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Cease-and-desist orders issued against 8 mortgage bankers

The Office of the Comptroller of the Currency issued cease-and-desist orders Wednesday against eight national mortgage bankers, including Bank of America, PNC and Wells Fargo, for “unsafe and unsound” practices dealing with residential mortgage foreclosures.

The banks agreed to the orders, which require them to undertake a number of fixes to address concerns about the foreclosure process that came to light last year. The banks agreed to correct any mistakes that were identified during reviews undertaken in the fourth quarter of 2010. They also agreed not to foreclose on mortgages once the loan has been approved for modification.

Additionally, the OCC is requiring the banks to make sure borrowers have a single point of contact available to them throughout the modification and foreclosure process.

“These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations,” acting Comptroller of the Currency John Walsh said in a statement. “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. 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.”

The eight loan servicers issued cease-and-desist orders are: Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo. The OCC also issued cease-and-desist orders to Lender Processing Services and its subsidiaries DocX LLC and LPD Default Solutions Inc. and the parent company of Mortgage Electronic Registration Systems Inc. (MERS).

The companies did not admit to fault and the OCC orders do not preclude potential civil penalties. The attorneys general of all 50 states have a parallel investigation going into the banks over ‘robo-signing’ and other concerns in residential foreclosures.

The Federal Deposit Insurance Corp., which participated in the interagency reviews, but is not the primary federal regulator for any of the largest mortgage servicers, commented Wednesday on the orders.

“The findings of the interagency review clearly show that the largest mortgage servicers had significant deficiencies in numerous aspects of their foreclosure processing,” the FDIC said in a statement. “These deficiencies included the filing of inaccurate affidavits and other documentation in foreclosure proceedings (so-called ‘robo-signing’), inadequate oversight of attorneys and other third parties involved in the foreclosure process, inadequate staffing and training of employees, and the failure to effectively coordinate the loan modification and foreclosure process to ensure effective communications to borrowers seeking to avoid foreclosures.”

Geoff Greenwood, spokesman for Iowa Attorney General Tom Miller, who is heading up the bipartisan multistate group, said they met with the banks a few weeks ago and negotiations are continuing.

“These orders are independent of our efforts, and we don’t expect it to limit the scope of what we’re doing,” he said. “It’s still full-steam ahead.”

The FDIC regulates a number of state nonmember banks, which collectively service less than 4 percent of residential mortgages. The agency said it has been reviewing cases of the institutions it regulates.

“To date, the review has not identified “robo-signing” or any other deficiencies that would warrant formal enforcement actions,” the agency said in a statement. “The FDIC will continue to monitor these servicers, as well as the performance of institutions servicing loans through FDIC securitizations or resolution programs.”

4 comments

  1. Your article on Cease-and-desist order. is welcoming because someone finally know what I have been going through for 2 years. I lost my job in April 2009, I informed BOA two days after I lost my job, that I am a single mother and that I lost my job. they told me to fax certain information which I did. several times. I was always put on hold or get transfer several times and finally told that the person that handle modification is not in. then in August 2010 i was served foreclosure notice. during that time I was looking for a job. they were aware that I was on Unemployment and actively looking for a job. when i did they were informed about. it each time I got a job BOA was notify. I was asked each time to fax my pay stub which I did. In November 2010 I got a job that pays well and inform BOA Still they did not respond. I would like to know who i can contact now and with out getting the runaround.I want to keep my home.

  2. I feel like the comment above tells my story as it is very similar to mine. I tried notifying Bank of America, formerly Countrywide approximately 6 months prior to losing my job and undergoing a medical condition as well. Upon their review, my loan modification Application submission, I was denied. When I became unemployed (8/2008), I submitted another application for the MHA. I’ve approximately submitted about 3 applications already, always submitted what was requested, and was denied again and again. Thus, unable to speak with my loan negotiators because they indicated that there was certain litigation on my loan, which did not allow them to discuss it’s status with me, or that it was assigned to someone else and they could not provide any info. Although I sought the help of a not-for-profit organization, to date after 2 years of battling with Bank of America to modify my loan, as I hold a stable job that pays well, to this date they have not approved me for a modification, or have discussed what’s going on with my mortgage. I just want to get my loan modified and start making affordable payments. Owning my home has been my biggest accomplishment. My greatest efforts and savings have been put into it. Also, I am a single mother striving to survive in this economy and trying to have a tranquil and healthy place for my two young daughters to live. I can finally breathe again and be aware that corresponding authorities are taking care of business to stop all these unfair practices that the banks are doing with this nation. If all of us who are in default with our mortgage get a reasonable loan modification, I am sure that the economy will get a lot better, allow for more financial stability as it will help cure most of the deficits that the delinquent mortgages are causing due to the banks inappropriate practices with their borrowers. I know I will see the light at the end of the tunnel, and many others who are going through the same situation with their lenders. God Bless America and all those hands that are working together seeking justice!!!

  3. Hello Maam: I had a similar experience but thankfully I have a Masters in Real Estate and could smell bank fraud a mile away. The Attorney Generals Office of each State was actually part of the decision making and will be executing the law in full to protect you. In Georgia, our Attorney General – Sam Olens – even spelled out each step to take including form letters. For me, they “ceased and desisted’ rather quickly. I hope your state is as diligent.

  4. Alexia email I’m a REO investor and I may can help you with your loan modifaction

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