The country’s biggest mortgage servicers have begun reaching out to foreclosed borrowers as required by consent orders issued earlier this year by federal regulators.
In April, consent orders were issued against 14 mortgage servicers. The orders require the servicers to correct deficiencies that were identified in fourth-quarter regulatory reviews that were summarized in the Interagency Review of Foreclosure Policies and Practices produced by the Office of the Comptroller of the Currency, the Federal Reserve Board and the Office of Thrift Supervision.
The orders also required the servicers to hire independent firms to review their foreclosure actions between Jan. 1, 2009, and Dec. 31, 2010, and determine whether foreclosures were compliant with federal and state laws, if they happened when loans were current and whether any errors, misrepresentations or other deficiencies led borrowers to suffer financial injury.
The independent consultants are also reviewing a variety of sample cases from each servicer and conducting additional secondary reviews where issues are identified.
The reviews are expected to take several months.
Servicers are required to provide remediation where the independent consultants identify borrowers who suffered financial injury as a result of the faulty practices.
On Tuesday, the OCC said that the 14 servicers had started mailing out letters to eligible borrowers that explain how to request a review of their case if they believe they suffered financial injury.
“The independent foreclosure review is a significant component of the mortgage servicers’ compliance with our enforcement actions,” Acting Comptroller of the Currency John Walsh said in the announcement. “These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices identified in our enforcement actions.”
The OCC said that the servicers have begun correcting other deficiencies outlined in the orders, including improving oversight on third-party service providers.
