Monday, March 12, 2012

Mortgage Servicing Agreement Filed in Federal Court

(picture courtesy of DOJ)
Justice Department, HUD & State AG's FILE $25 Billion AGREEMENT in D.C. 
FIVE Mortgage Servicers to Address Mortgage Loan Servicing & Foreclosure Abuses

WASHINGTON – The Justice Department, the Department of Housing and Urban Development (HUD) and 49 state attorneys general announced today the filing of their landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The federal government and state attorneys general filed in U.S. District Court in the District of Columbia proposed consent judgments with Bank of America Corporation, J.P. Morgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc., to resolve violations of state and federal law.   

The unprecedented joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country.

The consent judgments provide the details of the servicers’ financial obligations under the agreement, which include payments to foreclosed borrowers and more than $20 billion in consumer relief; new standards the servicers will be required to implement regarding mortgage loan servicing and foreclosure practices; and the oversight and enforcement authorities of the independent settlement monitor, Joseph A. Smith Jr
Read the rest of the press release (HERE)

The court documents filed today also provide detailed new servicing standards that the mortgage servicers will be required to implement.  These standards will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create new consumer protections.  The new standards provide for strict oversight of foreclosure processing, including third-party vendors, and new requirements to undertake pre-filing reviews of certain documents filed in bankruptcy court.  The new servicing standards make foreclosure a last resort by requiring servicers to evaluate homeowners for other loss mitigation options first.  Servicers will be restricted from foreclosing while the homeowner is being considered for a loan modification.  The new standards also include procedures and timelines for reviewing loan modification applications and give homeowners the right to appeal denials.  Servicers will also be required to create a single point of contact for borrowers seeking information about their loans and maintain adequate staff to handle calls.

  • Ally Financial Inc. Consent Judgment (PDF)

  • Bank of America Corporation Consent Judgment (PDF)

  • Citigroup Inc. Consent Judgment (PDF)

  • J.P. Morgan Chase & Co. Consent Judgment (PDF)

  • Wells Fargo & Company Consent Judgment (PDF)

  • For more information about the task force visit:

    BLOGGER/WRITER: David Dayen asks a simple question
    ......You might ask why ANY industry with this kind of performance record would be allowed to stay in business. It would be a good question........(HERE)

    First of all, as we’ve been documenting, these are larger releases from liability than at first contemplated. It’s not just a “robo-signing” settlement. Among the elements released in the settlement include foreclosure fraud, numerous instances of varied servicer abuse, violations of the Servicemembers Civil Relief Act, whistleblower claims of fraud in HAMP, origination errors, false documentation in court, violations of the False Claims Act, appraisal fraud at Countrywide, fair lending violations, underwriting inaccuracies on FHA loans, and more. Here’s just one list from the complaint of servicing abuses found by the government:
    a. failing to timely and accurately apply payments made by borrowers and failing to maintain accurate account statements;
    b. charging excessive or improper fees for default-related services;
    c. failing to properly oversee third party vendors involved in servicing activities on behalf of the Banks;
    d. imposing force-placed insurance without properly notifying the borrowers and when borrowers already had adequate coverage;
    e. providing borrowers false or misleading information in response to borrower complaints; and
    f. failing to maintain appropriate staffing, training, and quality control systems.
    And here’s another list on loan modification noncompliance (which in the case of FHA and other loans, is mandatory):
    a. failing to perform proper loan modification underwriting;
    b. failing to gather or losing loan modification application documentation and other paper work;
    c. failing to provide adequate staffing to implement programs;
    d. failing to adequately train staff responsible for loan modifications;
    e. failing to establish adequate processes for loan modifications;
    f. allowing borrowers to stay in trial modifications for excessive time periods;
    g. wrongfully denying modification applications;
    h. failing to respond to borrower inquiries;
    i. providing false or misleading information to consumers while referring loans to foreclosure during the loan modification application process;
    j. providing false or misleading information to consumers while initiating foreclosures where the borrower was in good faith actively pursuing a loss mitigation alternative offered by the Bank;
    k. providing false or misleading information to consumers while scheduling and conducting foreclosure sales during the loan application process and during trial loan modification periods;
    l. misrepresenting to borrowers that loss mitigation programs would provide relief from the initiation of foreclosure or further foreclosure efforts;
    m. failing to provide accurate and timely information to borrowers who are in need of, and eligible for, loss mitigation services, including loan modifications;
    n. falsely advising borrowers that they must be at least 60 days delinquent in loan payments to qualify for a loan modification;
    o. miscalculating borrowers’ eligibility for loan modification programs and improperly denying loan modification relief to eligible borrowers;
    p. misleading borrowers by representing that loan modification applications will be handled promptly when Banks regularly fail to act on loan modifications in a timely manner;
    q. failing to properly process borrowers’ applications for loan modifications, including failing to account for documents submitted by borrowers and failing to respond to borrowers’ reasonable requests for information and assistance;
    r. failing to assign adequate staff resources with sufficient training to handle the demand from distressed borrowers; and
    s. misleading borrowers by providing false or deceptive reasons for denial of loan modifications.

    No comments:

    Post a Comment