InfoBytes, April 15, 2011 - Weekly In-depth review of news & developments in the financial services industry


Topics In This Issue

• Federal Issues

• Courts

• Firm News

• Miscellany

• Mortgages

• Banking

• Litigation

• E-Financial Services

• Criminal Enforcement Action

Federal Issues

Federal Banking Agencies Take Enforcement Actions Against 14 Servicers and 2 Service Providers for Foreclosure Practices. On April 13, the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB) and the Office of Thrift Supervision (OTS) announced orders issued to 14 large mortgage servicers and 2 service providers based on the interagency horizontal review of foreclosure practices. According to the agencies, the interagency review found deficiencies in many aspects of the foreclosure process, including the filing of inaccurate affidavits, inadequate supervision of third parties, and ineffective coordination of the loan modification and foreclosure process to assist borrowers in avoiding foreclosures. The agencies released a joint report, Interagency Review of Foreclosure Policies and Practices, detailing their findings. The enforcement actions require servicers to take corrective action including, but not limited to, (i) ensuring that foreclosures not be pursued once a mortgage modification had been approved unless payments are not made as required under the modification, (ii) enhancing policies and procedures related to foreclosure and loss mitigation activities, and (iii) retaining an independent consultant to conduct an independent review of foreclosures in 2009 and 2010. Pursuant to the foreclosure review, the servicers are required to remediate borrowers for any financial injury and/or improper foreclosure. The agencies indicated that the enforcement orders are only a first step in remedying deficiencies in the foreclosure process and that civil money penalties may be assessed against these institutions and that institutions with smaller servicing portfolios will be subject to similar regulatory foreclosure reviews.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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