MetLife Inc. can’t get out of the mortgage business fast enough. The insurance provider has been hit with a monetary sanction in connection with its servicing and foreclosure practices. The sanction is similar to those handed out to larger banks in February in connection with the massive mortgage servicer settlement.
In April 2011, Bridgewater, N.J.-based MetLife Bank, N.A., was one of more than a dozen major mortgage servicers hit with consent orders by the Federal Reserve, the Office of the Comptroller of the Currency or the Office of Thrift Supervision. The orders required the servicers to clean up their foreclosure and servicing processes.
Servicing deficiencies addressed by the orders were summarized in the Interagency Review of Foreclosure Policies and Practices jointly produced by the Federal Reserve Board, the OCC and the Office of Thrift Supervision.
MetLife has since disclosed plans to exit mortgage lending altogether.
In January, plans were announced to close down Irving, Texas-based MetLife Home Loans and sell MetLife Bank deposits to GE Capital. Not long after that, the company said it would close its reverse mortgage lending business and sell off the servicing portfolio to Nationstar Mortgage LLC.
MetLife said that it was at a competitive disadvantage with other insurance companies because of the excessive regulation it is subject to as a bank-holding company.
But MetLife’s mortgage troubles still aren’t over.
On Tuesday, the Fed said it issued a $3.2 million monetary sanction against the New York-based company because it failed to adequately oversee its subsidiary bank’s mortgage loan servicing and foreclosure processing operations. The amount of the sanction factors in “the maximum amount prescribed for unsafe and unsound practices under the applicable statutory limits, the comparative severity of MetLife’s misconduct, and the comparative size of MetLife’s foreclosure activities.”
The sanction against MetLife is similar to the $767 million in monetary sanctions announced in February by the Fed against five bigger banks in conjunction with the multi-state servicer settlement.
“Although MetLife was not a party to the settlement in February, the board’s monetary sanctions against MetLife contemplate the possibility of a similar settlement under which MetLife agrees to provide borrower assistance or remediation,” a Fed statement said.
According to the Fed, if MetLife agrees to a settlement with state attorneys general and the Justice Department by June 30, 2013, then MetLife will be required at that time to pay the Fed the unused portion of the $3.2 million. If no settlement occurs by Aug. 6, 2014, then the portion of the $3.2 million that hasn’t been expended will be paid to the Fed.
“The board is taking action against MetLife at this time in light of MetLife’s publicly announced decision to sell its subsidiary bank’s deposit-taking operations,” according to the Fed. “Because that sale is subject to formal approval by regulators other than the board and would result in MetLife no longer being a bank holding company, the board believes it is appropriate to act at this time.”
