One of the nation's foremost banking regulators has issued a directive to some of the largest mortgage servicers, ordering them to reassess their procedures for foreclosing on defaulted borrowers.[IMAGE]
John Walsh, acting chief of the ""Office of the Comptroller of the Currency"":http://www.occ.gov (OCC) told a panel of lawmakers this week that he contacted seven institutions his agency supervises, after ""GMAC Mortgage"":http://dsnews.comarticles/analysts-weigh-in-on-gmacs-foreclosure-snafu-2010-09-28 and ""JPMorgan Chase"":http://dsnews.comarticles/jpmorgan-halts-foreclosures-robo-signers-appear-commonplace-2010-09-30 both announced a halt on foreclosures in judicial states where filings might contain erroneous paperwork and preparers may have broken the law in their haste to process large volumes of cases.
JPMorgan was among the seven companies singled out by Walsh, as were Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank, and Wells Fargo.
According to a _Washington Post_ report, the OCC has teams permanently stationed at each one of the banks, in close contact with senior management to ensure the reviews are completed as mandated.
Walsh says it is clear that some lenders have ""deficiencies"" in their foreclosure operations. He says he not only wants to see that any processing problems are fixed, but also to examine what specific damage may have already resulted in individual cases.
As ""DSNews.com previously reported,"":http://dsnews.comarticles/jpmorgan-halts-foreclosures-robo-signers-appear-commonplace-2010-09-30 the problem may be go far beyond GMAC and JPMorgan.[COLUMN_BREAK]
""Freddie Mac's"":http://www.freddiemac.com COO Bruce Witherell issued a statement Friday regarding the news of flawed foreclosure practices.
He said, ""Freddie Mac is deeply concerned about recent reports that there may be affidavits that were improperly executed in connection with foreclosures. The alleged practices in these reports are clearly not in compliance with Freddie Mac's guidelines and directives to its servicers. It's essential that the industry work together to protect borrowers' rights and ensure the integrity of the foreclosure process.""
""Fannie Mae's"":http://www.fanniemae.com EVP Terry Edwards published a similar statement, noting that GSE servicers are required, by contract, to adhere to applicable laws and rules regarding mortgage documents, and to establish processes and controls that ensure compliance.
Edwards said his organization was ""disturbed"" by the recent news and ""strongly believes that homeowners who have exhausted all other options and are now facing foreclosure must be treated fairly and equitably.""
Fannie and Freddie's regulator is also sounding off. Edward DeMarco, acting director of the ""Federal Housing Finance Agency"":http://www.fhfa.gov (FHFA), said the deficiencies in foreclosure documentation by GMAC and JPMorgan raise concerns for homeowners and mortgage investors alike.
""FHFAÃ¢â‚¬Â¦supports efforts by the Enterprises [Fannie and Freddie] to remind servicers and other parties engaged in processing foreclosures to do so in accordance with their seller-servicer agreements and applicable laws,"" DeMarco said. ""Where deficiencies have been identified, FHFA has directed the Enterprises to work collectively to develop and implement a consistent approach to address any problems. In addition, FHFA is coordinating with appropriate regulators on this issue.""
The Treasury Department has asked federal regulators to look into what it called ""troubling developments"" in foreclosure processing. Attorneys general in at least six states have launched their own inquiries into the matter.
*_UPDATE:_* Since this story was published, BofA also ""announced a foreclosure suspension"":http://dsnews.comarticles/bank-of-america-suspends-foreclosures-in-23-states-2010-10-01, affecting mortgages in the 23 judicial states.