Regulators Warn Banks Not to Flout $25 Billion Foreclosure Deal
The Consumer Financial Protection Bureau and the court-appointed monitor of the 2012 foreclosure settlement are among those moving to tighten oversight of the process known as dual-tracking, when borrowers facing the loss of their homes are simultaneously negotiating changes in their loans. Mortgage servicers who violate the rules or the terms of the deal could face sanctions including fines of $1 million per infraction.
“It is an important outstanding issue of unfinished business,” Joseph A. Smith, the monitor, said in an interview.
Smith, who is responsible for ensuring Bank of America Corp. (BAC:US), JPMorgan Chase & Co. (JPM:US), Wells Fargo & Co. (WFC:US), Ally Financial Inc. (ALLY:US) and Citigroup Inc. (C:US) live up to their promises, said he is preparing to start measuring how well banks are communicating with borrowers about loan-workout applications. That could determine whether the servicers or homeowners are at fault for incomplete files.
Separately, the consumer bureau this week plans to complete proposed changes to pending mortgage-servicing rules aimed at tightening restrictions on dual-tracking, according to a person briefed on its work. The rules, to take effect in January, would cover all lenders, including those who aren’t parties to the settlement such as Ocwen Financial Corp. and Nationstar Mortgage Holdings. (NSM:US)
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