The nation's top mortgage servicers are expected to sign legal agreements by the end of this week compelling them to change their foreclosure procedures, regulatory officials said yesterday, according to an article in today's edition of The New York Times by David Streitfeld.
The servicers, which violated state and local laws and regulations governing foreclosures, are agreeing to improve their methods in numerous ways, the article said, adding that "they will be required to have more layers of oversight and proper training of their foreclosure staff" and that "the oversight will extend to third party groups, including the law firms that do much of the actual work of eviction."
Under the new rules, the article continued, "every homeowner in default will have a single point of contact with the servicer" and "the servicers will end their practice of foreclosing while borrowers are pursuing loan modifications that might allow them to stay in their homes."
The article said that "One of the most significant measures in the consent agreement will require servicers to hire an independent consultant to review foreclosures done over the last two years. If owners were improperly foreclosed on or paid excessive fees, they will be compensated."
The reforms were described by individuals who spoke on condition of anonymity because the consent agreements were not yet public.
"Bringing in a consultant to establish the amount of damages," the article said, "will give individuals who feel they were abused by their servicer some means of redress. While the servicers have acknowledged violating the laws they maintain that very few if any people lost their house who were not in severe default. Jamie Dimon, chief executive of JPMorgan Chase, addressed the issue Tuesday at a banking conference in Washington. 'Some of the mistakes were egregious, and they're embarrassing,' he said, according to Bloomberg News. But we made a mistake, and we're going to pay for that mistake.'"
"Many of the reforms that the servicers are agreeing to were also being sought by the state attorneys general, who began their own search for reform last fall....The attorneys general have larger goals than the regulators. They are seeking to make the banks...cut the debt of delinquent owners. The servicers are balking at this," the article said.
As a result of the changes being imposed by the banking regulators, servicers will have two options: either hire more employees to give the millions of households in default closer attention, or slow the pace of foreclosures.
Regulators expect to issue their report on foreclosure practices at the top 14 servicers within the next few weeks. Preliminary consent agreements were sent to the servicers in February, the article said, adding that "the servicers will probably be assessed fines at a later point."
The servicers, which violated state and local laws and regulations governing foreclosures, are agreeing to improve their methods in numerous ways, the article said, adding that "they will be required to have more layers of oversight and proper training of their foreclosure staff" and that "the oversight will extend to third party groups, including the law firms that do much of the actual work of eviction."
Under the new rules, the article continued, "every homeowner in default will have a single point of contact with the servicer" and "the servicers will end their practice of foreclosing while borrowers are pursuing loan modifications that might allow them to stay in their homes."
The article said that "One of the most significant measures in the consent agreement will require servicers to hire an independent consultant to review foreclosures done over the last two years. If owners were improperly foreclosed on or paid excessive fees, they will be compensated."
The reforms were described by individuals who spoke on condition of anonymity because the consent agreements were not yet public.
"Bringing in a consultant to establish the amount of damages," the article said, "will give individuals who feel they were abused by their servicer some means of redress. While the servicers have acknowledged violating the laws they maintain that very few if any people lost their house who were not in severe default. Jamie Dimon, chief executive of JPMorgan Chase, addressed the issue Tuesday at a banking conference in Washington. 'Some of the mistakes were egregious, and they're embarrassing,' he said, according to Bloomberg News. But we made a mistake, and we're going to pay for that mistake.'"
"Many of the reforms that the servicers are agreeing to were also being sought by the state attorneys general, who began their own search for reform last fall....The attorneys general have larger goals than the regulators. They are seeking to make the banks...cut the debt of delinquent owners. The servicers are balking at this," the article said.
As a result of the changes being imposed by the banking regulators, servicers will have two options: either hire more employees to give the millions of households in default closer attention, or slow the pace of foreclosures.
Regulators expect to issue their report on foreclosure practices at the top 14 servicers within the next few weeks. Preliminary consent agreements were sent to the servicers in February, the article said, adding that "the servicers will probably be assessed fines at a later point."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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