The Federal Reserve released documents showing how U.S. mortgage servicers pledged to overhaul faulty foreclosure practices that led to this month’s $25 billion settlement with state and federal authorities.
Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. were among lenders that submitted the so-called action plans following a Fed enforcement action last year. The documents describe how firms will strengthen communications with borrowers, limit certain foreclosures and bolster compliance programs, the Fed said today in a statement. It also released “engagement letters” between firms and outside consultants.
“Examiners found unsafe and unsound processes and practices in residential mortgage loan servicing and foreclosure processing at a number of supervised institutions” during reviews from November 2010 to January 2011, the Fed said. The central bank will “closely follow” implementation of the plans to ensure deficiencies are fixed, it said.
Servicers agreed in an April settlement to improve foreclosure, loan-modification and refinancing procedures by hiring staff, upgrading document-tracking systems, assigning a single point of contact for each borrower and policing lawyers and vendors. Earlier this month, the five largest servicers agreed to pay penalties and provide relief to borrowers in resolving related claims with state and federal authorities.