TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/551198
52 | Th e M Rep o RT O r i g i nat i O n S e r v i c i n g a na ly t i c S S e c O n da r y m a r k e t SERVICING the latest Servicers to Face Business restrictions The oCC put a serious squeeze on six companies' operations for noncompliance with its consent order requirements. i n an effort to escheat any remaining uncashed pay- ments that borrowers made pursuant to the 2013 Inde- pendent Foreclosure Review (IFR) Payment Agreement, the Office of the Comptroller of the Currency (OCC) announced in mid-June that six servicers will now face several business restrictions for not complying with the consent order requirements. The six institutions that the OCC determined have not met all the requirements of the IFR Payment Agreement were Everbank, HSBC Bank USA, JPMorgan Chase Bank, Santander Bank, U.S. Bank, and Wells Fargo, and therefore the OCC issued orders to restrict their business activities. The restrictions include limitations on the acquisition of residential MSR portfolios, new contracts to perform residential mortgage servicing for other par- ties, the outsourcing or sub-ser- vicing of new residential mortgage servicing activities to other parties, off-shoring new residen- tial mortgage servicing activities, and new appointments of senior officers responsible for residential mortgage servicing. OCC said the restrictions will vary based on the individual circumstances of each bank, and the agency will continue to monitor the corrective actions for these institutions. The OCC determined that Bank of America, Citibank, and PNC bank have complied with the orders the agency issued in 2011 and the amendments it issued in 2013 and therefore the consent orders against them have been terminated. The OCC announced that any uncashed payments made pursuant to the IFR Payment Agreement will be escheated at the end of 2015 in order to allow eligible borrowers and their heirs to claim the funds. The OCC also announced that it has terminated foreclosure-re- lated consent orders against three national mortgage servicers that have met the consent order re- quirements and imposed business restrictions on six banks that have not met the requirements. More than $2.7 billion has been distributed to more than 3.2 million eligible borrowers from OCC-supervised institutions as a result of the IFR Payment Agreement, representing about 90 percent of the amount avail- able for distribution, according to the OCC. The agency estimates that about $280 million from OCC-supervised institutions will go unclaimed by the end of this year after all efforts to find re- maining eligible borrowers have been exhausted; the escheatment of funds from uncashed checks will give eligible borrowers and their heirs an additional oppor- tunity to claim the funds. A spokesman for the OCC told MReport that the restrictions are meant to focus servicer action on meeting the remaining require- ments in their respective consent orders and that the restrictions will not impede consumers' access to mortgage loans. The Independent Foreclosure Review concluded in January 2013 with 10 mortgage servicers reach- ing an agreement with the Fed and the OCC to pay a combined total of $8.5 billion to more than 3.8 million homeowners whose homes were in foreclosure in 2009 and 2010. The sum included $3.3 billion to be paid directly to borrowers. The claims allege that the servicers mishandled loan paperwork and robo-signed docu- ments related to the foreclosures. The settlement totals were later increased to 15 servicers and a total of $10 billion in payments, according to the Fed. wealth will continue until poli- cymakers address this pressing issue," said Goodman. A number of factors con- tributed to the deeply unequal economic opportunities includ- ing the large proportion of black families who had a larger portion of their wealth tied up in home equity pre-crisis, so the de- crease in housing prices affected them severely. Black families were also more likely to receive pricier predatory loans during the subprime boom than similarly creditworthy white Americans. "Steps can be taken right now to help close the growing racial wealth divide and to ensure that the next generation has the bene- fits of assets and savings that bring a more secure future," said Sarah Burd-Sharps, co-director of the Social Science Research Council's Measure of America project. The SSRC and ACLU Recommended the Following Actions: • Regulate Mortgage Servicing: Government enforcement agencies should focus special attention on identifying and stamping out racial disparities in servicing practices. Policy reforms aimed at strengthening regulators or addressing abuses in the mortgage servicing industry should be specially attuned to the civil rights con- sequences of unequal exclusion from housing opportunity. • Reform the Secondary Mortgage Market: Reforms should ensure that mortgage securitizers operate in a way that encourages inclusive lend- ing and discourages discrimi- nation by originators. • Open Access to Credit: Policymakers should carefully monitor current lending prac- tices to ensure that low-income and minority communities are not being unfairly denied mort- gages and to clarify that recent legislation does not support racially disparate limitations on access to credit. Continued from page 51