The Federal Reserve has released more detail on its new “action plans” for HSBC North America Holdings, Ally Financial Inc., and IMB HoldCo. (the holding company of OneWest Bank), “to correct deficiencies” in residential mortgage loan servicing and foreclosure processing,” among other things.
The Fed’s new action plans come on the heels of the central bank’s publication of similar action plans on Feb. 27 for Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), Citigroup (C), EverBank, JPMorgan Chase (JPM), MetLife (MET), PNC Bank (PNC), SunTrust (STI) and US Bancorp (USB). For more, click here.
The Fed's plans, which FOX Business has reviewed, indicate exactly what the central bank now expects the companies to do to revamp foreclosure practices, including tighter board oversight, improved communications with borrowers, as well as increased mortgage and foreclosure servicing compliance.
Bank of America, Citigroup, Ally Financial, (the former GMAC/ResCap), Wells Fargo and JPMorgan Chase are part of a national $26 billion settlement recently struck by state and federal authorities to address alleged problems in foreclosure processing.
According to market research firm CoreLogic, recent data show about 10.7 million residential properties have underwater mortgages, approximating 22.1% of all mortgages, or $699 billion.
Last year, the Federal Reserve, the Office of Comptroller of the Currency (OCC), the FDIC, and the Office of Thrift Supervision (OTC) issued formal enforcement actions against 14 banking and two loan servicing-related companies
The Fed says that after it conducted its own review it concluded the banks had demonstrated a “pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing,” as well as deficiencies that “represent significant and pervasive compliance failures and unsafe and unsound practices.”
The Fed says its reviews were conducted from November 2010 to January 2011.
According to FOX Business’s review of the Fed’s action plans, the central bank also says it has ordered these companies “to submit acceptable plans that describe, among other things, how the institutions will strengthen communications with borrowers by providing each borrower the name of a primary point of contact at the servicer; establish limits on foreclosures where loan modifications have been approved; establish robust, third-party vendor controls; and strengthen compliance programs.”
The Federal Reserve’s enforcement actions “also require the parent holding companies of mortgage servicers to submit acceptable plans that describe, among other things, how the companies will improve oversight of servicing and foreclosure processing conducted by bank and nonbank subsidiaries,” the central bank says.
The Federal Reserve also “anticipates that more engagement letters and action plans will be released soon,” its statement says.
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007 and is the author of Skirting Heresy: The Life and Times of Margery Kempe (Franciscan Media, June 2014).
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.