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Mortgage News Daily combines the expertise of some of the housing industry's leading minds with the power of social media to offer an always lively, constantly evolving web community. MND communicates breaking news, streams video, and provides expert opinion and commentary to a community of interested market professionals and curious consumers.Loan Servicer Code of Conduct Proposed by State Officials and DOJ
According to the Wall Street Journal, the 50-state alliance of attorney generals who
are working with federal agencies to investigate and reform mortgage servicing
have sent their first list of demands to the nation's leading banks.
The WSJ article, written by Nick Timiraos and Ruth Simon, claims the group sent a
27-page proposal to the banks last Thursday outlining a proposed code of
conduct for its servicing operations. The WSJ
appears not to have had access to the actual document and was relying on
"sources familiar with it." Shortly
before the article appeared the Association
of Mortgage Investors' released a comment on the Attorneys General investigation,
urging Congress in particular to "respect the process."
According
to the WSJ, the letter was drafted by state attorney generals, the U.S. Department of Justice
and three other federal agencies and comes on the heels of separate enforcement
actions submitted by bank regulators. The document outlines a number of standards for
reforming mortgage servicing.
-
Adopting formulas that would force banks to more
regularly consider offering loan write-downs to underwater borrowers.
-
Enforcing firm modification timelines for
servicers to meet, including notifications to borrowers of actions on
modification requests.
-
Providing a single point of contact for
borrowers over the course of the modification process.
-
Requiring a freeze on foreclosures during
modification considerations and providing methods for penalties and enforcement.
-
Outlining steps for banks to verify the
accuracy of amounts owned and placing limits on fees the banks can charge distressed
borrowers.
-
Adopting directives to improve tracking of
mortgage notes and chain of title.
-
Increasing supervision of foreclosing law firms
and other third-party vendors.
The letter indicates that the Mortgage Electronic
Registration System (MERS), the industry owned mechanism for tracking mortgage
documents that has been at the heart of many complaints about robo-signing and
improper foreclosures, will be dealt with later.
The WSJ says that this letter is separate from any settlement that may be worked out
between the group and banks to address various abuses that came to light in the
fall and led to foreclosure moratoriums in several states including a
nation-wide pause in Bank of American's foreclosures. Such a settlement, the newspaper says, "could include requirements
for banks to write down more than $20 billion in loan balances for borrowers
that are underwater or to pay more in fines. The current proposal, outlining a
code of conduct, is designed to lay the foundation for more permanent changes
in mortgage-servicing practices that would outlast such a settlement."
To further quote the WSJ article, "Banks said they are
studying the document 'We are analyzing what was shared with us yesterday,'
said a spokeswoman for Wells Fargo. A spokesman for Citigroup said, 'Our
discussions with government officials are confidential.' Bank of America
declined to comment.
The press release from AMI, which represents private investors, public
and private pension funds and endowments, quoted the group's Executive Director
Chris Katopis commenting, not on a specific letter, but on news reports
concerning "the
multi-state Attorney General investigation into mortgage servicer alleged
misconduct." Katopis stated:
"For
months, the 50 state Attorneys General have worked on developing a settlement
plan that helps Americans and our communities.
This is a bipartisan group of elected officials which includes
Republicans and Democrats, conservatives, centrists, and all political stripes. While the details of the plan's substance are
forthcoming, we all must respect the integrity of the process. We urge Congressional lawmakers to respect
the rule of law, the autonomy of the states, and allow this process to continue
without intervention, at least until all of the facts are made known to the
public.
"As Congress reviews the proposed plan and
other recommendations, the issue of defective loan put backs must remain high
on the agenda, as it impacts a range of our institutions back home, such as
state entities. "It is the greatest hope of mortgage investors that any
settlement carefully consider the impact on the soundness of state pension,
retirement systems, life insurance, and medical savings plans."
AMI may
be responding in equal measure to the investigation and to efforts currently
underway in Congress to eliminate the Making Home Affordable Program (HAMP), and
otherwise eliminate or severely restrict the government's role in housing
finance.
