Office of the Comptroller of the Currency’s Minimum Standards for Prioritization and Handling Borrower Files Subject to Imminent Foreclosure Sale for all OCC Regulated Banks


Office of the Comptroller of the Currency’s Minimum Standards for Prioritization and Handling Borrower Files Subject to Imminent Foreclosure Sale for all OCC Regulated Banks.

The OCC guidance is significant because it applies to all OCC-regulated bank servicing, rather than specific consent orders. Most of the requirements — presented in a list of 13 questions banks should ask themselves before selling a home — are remedial.

Question No. 1, for example, is "Is the loan's default status accurate?"

Question No. 2.Does the servicer have and can demonstrate the appropriate legal authority to foreclose (documented assignments, note endorsements, and other necessary legal documentation, as applicable)?

Question No. 3. Have required foreclosure notices or other required communications to the borrower or others, as applicable, been provided in a timely manner.

Question No. 5 asks whether borrowers are protected from foreclosure by bankruptcy. Question No. 7 asks if the borrower is in an "active trial loss mitigation plan," otherwise known as a modification.

Question No. 11. Was the modification decision correct and validated as required

by the applicable modification program (to include, as applicable, compliance with program requirements and accuracy of calculations and application of the NPV test) along with appropriate resolution and communication of any borrower complaint, appeal, or escalation?

Question No. 12. Was the borrower or the borrower's representative (housing counselor or attorney) notified of the loan modification decision and rationale as required by program or policy guidelines?

"Failure to comply with this guidance may result in unsafe and unsound banking practices, non-compliance with foreclosure related consent orders, as applicable, and/or require rescission of completed foreclosures," the OCC warned.

Neither Wells nor the OCC identified specific areas of concern for the bank. But Wells has faced scrutiny of its foreclosure handling, most recently from New York Attorney General Eric Schneiderman. At a heavily publicized press conference earlier this month, Schneiderman alleged that Wells Fargo had "flagrantly violated" its obligations to homeowners under a 50-state mortgage servicing settlement.

"There have been problems with Wells' servicing for a long time," says Ira Rheingold, executive director of the National Association of Consumer Advocates.

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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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