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The Office of the Comptroller of the Currency (OCC) is calling for independent reviews of almost 4.5 million loans.
After reviewing 200 loans from each of 14 major servicers, regulators determined enforcement actions were necessary, but said the review was “not nearly enough to answer all questions,” according to John Walsh, acting Comptroller of the Currency.
The independent review of 4.5 million loans that faced foreclosure actions between January 2009 and December 2010 will identify borrowers who “suffered financial injury as a result of errors, misrepresentations, or other deficiencies in the foreclosure process,” Walsh said.
On Monday, Walsh also announced the implementation of a new transparent, easily accessible complaint process for borrowers who feel they faced financial harm due to improper foreclosure action. This new process will be enacted in the next several weeks.
Borrowers will be contacted through direct mailings, and they will have the opportunity to request an independent review online or by phone through one common Web site or one phone number.
The independent consultants conducting the reviews will use one uniform complaint form for all of the 14 servicers in order to simplify the process for borrowers.
In cases where financial harm is determined, servicers will be required to make “appropriate restitution.”
“Remediation plans are subject to OCC and Federal Reserve approval,” Walsh said.
Walsh also stated, “The nature and severity of any financial injury will be case specific, so remedies could vary substantially.”
In addition to addressing improper actions in the past, Walsh addressed the future of industry regulation.
“Federally chartered servicers handle two-thirds of the nation’s mortgage loans, and as you know, we are in the midst of implementing a set of enforcement actions that are among the most complex and most significant of any that the OCC has ever initiated,” he stated.
New regulations designed to bring accountability to the industry have been signed by each member of the board of directors at each of the 14 banks.
The new orders call for further oversight of third-party vendors as well as a single point of contact for borrowers and an end of dual tracking.
“I continue to believe that we will be able to harmonize the mortgage servicing requirements in our orders with those of other regulators if and when they are reached. In fact, I think it is absolutely essential that we do so,” Walsh said.