A national probe into the mortgage industry’s foreclosure process found “critical deficiencies” with mortgage servicers breaking laws and wrongly evicting a “small number” of home owners, says John Walsh, the acting head of the Office of the Comptroller of the Currency.
These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole, Walsh said in congressional testimony.
The probe included Bank of America, Citibank, JPMorgan, and Wells Fargo, as well as others.
The largest mortgage servicers have been accused of taking shortcuts by “robo-signing” hundreds of unread documents in approving foreclosures, without proving they even held the mortgages.
While no final decision has been made regarding punishment yet, David Stevens, the commissioner of the Federal Housing Administration, says the penalties will likely be determined and handed down in the next month. He said the punishments could include fines paid to the government. He also said they may consider loan modifications for affected home owners or banks even forgiving some of the principal balance on the loan.
Source: “U.S. Close to Punishing Banks Over Foreclosures,” Reuters (Feb. 16, 2011)