The Office of the Comptroller of the Currency (OCC) on Thursday defined its expectations for national banksÃ¢â‚¬â„¢ oversight and management of mortgage foreclosures.
The federal agency says all servicers under OCC supervision must observe the same stipulations administered to a handful of servicers in April as part of the regulatory settlement for robo-signing infractions.
National banks are directed to conduct a self-assessment examining their foreclosure management practices by no later than September 30, 2011.
Banks that determine weaknesses in their processes must take immediate corrective action.
After reviewing 14 large mortgage servicers in the fourth quarter of 2010, the OCC, Federal Reserve, FDIC, and the Office of Thrift Supervision found what the regulators described as Ã¢â‚¬Å“a pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing.Ã¢â‚¬Â
The agencies are concerned that similar weaknesses may be present in other servicing operations.
Ã¢â‚¬Å“[N]ational banks engaged in mortgage servicing, whether for their own book or others, must ensure compliance with foreclosure laws, conduct foreclosure
processing in a safe and sound manner, and establish responsible business practices that provide accountability and appropriate treatment of borrowers in the foreclosure process,Ã¢â‚¬Â according to the OCC.
The bulletin released by the OCC addresses issues such as adequate staffing and training, dual-track processing, management of affidavit and notary practices, documentation, and appropriate oversight of third-party service providers.
Bank management is required to guide, control, and monitor all foreclosure-related activities.
Because many confused borrowers continue with foreclosure proceedings while their servicer is working with them on a modification, banks are required to suspend foreclosure proceedings during successfully performing trial periods when possible.
Managers within the banks must guarantee proper affidavit and notarization practices are taking place, making sure attestations are truthful and supported by file documentation, affiants have sufficient documentation and have reviewed it before making attestations, and notary practices are in line with legal requirements.
All required documents must be maintained and properly endorsed or assigned, and management must oversee a proper audit trail.
Bank executives and officials are responsible for making sure all laws and regulations regarding foreclosures are observed, taking special care to protect those affected by the Servicemembers Civil Relief Act.
When third-party vendors are involved, management must clearly define and monitor all rules and responsibilities pertaining to the vendorÃ¢â‚¬â„¢s role.
Ã¢â‚¬Å“Examiners will review the self-assessments, corrective actions, and any determinations of financial harm and related remediation in the next quarterly review or examination of the bank,Ã¢â‚¬Â says the OCC.