Federal Banking Regulators to End Abuse of Residential Mortgage Borrowers
Finally, there’s some good news for home mortgage borrowers who have been treated unfairly by their banks. On April 13, 2010, federal banking regulators took formal action against 14 of the nation’s largest loan servicers (including the 10 banks that represent 65% of the loan servicing industry) as a result of their “misconduct and negligence” and “unsafe and unsound practices” in residential mortgage loan servicing and foreclosure processing.
Among other things, the banks will now be required to:
- Give borrowers the name of a specific contact person for their loan;
- Make sure they don’t foreclose on a borrower whose mortgage has been approved for modification unless the borrower has failed to make the required repayments; and
- Provide remediation to borrowers who suffer financial injury due to wrongful foreclosures.
The banks and loan servicers subject to the regulators’ action (including financial penalties that will be imposed in the future) are: Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase & Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; Wells Fargo & Company; Aurora Bank; EverBank; OneWest Bank and Sovereign Bank. You can find the consent orders here, here and here.
You can also read our March 3, 2011 post in which we discussed the wave of lawsuits brought by homeowners against U.S. mortgage lenders for failing to comply with the terms of the United States Treasury’s Home Affordable Modification Program (“HAMP”).
Do you think the federal regulators’ enforcement action will end the unfair practices?