Bloomberg News

Mortgage Servicers Make Progress to Fix Flawed Foreclosures

November 23, 2011

(Updates with detail, names of consultants starting in fifth paragraph.)

Nov. 22 (Bloomberg) -- Banks and mortgage servicers are making progress in improving their processes and reaching out to homeowners hurt by invalid or flawed foreclosures, the Office of the U.S. Comptroller of the Currency reported.

The regulator released an interim report today on actions taken by 12 banks and servicers to comply with a set of April consent orders that require them to correct deficient and unsound foreclosure practices.

“While much of the work to correct identified weaknesses in policies, operating procedures, control functions and audit processes will be substantially complete in the first part of 2012, other longer-term initiatives will continue through the balance of 2012,” the OCC report concluded.

Under the consent decrees, banks were required to hire consultants to identify borrowers who improperly lost their homes, failed to get loans rewritten or were forced into court in 2009 and 2010 because of mistakes made by mortgage servicers or their vendors. Banks and their consultants, under the OCC’s oversight, will determine who was harmed, the extent of any financial injury and the amount of compensation.

The move is part of a settlement between the biggest mortgage-servicing firms, the OCC, the Federal Reserve and the Office of Thrift Supervision.

Mortgage servicers earlier this month began reaching out to borrowers who may have suffered financial injury from errors and misrepresentations. The companies also established a centralized website to help borrowers contact servicers and file claims.

The agency released the names of consultants hired by banks to review claims by borrowers. Clayton Services LLP, Ernst & Young LLP, Deloitte & Touch LLP and Promontory Financial Group LLC are among the companies processing borrower complaints on behalf of the banks.

Companies including JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. were part of the April accord.

Borrowers can get information about filing a claim at www.independentforeclosurereview.com/.

--Editors: Maura Reynolds, Lawrence Roberts.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.


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