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SERVICER TIMELINE
The following timeline offers a brief overview of the escalating legal and regulatory actions and other significant events since late 2010 that have had a dramatic impact on the U.S. servicing landscape. Not all events relate directly to servicing/servicers; however, overall, they are intended to show an accurate picture of the ways in which servicing will be permanently reformed and re-shaped. This timeline, first made public during the Q2 Great Debates in Housing Finance Webinar on June 23, 2011, is continually being monitored and updated. Soon, all entries will be updated with their relevant website links. Please report any errors to Shirley Jackson (shirley.jackson at americatalyst.com)
| 2010-10-OCTOBER | |
| 2010-10-13 | NAAG announces that 50 states have signed a joint statement on mortgage foreclosure to set up a bipartisan multistate group that will address issues common to a large number of states. “The group is comprised of both state Attorneys General and the state bank and mortgage regulators. State bank and mortgage regulators are participating both individually and through their Multistate Mortgage Committee, which represents mortgage regulators from all 50 states. Through this process, the states will attempt to speak with one voice to the greatest extent possible. Our multistate group has begun inquiring whether or not individual mortgage servicers have improperly submitted affidavits or other documents in support of foreclosures in our states.” |
| 2010-11-NOVEMBER | |
| 4-Nov-10 | Fitch Ratings assigns a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector based on increased concerns surrounding alleged procedural defects in the judicial foreclosure process. “Risks to servicers include cost to research and remediate any errors, additional fees and resources, potential penalties and reputational risk,” says Diane Pendley. This industry-wide issue will cause all servicers to be under increased scrutiny from a wide range of state and federal regulators, state attorneys general, and GSEs, Fitch says, adding that all servicers will be affected, even those fully in compliance with all foreclosure rules and regulations. This is due to the increased amount of time and manpower Fitch believes it will take to properly address the much higher level of oversight and inquiries that are received, as well as the anticipated additional court delays. |
| 12-Nov-10 | Federal Reserve Governor Sarah Bloom Raskin gives speech at the National Consumer Law Center’s Consumer Rights Litigation Conference on “Problems in the mortgage servicing industry.” In her first public address as a FRB governor, Raskin calls for major changes to mortgage servicing, saying it’s time for “serious and sustained reform” and adding that she’s deeply concerned that new questions about banks’ handling of foreclosure paperwork are part of a more widespread, long-standing problem with mortgage servicing. “Many may view these procedural flaws as trivial, technical, or inconsequential, but I consider them to be part of a deeper, systemic problem and am gravely concerned,” says Raskin, one of the newest members of the Fed’s Board of Governors. “Mortgage servicers simply are not doing enough to provide sustainable alternatives to foreclosure,” she said, adding that the lack of action might be due to the fact that loan servicing is largely done by large servicers that are subsidiaries of depository institutions, affiliates of depository institutions, or independent companies focused primarily or exclusively on loan servicing. (Wall Street Journal) |
| 16-Nov-10 | US Senate Committee on Banking, Housing & Urban Affairs holds a hearing on “Problems in Mortgage Servicing from Modification to Foreclosure” with testimony by Tom Miller, Attorney General, State of Iowa; Barbara J. Desoer, President, Bank of America Home Loans; David Lowman, CEO, Chase Home Lending; Adam J. Levitin, Associate Professor of Law, Georgetown University Law Center; and Diane Thompson, Counsel, National Consumer Law Center. |
| 2010-12-DECEMBER | |
| 1-Dec-10 | Federal Reserve Board Governor Daniel Tarullo testifies before the Senate Committee on Banking, Housing and Urban Affairs on “Problems in Mortgage Servicing,” and suggests that “while bank regulatory agencies can and should respond to specific failings that are being identified in our interagency examination, there is a strong case to be made that broader solutions are needed both to address structural problems in the mortgage servicing industry and to accelerate the pace of mortgage modifications or other loss mitigation efforts.” |
