The nation’s top mortgage servicers are expected to sign legal agreements by the end of this week compelling them to change their foreclosure procedures, regulatory officials said Tuesday. þþThe servicers, which violated state and local laws and regulations governing foreclosures, are agreeing to improve their methods in numerous ways. They will be required to have more layers of oversight and proper training of their foreclosure staff. The oversight will extend to third party groups, including the law firms that do much of the actual work of eviction. þþUnder the new rules, every homeowner in default will have a single point of contact with the servicer. The servicers will end their practice of foreclosing while borrowers are pursuing loan modifications that might allow them to stay in their homes. þþOne of the most significant measures in the consent agreement will require servicers to hire an independent consultant to review foreclosures done over the last two years. If owners were improperly foreclosed on or paid excessive fees, they will be compensated. þþThe reforms were described by individuals who spoke on condition of anonymity because the consent agreements were not yet public. The banks either could not be reached or declined to comment. þþBringing in a consultant to establish the amount of damages will give individuals who feel they were abused by their servicer some means of redress. While the servicers have acknowledged violating the laws they maintain that very few if any people lost their house who were not in severe default. þþJamie Dimon, chief executive of JPMorgan Chase, addressed the issue Tuesday at a banking conference in Washington. “Some of the mistakes were egregious, and they’re embarrassing,” he said, according to Bloomberg News. “But we made a mistake, and we’re going to pay for that mistake.” þþMany of the reforms that the servicers are agreeing to were also being sought by the state attorneys general, who began their own search for reform last fall. For several weeks in January, the regulators and the attorneys general attempted to work with officials from the Justice Department and the Department of Housing and Urban Development to produce one comprehensive settlement, but the attempt proved unwieldy. þþThe attorneys general met face to face with the servicers for the first time last week at the Justice Department. A spokesman for Iowa Attorney General Tom Miller, who is leading the effort, said more meetings are planned but declined to be specific. þþThe attorneys general have larger goals than the regulators. They are seeking to make the banks to cut the debt of delinquent owners. The servicers are balking at this. þþAs a result of the changes being imposed by the banking regulators, servicers will have two options: either hire more employees to give the millions of households in default closer attention, or slow the pace of foreclosures. þþForeclosure is already a ponderous process, and has grown more so since the controversy over the servicers’ procedures erupted last fall. The average household in foreclosure has been delinquent for more than 500 days. þþRegulators expect to issue their report on foreclosure practices at the top 14 servicers within the next few weeks. Preliminary consent agreements were sent to the servicers in February. þþThe report, whose conclusions have been foreshadowed by regulators in Congressional testimony, derives from an investigation this winter by the Office of Comptroller of the Currency, the Federal Reserve Board, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. It will not name individual banks but rather describe their aggregate behavior. þþThe investigators reviewed the policies and procedures, structure and staffing of the top servicers, as well as their use of law firms and other third parties. They examined 2,800 foreclosures in various stages. þþThe banks examined were Bank of America, Citibank, GMAC, JPMorgan Chase, Wells Fargo and nine others. The examination found critical deficiencies and shortcomings in foreclosure preparation and oversight, resulting in violations of state and local foreclosure laws, regulations and rules. þþThe servicers will probably be assessed fines at a later point. þþ
Source: NY Times
