Mortgage servicers have reportedly reached an agreement with federal regulators to change their foreclosure procedures as part of a settlement for the robo-signing transgressions that were uncovered last fall.
The arrangement includes no fines, Bloomberg says, citing “people familiar with the matter.” However, the news agency’s sources are not completely ruling out a monetary penalty, as negotiations are still ongoing regarding certain settlement terms.
According to Bloomberg, one major servicer has already signed a pact with the federal regulators. At least 14 servicers were subject to the regulators’ investigation, and the others are expected to ink their deals by the end of this week.
Conditions of the federal consent agreements have not been made public, but the New York Times says the servicers have agreed to provide every homeowner in default with a single point of contact, and to end the
practice of dual-tracking foreclosure proceedings while borrowers are pursuing loan modifications.
According to the paper, the deals also require servicers to add more layers of oversight and quality control to foreclosure processes, which extends to third-party vendors and law firms, as well as improve training for internal foreclosure staff.
In addition, servicers will be required to hire independent consultants to review all foreclosures that have been completed in the past two years, and must compensate any homeowner who is found to have been improperly foreclosed on or made to pay excessive fees, the Times reports.
The regulatory agencies that are part of the consent agreements include the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Reserve, and FDIC.
In early March, major servicers received a 27-page settlement proposal sent jointly from the federal regulatory agencies and state attorneys general. At that time, all signs pointed to a blanket settlement that would resolve all parties’ charges.
A spokesman for Iowa Attorney General Tom Miller, who has been heading up negotiations on behalf of the states, has indicated that any agreement between servicers and federal officials will have no impact on attorneys general’s demands.
“We see any settlement they may reach as a floor, not a ceiling,” the spokesperson told Bloomberg. We still don’t know what their agreement would say because we haven’t been notified.”
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