OCC Orders Banks to Review Compliance With Foreclosure Accord

The Office of the Comptroller of the Currency ordered U.S. national banks to review their foreclosure practices to ensure they are following rules set out in an April settlement with the largest mortgage servicers.

Banks engaged in loan servicing must check whether they are complying with foreclosure laws, conducting home seizures in a safe and sound manner and promoting appropriate treatment of borrowers, the OCC said today in a statement on its directive.

The OCC, Office of Thrift Supervision, Federal Reserve and Federal Deposit Insurance Corp. reached an accord with the 14 largest banks in April, requiring them to improve foreclosure, loan-modification and refinancing procedures.

“We want to make sure that the lessons we learned in that inter-agency review and the standards we set for the enforcement actions applies to everyone,” said Bryan Hubbard, a spokesman for the OCC, which oversees some of the top loan services among the 1,400 banks it regulates. The banks must assess their services by Sept. 30 and correct any deficiencies, the OCC said.

The April sanctions were the first to arise from state and federal probes of servicer lapses in handling foreclosures stemming from the 2008 financial crisis. State attorneys general and the U.S. Justice Department are negotiating with banks to reach a global settlement that will include fines.

JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), Bank of America Corp. (BAC), Citigroup Inc. (C), Ally Financial Inc., Aurora Bank FSB, EverBank Financial Corp., HSBC Holdings Plc (HSBA), OneWest, MetLife Inc. (MET), PNC Financial Services Group Inc. (PNC), Sovereign Bank, SunTrust Banks Inc. (STI) and US Bancorp (USB) were part of the April settlement.

The settlement, which covered nearly 70 percent of all mortgages, didn’t affect smaller lenders or non-bank servicers.

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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