| 9-Dec-10 | The MBA launches Council on Residential Mortgage Servicing for the 21st Century, a task force of key MBA members tasked with examining and issuing recommendations for the future of residential mortgage servicing. Its members include: Debra W. Still (Chairman), CMB, Pulte Mortgage, LLC David Allison, Dovenmuehle Mortgage Inc. Richard A. Aneshansel, U.S. Bank Home Mortgage Jon K. Baymiller, New York Community Bank Joseph Anthony Bonaventura, Jr., CMB, BB&T Phillip W. Bracken, CMB, Wells Fargo Home Mortgage Brandon Coleman, CitiMortgage, Inc. Jordan D. Dorchuck, CMB, American Home Mortgage Servicing Sterling Edmunds, Jr., CMB, SunTrust Mortgage, Inc. Ronald M. Faris, Ocwen Financial Corporation Michael Fontaine, CMB, Plaza Home Mortgage, Inc. Martin L. Foster, PHH Mortgage Jonathan M. Gaiser, Bank of the West Robert Gaither, Bank of America Home Loans Michael C. Koster, EverHome Mortgage Company Terry L. McCoy, MetLife Home Loans Mary Ann McGarry, Guild Mortgage Company J. David Motley, CMB, Colonial National Mortgage, a Division of Colonial Savings Scott A. Reed, Midfirst Bank Matthew I. Roslin, Flagstar Bank, FSB Glenn Silver, Chase Jennifer Simons, The PNC Financial Services Group, Inc. Gregory S. Tornquist, Cenlar, FSB Kimberly Walsh, Ally Bank Glenn Weller, Standard Mortgage Corporation |
| 21-Dec-10 | “Open Letter to U.S. Regulators Regarding National Servicing Standards” sent to Tim Geithner, Sheila Bair, Ed DeMarco, Ben Bernanke, Mary Schapiro and John Walsh. Letter stresses the urgency of creating and implementing a national set of standards for mortgage servicers. |
| 2011-01-JANUARY | |
| 18-Jan-11 | FHFA directs Fannie Mae and Freddie Mac to work on a joint initiative to consider alternatives for a new mortgage servicing compensation structure. |
| 19-Jan-11 | Council on the Future of Residential Servicing for the 21st Century hosts Summit on Future of Residential Servicing for the 21st Century. The meeting brings together industry leaders, consumer advocates, economists, academics and policymakers to “take a detailed look at the issues that have vexed the industry and sought to identify the essential building blocks for the future of loan servicing.” A few months later, the Council publishes the results of the summit in a White Paper (May 2011 see below) and vows to continue its work focused in three primary areas — “servicer compensation, best practices in loss mitigation and customer service, and improvement to the foreclosure process” — “to come up with workable solutions to ensure that all stakeholders will have the tools at their disposal to better align their efforts with what is best for homeowners, investors, and the nation as a whole.” |
| 2011-02-FEBRUARY | |
| 11-Feb-11 | JPMorgan Chase’s Jamie Dimon assigns his chief administrative officer, Frank Bisignano, to supervise the Chase mortgage origination and loan payment collection businesses, in addition to his other duties, which include managing technology and real estate for the bank. David Lowman, the current head of Chase Home Lending, retains his title but reports to Bisignano (New York Times ). |
| 14-Feb-11 | CFPB presents 7-page discussion document to state attorneys general (Tom Miller, specifically). The draft, for the first times, puts a dollar amount to discussions on penalties that could be levied against servicers, by estimating that the big servicers saved a total of $20 billion by avoiding special servicing of delinquent loans, for the period from 2007 through to the third quarter of 2010. The draft then determines that penalties “based on servicing costs avoided would have little effect on Tier 1 capital ratios,” and then suggests that “a principal reduction mandate could be meaningfully additive to HAMP.” The draft was reported by Huffington Post in March. |
| 17-Feb-11 | In testimony before the Senate Committee on Banking, Housing and Urban Affairs, the OCC’s John Walsh describes the results of an interagency (OCC, FRB, FDIC, OTS) examination of foreclosure processing at the 14 largest federally regulated mortgage servicers during the fourth quarter of 2010, with the goal of evaluating the adequacy of controls and governance over bank foreclosure processes, including compliance with applicable federal and state law. Walsh said that examiners reviewed approximately 2,800 borrower foreclosure cases (selected from in-process and completed foreclosures during 2010 based on pre-established criteria; sample included foreclosures from both judicial states and non-judicial states), and found critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third party law firms and vendors. However, Walsh said, “despite these deficiencies, the examination of specific cases and a review of servicers’ custodial activities found that loans were seriously delinquent, and that servicers maintained documentation of ownership and had a perfected interest in the mortgage to support their legal standing to foreclose. In addition, case reviews evidenced that servicers were in contact with troubled borrowers and had considered loss mitigation alternatives, including loan modifications.” |