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This email was sent to you by:
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Anonymous Anonymous |
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Message:
YOUR MESSAGE HERE
Loan Servicer Code of Conduct Proposed by State Officials and DOJ
According to the Wall Street Journal, the 50-state alliance of attorney generals who
are working with federal agencies to investigate and reform mortgage servicing
have sent their first list of demands to the nation's leading banks.
The WSJ article, written by Nick Timiraos and Ruth Simon, claims the group sent a
27-page proposal to the banks last Thursday outlining a proposed code of
conduct for its servicing operations. The WSJ
appears not to have had access to the actual document and was relying on
"sources familiar with it." Shortly
before the article appeared the Association
of Mortgage Investors' released a comment on the Attorneys General investigation,
urging Congress in particular to "respect the process."
According
to the WSJ, the letter was drafted by state attorney generals, the U.S. Department of Justice
and three other federal agencies and comes on the heels of separate enforcement
actions submitted by bank regulators. The document outlines a number of standards for
reforming mortgage servicing.
-
Adopting formulas that would force banks to more
regularly consider offering loan write-downs to underwater borrowers.
-
Enforcing firm modification timelines for
servicers to meet, including notifications to borrowers of actions on
modification requests.
-
Providing a single point of contact for
borrowers over the course of the modification process.
-
Requiring a freeze on foreclosures during
modification considerations and providing methods for penalties and enforcement.
-
Outlining steps for banks to verify the
accuracy of amounts owned and placing limits on fees the banks can charge distressed
borrowers.
-
Adopting directives to improve tracking of
mortgage notes and chain of title.
-
Increasing supervision of foreclosing law firms
and other third-party vendors.
The letter indicates that the Mortgage Electronic
Registration System (MERS), the industry owned mechanism for tracking mortgage
documents that has been at the heart of many complaints about robo-signing and
improper foreclosures, will be dealt with later.
The WSJ says that this letter is separate from any settlement that may be worked out
between the group and banks to address various abuses that came to light in the
fall and led to foreclosure moratoriums in several states including a
nation-wide pause in Bank of American's foreclosures. Such a settlement, the newspaper says, "could include requirements
for banks to write down more than $20 billion in loan balances for borrowers
that are underwater or to pay more in fines. The current proposal, outlining a
code of conduct, is designed to lay the foundation for more permanent changes
in mortgage-servicing practices that would outlast such a settlement."
To further quote the WSJ article, "Banks said they are
studying the document 'We are analyzing what was shared with us yesterday,'
said a spokeswoman for Wells Fargo. A spokesman for Citigroup said, 'Our
discussions with government officials are confidential.' Bank of America
declined to comment.
The press release from AMI, which represents private investors, public
and private pension funds and endowments, quoted the group's Executive Director
Chris Katopis commenting, not on a specific letter, but on news reports
concerning "the
multi-state Attorney General investigation into mortgage servicer alleged
misconduct." Katopis stated:
"For
months, the 50 state Attorneys General have worked on developing a settlement
plan that helps Americans and our communities.
This is a bipartisan group of elected officials which includes
Republicans and Democrats, conservatives, centrists, and all political stripes. While the details of the plan's substance are
forthcoming, we all must respect the integrity of the process. We urge Congressional lawmakers to respect
the rule of law, the autonomy of the states, and allow this process to continue
without intervention, at least until all of the facts are made known to the
public.
"As Congress reviews the proposed plan and
other recommendations, the issue of defective loan put backs must remain high
on the agenda, as it impacts a range of our institutions back home, such as
state entities. "It is the greatest hope of mortgage investors that any
settlement carefully consider the impact on the soundness of state pension,
retirement systems, life insurance, and medical savings plans."
AMI may
be responding in equal measure to the investigation and to efforts currently
underway in Congress to eliminate the Making Home Affordable Program (HAMP), and
otherwise eliminate or severely restrict the government's role in housing
finance.
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