The U.S. Office of the Comptroller of the Currency (OCC) has announced its independent foreclosure review process of the nation's mortgage servicers. On April 13, 2010, the OCC, along with the Board of Governors of the Federal Reserve Board (FRB), and the Office of Thrift Supervision (OTS) announced enforcement actions against 14 large residential mortgage servicers and two third-party vendors for unsafe and unsound practices related to residential mortgage servicing and foreclosure processing that occurred in 2009 and 2010. Independent consultants are charged with evaluating whether borrowers suffered financial injury through errors, misrepresentations, or other deficiencies in foreclosure practices and determining appropriate remediation for those customers. Where a borrower suffered financial injury as a result of such practices, the consent orders require remediation to be provided.
"The independent foreclosure review is a significant component of the mortgage servicers' compliance with our enforcement actions," said acting Comptroller of the Currency John Walsh. "These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices identified in our enforcement actions."
The 14 mortgage servicers covered by the enforcement actions began mailing letters on Nov. 1 to eligible borrowers that explain how to request a review of their case if they believe they suffered financial injury as a result of errors, misrepresentations, or other deficiencies in foreclosure proceedings related to their primary residence between Jan. 1, 2009 and Dec. 31, 2010, and the property securing the loan must have been the primary residence. The mortgage must have been serviced by one of the following mortgage servicers:
►America’s Servicing Company
►Aurora Loan Services
►Bank of America
►IndyMac Mortgage Services
Borrowers may also visit IndependentForeclosureReview.com for more information about the review and claim process. Requests for reviews must be received by April 30, 2012.
In addition to this outreach and claims program, independent consultants will also review a variety of sample cases from each servicer. Where they identify issues, they will conduct additional secondary reviews to identify as many affected borrowers as possible.
"The challenge is substantial, but the steps we have required the servicers to take are vitally important to resolving these issues in a way that respects the rights of those who have been harmed and helps to restore confidence in the system," said Walsh.
Walsh said the reviews will take several months to complete, considering the large pool of borrowers that could be part of the review. The enforcement actions also require the servicers to correct other deficiencies in residential mortgage loan servicing and foreclosure practices. Work related to correcting these deficiencies is also underway and includes enhancing oversight of third-party foreclosure service providers, upgrading management information systems associated with mortgage servicing and foreclosure processing, and improving communication with customers by establishing a single point of contact and eliminating "dual tracking," in which servicers continue to pursue foreclosure even though a borrower may have been approved for, or is performing under the terms of a loan modification or trial modification, among other steps.
Walsh added that, while independent consultants will be responsible for conducting the independent review and servicers accountable for taking other corrective actions required in the consent orders, the OCC and other federal regulators will continue to hold the mortgage servicers accountable for complying with all aspects of our orders. In addition, Walsh said, "we will oversee the independent consultants to make certain they conduct the reviews in an independent and responsible manner."