by Broderick Perkins
(7/4/2011) Remember that bank-spanking federal agencies doled out to eight mortgage servicers for fouling foreclosures with robo-signing shenanigans, dual tracking tricks and other foreclosure head-fakes?
All national banks are going to have to hold out their wrists for a similar ruler whack, but they are likely laughing their assets off at what appears to be impotent government regulation.
A reprimand -- and that's what this order amounts to -- is the least mortgage servicers should endure given the real lashings homeowners and mortgage banking consumers have had to endure because of lender and servicer failures since before the onset of the Great Recession.
Homeowners facing foreclosure don't get extra months to stave off a foreclosure, but banks now have three months to conduct a self-assessment of their foreclosure management procedures, according to a new order from the Office of the Comptroller of the Currency.
Mortgage servicers have been using questionable foreclosure procedures for nearly a half decade and OCC's order is just getting around to busting banks' chops -- if you can even call it chop busting.
The OCC said on June 30, banks that determine problems in their foreclosure processes must take "immediate" corrective action, but they have until September 30 to take that "immediate" action.
After reviewing 14 large mortgage servicers in the fourth quarter of 2010, the OCC, Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS) found what the regulators described a "pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing."
In the earlier April 2011 report "Interagency Review of Foreclosure Policies and Practices" regulators also found "unsafe and unsound practices and violations of applicable federal and state laws."
Enforcement actions against eight national bank mortgage servicers consisted largely of telling mortgage servicers to clean up their act, but did not "preclude determinations regarding assessment of civil money penalties, which the OCC is holding in abeyance."
Like that's going to happen.
Now, two months later, federal agencies are concerned "that similar weaknesses may exist in other servicing operations."
"National banks engaged in mortgage servicing, whether for their own book or others, must ensure compliance with foreclosure laws, conduct foreclosure processing in a safe and sound manner, and establish responsible business practices that provide accountability and appropriate treatment of borrowers in the foreclosure process," the OCC's statement says.
In the latest OCC report, the federal regulator again reminded mortgage servicers to stop, among other practices:
• The practice of "dual tracking" simultaneously engaging a homeowner in a loan modification, while foreclosing on the property.
• Using robo-signing to finalize foreclosures. Robo-signing is the practice of employees, dubbed "robo-signers," who vouched for the accuracy of foreclosure documents without reading them.
• Losing and misplacing documents, not keeping records of contact with homeowners, and asking homeowners to repeatedly submit the same documents.
Good luck with that.
Federal regulators can't even regulate themselves.
In a June 21, 2011 report, "Audit of the Federal Housing Finance Agency's (FHFA) Consumer Complaints Process" by the FHFA's own Office of Inspector General (OIG), the FHFA OIG found that the FHFA has let complaints alleging fraud, abuse, and waste -- many involving possible improper foreclosure actions -- slip through the cracks with no oversight of their resolution. The inspector general says FHFA also failed to refer criminal allegations to law enforcement authorities.
The FHFA, in part, oversees Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs) that hold or guarantee about half the nation's outstanding mortgages.
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