Thursday, April 14, 2011

Big Banks Face Fines for Foreclosure Mess

The Federal Reserve Board and banking regulators yesterday formally accused 14 mortgage servicers  ( Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase & Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company) of engaging in "unsafe and unsound" practices in residential loan and foreclosure processing, announcing settlements that immediately require major procedural changes and will eventually include monetary damages, the Deal Pipeline reported yesterday. The Fed joined with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. in taking the action. The agencies required the mortgage servicers to act immediately to remedy the problems even as they and state attorneys general continue working out the exact damages of the fines that will be imposed. Under the settlements, each firm has to develop a plan to give borrowers a single point of contact; stop foreclosures of loans approved for modification; establish robust controls over third-parties providing loss mitigation or foreclosure services; provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures and strengthen programs to ensure compliance with state and federal law.