Plans to Remedy Servicer Errors Completed by Nine Companies
The Federal Reserve Board has posted on-line action plans developed by nine of its supervised financial institutions to correct deficiencies in their residential mortgage loan servicing and foreclosure processing. The action plans were required by formal enforcement actions issued by the Federal Reserve last year after reviews conducted from November 2010 to January 2011 uncovered unsafe and unsound processing and practices at a number of supervised institutions.
The action plans released today were prepared by Bank of America, Citigroup, Everbank, JPMorgan Chase, MetLife, PNC, SunTrust, U.S. Bancorp, and Wells Fargo. The Federal Reserve said that other action plans would be forthcoming.
The Federal Reserve had demanded the action plans to describe, among other things, how the institutions will strengthen communications with borrowers by providing each borrower the name of a primary point of contact, establish limits on foreclosures where loan modifications have been approved, establish robust third-party vendor controls, and strengthen compliance programs. The parent companies of servicers were also required to submit plans to describe how they would improve oversight of their subsidiaries.
In addition, the enforcement actions also require the mortgage servicing companies to provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers and required that the servicers hire an independent consultant to review foreclosure files. The Federal Reserve said it was releasing engagement letters between the financial institutions and independent consultants, however the only ones immediately apparent among the hundreds of pages released today were those between JPMorgan and Deloitte & Touche, LLP and between SunTrust and PricewaterhouseCoopers LLC.
The Federal Reserve said it will closely follow the implementation of the actions plans to ensure that the financial institutions correct the identified deficiencies and evaluate any harm done to homeowners through foreclosures in 2009 and 2010.
The action plans can be found here.