FDIC Report Highlights Lessons Learned From Review of Foreclosure Practices

The Special Foreclosure Edition of Supervisory Insights, released by the Federal Deposit Insurance Corporation (FDIC), highlights lessons learned from an interagency horizontal review of the 14 largest residential mortgage servicers. To date, FDIC reviews of state nonmember banks have not identified instances of "robo-signing" or other serious deficiencies in mortgage servicing operations. Nevertheless, any bank involved in residential mortgage servicing can benefit from understanding the issues identified in the interagency review. To help institutions minimize their legal and reputational risks, this Special Foreclosure Edition provides examples, derived from the lessons learned, of effective residential mortgage servicing practices. "The best practices outlined in this publication provide important suggestions for avoiding pitfalls in servicing mortgage loans," said Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation (FDIC). "We encourage all residential mortgage servicers to read the article and consider the best practices as they review their own servicing operations." Supervisory Insights provides a forum for discussing how bank regulation and policy are put into practice in the field, sharing best practices, and communicating about the emerging issues that bank supervisors face.