Bank of America. Wells Fargo. CitiGroup. JP Morgan Chase. These mortgage giants and 12 other lenders have reached an agreement with the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve, acting in advance of ongoing state probes of these lenders, have extracted what will amount to billions in reimbursements to homeowners who were foreclosed upon based on improper affidavits and other irregular paperwork.
More below the fold
In a story today in the Huffpo quoting Reuters here:
Government Orders Banks to Reimburse Homeowners
14 banks have entered voluntarily into agreements to begin issuing reimbursements to homeowners who lost their homes due to irregularities and improper affidavits issued by banks.
Disclosure: Until recently, I worked as a government subcontractor in one of the agencies listed, and know that one of the most ham-handed elements of the Making Home Affordable program for mortgage modifications was "dual tracking" - proceeding with a foreclosure while a loan modification is pending. The good news here for many homeowners is an end to this practice:
Servicers would also be prohibited from so-called "dual tracking," the practice of starting a foreclosure while a loan modification is pending.
Other Lenders:
The other lenders and loan servicers who signed agreements with their regulators were: HSBC bank, MetLife Bank Bank, Ally Financial, PNC bank, SunTrust, US Bancorp, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank.
The deals, though pricey for the banks, still drew criticism from Demoratic lawmakers and consumer groups.
What do you think of the consent agreements?
UPDATE: State Attorneys Make Additional Demands
A separate group of bank enforcers — a coalition of attorneys general from all 50 states as well as the Department of Justice and other federal agencies — are also seeking to settle with lenders. The group led by the state attorneys general have issued their own demands in a detailed, 27-page term sheet, and negotiations between them and the banks remain ongoing.
Consumer groups last week urged the federal regulators to join with the attorneys general.
"While homeowners and communities continue to face breached contracts, obstruction and misrepresentations from servicers, the proposed consent orders provide no new directions or standards to the financial institutions subject to your supervision," a coalition of advocates, including the National Consumer Law Center and the Center for Responsible Lending, wrote last week in a letter to the federal regulators. "Rather, the proposal permits the perpetrators of these abuses to design a plan to comply with existing laws and contracts. This is insufficient to halt the abuses."
LA Times On Mortgage Deal
One of the criticisms from consumer groups was that the OCC, the OTS and the Fed are allowing banks 60 days to come up with their own plans - here is the language:
(1)
Within sixty (60) days of this Order, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge an acceptable plan containing a complete description of the actions that are necessary and appropriate to achieve compliance with Articles IV through XII of this Order (“Action Plan”). In the event the Deputy Comptroller asks the Bank to revise the Action Plan, the Bank shall promptly make the requested revisions and resubmit the Action Plan to the Deputy Comptroller and the Examiner-in-Charge. Following acceptance of the Action Plan by the Deputy Comptroller, the Bank shall not take any action that would constitute a significant deviation from, or material change to, the requirements of the Action Plan or this Order, unless and until the Bank has received a prior written determination of no supervisory objection from the Deputy Comptroller.
Text of the Consent Order