyze foreclosures that took place between Jan. 1, 2009 and December 31, 2010.
“Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward,” said Mr. Walsh.