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6 Banks Face Limits on Mortgage Servicing Activities by OCC

zacks.com | June 19, 2015

By Zacks Equity Research

It seems that the scars inflicted by the financial crisis have not been erased entirely from the banking business. The Office of the Comptroller of the Currency (OCC) has imposed restrictions on business activities related to mortgage servicing of six banks as they failed to comply with the consent orders related to faulty foreclosures in the past.

The six banks – JPMorgan Chase & Co. (JPM - Analyst Report), Wells Fargo & Company (WFC - Analyst Report), HSBC Holdings plc (HSBC - Analyst Report), U.S. Bancorp (USB - Analyst Report), Banco Santander, S.A. , EverBank Financial Corp. (EVER - Snapshot Report) – have not fulfilled all the requirements of the consent orders related to the 2011 independent foreclosure review. OCC stated that these banks failed to complete the required corrective actions.

However, the OCC concluded enforcement actions against Bank of America Corporation (BAC - Analyst Report), Citigroup Inc. (C - Analyst Report) and The PNC Financial Services Group, Inc. (PNC - Analyst Report) as these banks were found to be compliant with the consent orders.

Per the release of OCC, the above mentioned six banks face restrictions with respect to the acquisition of residential mortgage servicing or residential mortgage servicing rights, new contracts of residential mortgage servicing for other parties, outsourcing and off-shoring of new residential mortgage servicing activities.

Further, limitations have been imposed regarding new appointments of senior officials in charge of residential mortgage servicing or related risk management and compliance. However, the restrictions differ depending on the case of each bank.

Morris Morgan, the OCC's deputy comptroller for large banks stated , “One way or another there will be additional action... the meter is still running relative to those six banks and the nature and severity of the additional action will be based on the length and severity of their continued non-compliance.” He further added "We expect their remediation time frame to be measured in months, not years here. And if institutions take longer than that, we wouldn't necessarily wait until completion either."

The banks stated that they have made considerable progress to resolve the issues and would continue to co operate with the OCC on remaining matters.

The independent foreclosure review was part of the $10 billion settlements with the OCC and the Federal Reserve related to mortgage abuses, which was further amended in 2013. As per the agreements, banks were required to modify and improve their mortgage servicing operations to settle claims of mishandling loan documents, robo-signing papers to initiate rapid foreclosures and undertaking other fraudulent measures that initiated large number of home foreclosures following the 2008 financial crisis.

The OCC stated that to date over $2.7 billion has been paid to more than 3.2 million borrowers by the banks involved in the agreements, reflecting distribution of 90% of the total amount paid by banks. The regulator will move any remaining uncashed payments to the states so that eligible borrowers can claim these there. OCC expects around $280 million to be remained by the end of this year which will be transferred to the states.

Bottom Line

The latest announcement by the OCC seems to send a clear message that the banks cannot escape from their past misconducts and that they are strictly required to improve their business practices in order to prevent any further crisis. We remain encouraged by the continued efforts of regulators to bring stability in the financial sector and protect interest of investors.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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