FORECLOSURE COMPLAINT WEBSITE: Major U.S. banks plan to launch a common website, toll-free phone number and advertising campaign in the coming weeks to solicit complaints from consumers harmed by problems in foreclosure processing, a top regulator said Monday.
Last spring, U.S. regulators ordered major banks and thrifts to overhaul their foreclosure practices, finding that 14 lenders filed foreclosures with improper documentation and lacked sufficient staff to properly handle distressed borrowers. The banks have now picked independent consultants to identify any borrowers that were harmed by foreclosure processing problems.
The regulators have decided to require that banks set up a single process for consumers who want a review of their case, rather than a separate one for each mortgage company. Homeowners can request a review if their foreclosure happened on a primary residence in 2009 or 2010.
Acting Comptroller of the Currency John Walsh, speaking at a conference held by the American Banker newspaper, stressed that the reviews will be independent of the mortgage companies.
The process of reviewing foreclosure cases requires a “strong quality control process to ensure each institution is treating cases of financial harm in a consistent way,” Walsh said. Any compensation for consumers, he said, will be judged on a case-by-case basis.
The complaint process affects the nation’s largest home-loan servicers, including Bank of America Corp. (BAC), J.P. Morgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC). Banks say their reviews haven’t uncovered evidence of wrongful foreclosures but have acknowledged weaknesses in their processes.
Banks have been in talks for month to settle a probe of foreclosure procedures by U.S. regulators and state attorneys general. That settlement could cost servicers as much as $25 billion, but have stalled over the extent of any release that would protect banks from additional legal claims.
Walsh said that the full cost of fixing banks’ foreclosure problems “will be known only at the end.” He added that the steps taken by regulators “lack the sex appeal of a big dollar settlement or the sound bite that summarizes the process in a word or two.”
Speaking to reporters after the speech, Walsh said finding borrowers who were harmed will be a “time-consuming” process. “There’s a lot of work to be done to get this right,” he said.
Walsh said he understands that it is difficult to get state attorneys general in agreement, but said that “It would be very good to get this wrapped up so we can have one set of requirements in place” for the mortgage industry.