More than a dozen of the nation’s largest mortgage providers have been told to reimburse homeowners over their mishandling of foreclosures.
Lenders were targeted over “a pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing,” said the Federal Reserve Board, which teamed with the Treasury’s Office of Thrift Supervision (OTS) and the Treasury’s Office of the Comptroller of the Currency (OCC) in issuing enforcement orders against the banks.
Among the banks targeted for their foreclosure practices are Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Officials said that “unsafe and unsound practices, violations of law and foreclosure processes geared toward speed and quantity, instead of quality and accuracy” will include fines and other types of sanctions and oversight.
“These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations,” said acting Comptroller of the Currency John Walsh.
Homeowners who were illegally foreclosed upon will be paid back for losses incurred during the foreclosure processes, and auditors will further investigate for improper foreclosures and other mishaps.
“These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers,” Walsh added. “Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward.”
An estimated 2.4 million first-lien mortgage loans were in foreclosure in 2010.