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The current fight concerns the Office of the Comptroller of the Currency, which is conducting its own investigation into mortgage servicing problems, separate from the one launched by 50 state attorneys general and banking regulators. A proposed agreement between the comptroller’s office and the major servicers was leaked to reporters in April.
[Related: Multiple Fronts in Mortgage Industry War]
That proposal “has been widely criticized as insufficient to curb the serious and chronic misconduct,” the senators wrote in their letter this week. It fails to hold servicers accountable for illegal actions, and does not stop avoidable foreclosures, according to the senators’ letter.
“I remain deeply concerned with any proposed consent orders that would allow mortgage servicers to continue disregarding their legal and contractual obligations, and that fail to rectify the damage that servicers have inflicted on borrowers, investors, communities, and the U.S. economy,” according to the letter.
Instead of writing its own agreement with servicers, the OCC should stop its investigation, the senators wrote, supposedly to give state regulators more time to work out an agreement. And instead of keeping its findings secret, the OCC should air them at a public hearing in Congress.
“(T)he Senators are urging the OCC to work with the State Attorneys General and other regulators to arrive at a comprehensive and robust solution,” Jack Reed (D – RI) said in a press release.
Mortgage servicers act as middlemen, collecting monthly payments from homeowners and passing the profits onto investors. During the mortgage boom, many mortgage servicers became so overwhelmed with the sheer mountain of paperwork involved that they took shortcuts, causing them to lose track of exactly who owned which mortgages, according to a report by Florida Attorney General Pam Bondi.
In extreme cases, that confusion caused some servicers to foreclose on the wrong people, Bondi found.
[Related: What it Takes To “Foreclose” on Your Bank]
Image: woodleywonderworks, via Flickr
December 13, 2023
Mortgages