OCC Issues Interim Report on Servicer Compliance with Consent Orders

The Office of Comptroller of the Currency (OCC) has reported onrnthe actions taken by 12 servicers to comply with consent order issued in Aprilrnto correct deficient and unsafe or unsound foreclosure processes and actionsrntaken related to the independent foreclosure review announced by OCC, thernFederal Reserve, and the Office of Thrift Supervision earlier this month.   Therntwelve servicers covered by the OCC and OTC’s portion of the action are Bank of America, Citibank, HSBC, JPMorgan Chase, MetLifernBank, PNC, U.S. Bank, Wells Fargo, Aurora Bank, FSB; EverBank (and the thriftrnholding company, EverBank Financial Corp.); OneWest Bank, FSB (and its holdingrncompany IMB HoldCo LLC); and Sovereign Bank. </p

Tuesday’s report, Interim Status Report: Foreclosure-Related Consent Orders identifiesrnthe independent consultants retained by the servicers to conduct file reviewsrn(under the direction of OCC) for borrowers requesting redress.  According to the report, work is underway onrnactions to comply with the consent orders with efforts to correct deficiencies inrnforeclosure processes management oversight, and internal audit the mostrnadvanced.  An integrated claims processorrnhas begun mailing letters to borrowers who were in any stage of foreclosurernbetween January 1, 2009 and December 31, 2010 to inform them of the process forrnrequesting reviews of their cases if they believe they suffered financialrninjury through servicer misfeasance.   Outreach will also be made to borrowers using suchrnmethods as mass media advertising in national publication such as People, andrnTV guide, online marketing, social media marketing, media news coverage, andrnoutreach to community groups.</p

In addition to the reviews of borrow claims,rna “look-back” review will be undertaken, sampling to identify files for arnreview which is intended to further identify servicer deficiencies, errors, orrnmisrepresentations that may have caused financial injury.  This review will look at such information asrnwhether the foreclosing party had properly documented ownership or was otherwiserna proper party to the action; whether a foreclosure may have taken place whilerna modification was underway, or whether fees were improperly charged.   Resultsrnof the sampling may lead to more in depth reviews.</p

Under the consent order servicersrnwere required to submit plans for correcting deficiencies in a number ofrnservicing areas, address their use of MERS, manage third parties, and correctrnother operational difficulties.  Thosernplans have been submitted at various times over the last few months.  Plans to correct servicing deficienciesrninclude such measures ensuring that loss mitigation staff routinely communicaternwith staff processing foreclosures; that deadlines for responding torncommunication from borrowers and for making loan modifications requests be met;rnthat there is a reliable single point of contact for each borrower and that bernidentified in writing; and that staff is trained adequately to handlerndelinquencies, loss mitigation and loan modifications.  Other factors included in the plan includernprocedures and controls to ensure that a loan is protected from “dual tracking”,rni.e., that a loan approved for modification is pulled from foreclosurernproceedings; and that payments are promptly and properly credited; </p

Plans addressing oversight ofrnthird-party service establish processes for appropriate due diligence in evaluatingrnthe qualifications of potential third-party service providers before enteringrninto new contractual arrangements,  provide for regular, periodic reviews ofrnthird-party service providers and assessment of their performance based onrnqualitative standards for competence, completeness, and legal compliance ratherrnthan standards based solely on the volume of foreclosures processed or thernspeed of processing. Additionally, the plans provide for the secure custody andrnaccuracy of records transferred to these third parties during the foreclosurernprocess. </p

Other plans ensure appropriate oversight and controls of servicerrnactivities with respect to MERS and compliance with MERSCORP’s membershiprnrules, terms, and conditions  These plansrninclude enhancing controls and standardizing processes for executing mortgagernassignments by MERS certifying officers, improving processes for controllingrndata quality, and establishing periodic-in some cases daily-reconciliations ofrnkey reports and data to ensure compliance with MERS requirements and promptrnresolution of discrepancies. </p

Other plans address improving the managementrninformation systems that support servicing and foreclosure processing, assessingrnrisks posed by servicer operations, and setting up compliance committeesrnresponsible for the development and implementation of compliance programs,rnaction plans, policies and procedures, and strengthened operating processes torncorrect the deficiencies cited by the enforcement actions </p

While muchrnof the work to correct identified weaknesses in policies, operating procedures,rncontrol functions and audit processes will be substantially complete in thernfirst part of 2012, other longer term initiatives will continue through thernbalance of 2012. Actions and progress vary by servicer. OCC examiners continuernto provide ongoing oversight of activities to ensure compliance with thernconsent orders.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.