Foreclosure Fraud? OCC Takes Action Against Mortgage Servicers for Unsound Foreclosure Practices

Last Updated Apr 14, 2011 11:21 PM EDT

The Office of the Comptroller of the Currency (OCC) announced today that it is ready to proceed with mandatory enforcement actions against eight mortgage servicers and two third-party contractors. The institutions have been charged with reckless, unsound practices in residential mortgage loan servicing and foreclosure processing.

"Reckless" isn't the same thing necessarily as "fraud," though many homeowners believe that their lenders' actions could be deemed fraudulent.

Who is being cited? You'll likely recognize these mortgage servicers, as they account for the vast majority of mortgage loans in the U.S.
  • Bank of America
  • Citibank
  • HSBC
  • JPMorgan Chase
  • MetLife Bank
  • PNC
  • U.S. Bank
  • Wells Fargo
The corrective actions will require the institutions to resolve widespread problems that OCC auditors identified in reviews conducted at the close of 2010. The comprehensive plan demands speedy improvements in the following areas:
  • More consistent and timely communication with borrowers.
  • Prevention against dual-tracking, so named for situations when lenders continue to pursue foreclosure during the loan modification process.
  • Implementation of solid oversight and controls pertaining to third-party vendors, especially those entrusted with default management or foreclosure services.
  • Engagement of an independent auditing firm to conduct a review of foreclosure actions taken between January 1, 2009, and December 31, 2010. The banks must demonstrate compliance with federal and state laws, as well as the justification of foreclosure proceedings when initiated.
  • Establishment of restitution processes for borrowers who believe they have been financially harmed by past and present process deficiencies.
The Mortgage Bankers Association promptly issued a statement commending the order:
"We welcome progress on these difficult and critical issues. There is nothing more important than getting the housing market back on the road to recovery, which is in the best interest of borrowers, lenders, servicers and the nation as a whole."
Click here to read the full press release.
Are you encouraged by the OCC's plans to correct malpractice in the mortgage market?
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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.
  • Ilyce Glink On Twitter»

    Ilyce R. Glink is an award-winning, nationally syndicated columnist, best-selling book author, and radio talk show host who also hosts "Expert Real Estate Tips," a Internet video show. She owns ThinkGlink.com as well as Think Glink Media, a privately held company that provides consulting, content and video services to companies and non-profit organizations.

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