| 23-Feb-11 | Bank of America is sued by investors in mortgage-backed bonds who are seeking to force the bank to buy back loans underlying their securities. The investors, acting as Walnut Place, said in the complaint filed in New York State Supreme Court in Manhattan that Bank of America’s Countrywide Financial unit breached representations and warranties about the loans, which it originated. The Walnut Place investors said at least 1,190 mortgage loans in the trust didn’t comply with underwriting guidelines and that at least 413 had loan-to-value ratios of more than 95 percent. Countrywide represented that no loan had a ratio of more than 95 percent, the investors said. |
| 2011-03-MARCH | |
| 3-Mar-11 | State AGs present 27-page term sheet for servicing standards to five largest mortgage servicers (American Banker) |
| 17-Mar-11 | Oklahoma AG Scott Pruitt and two other AGs (Alabama - Luther Strange; Nebraska - Jon Bruning) warn in letter to Iowa AG Tom Miller that some elements of the AGs proposal would override state laws, and argue that proposals aimed at forcing services to reduce mortgage loan balances to help keep borrowers in their homes go too far, have “morphed into an attempt to establish an overarching regulatory scheme that fundamentally restructures the mortgage loan industry” (Reuters) |
| 22-Mar-11 | Attorneys general from Florida (Pam Bondi), South Carolina (Alan Wilson), Texas (Greg Abbott), and Virginia (Ken Cuccinelli) send a second letter to AG Miller. The 4 state AGs object to financial penalties, including fines or requirements for banks to write down more than $20 billion in loan balances for homeowner borrowers that owe more on their properties than their homes are worth. “We believe that the states’ settlement proposal should focus on the alleged misconduct that prompted our investigation,” they wrote. “To the extent loan modification proposals should be included at all, they should be limited in scope and only address unlawful conduct at issue in this investigation -- such as banks’ improper handling of loan modification applications.” (Wall Street Journal) |
| 28-Mar-11 | Bank-servicers present their own servicing standards draft for discussions with attorney generals. The draft contains proposals for uniform standards related to key points including affidavit preparation, borrower account information verification, quality assurance through periodic reviews, third-party oversight and single point of contact. |
| 28-Mar-11 | Walter Investment Management purchases Green Tree Servicing |
| 2011-04-APRIL | |
| 13-Apr-11 | At the Federal level, three government agencies (OCC, OTS, FRB) issue enforcement action against a total of 14 servicers for “unsafe and unsound foreclosure practices”. OCC, speaking for the group, says the Consent Orders “create a framework for remedial action, but there’s no reason that additional procedures sought from the states can’t fit within that framework. Nothing that we’re doing is intended to impede any action by the state attorneys’ general.” The results of the review (which was also conducted by the FDIC) that led to the Consent Orders are published in a report, Interagency Review of Foreclosure Policies and Practices. The OCC Consent Orders were issued against BAC, Wells Fargo, JPMorgan Chase, Citigroup, HSBC, MetLife, US Bank and PNC Bank. The OTS Consent Orders were addressed to Aurora Bank, EverBank, OneWest and Sovereign Bank, while the FRB took charge of Consent Order for Ally Bank and SunTrust Mortgage, as well as the holding companies of all targeted firms. The entire group of firms, according to the review, comprises 68% of the mortgage servicing market. |
| 28-Apr-11 | State and federal official and bankers hold meetings in Washington in their attempts work out new term sheets. Bloomberg reports that BAC is accused of attempting to undermine the foreclosure settlement negotiations by the attorneys general. Patrick Madigan, Iowa’s assistant attorney general, alleges that the banking giant tried to disrupt settlement talks through a “divide-and-conquer” strategy, the news outlet reported, citing a person familiar with the matter, while another anonymous source said BAC attempted to create dissent among the states. |
| 28-Apr-11 | FHA announces that Fannie Mae and Freddie Mac will align guidelines for servicing delinquent mortgages, to include servicer incentives and penalties |
| 2011-05-MAY | |
| 3-May-11 | US (represented by U.S. Attorney for the Southern District of New York; Assistant Attorney General for the Justice Department’s Civil Division; General Counsel of HUD; and Acting Inspector General of HUD ) files civil mortgage fraud lawsuit against Deutsche Bank and Mortgage IT seeking damages and civil penalties for false certifications made to the U.S. Department of Housing and Urban Development in connection with the residential mortgage origination and sponsorship practices of MortgageIT. |
| 6-May-11 | Wells Fargo boosts reserves for legal expenses by 42 percent to a maximum of $1.7 billion, citing potential fines and penalties related to its mortgage practices (SEC Filing) |
| 6-May-11 | AG negotiators present a new set of term sheets to banks - one proposes changes in mortgage-servicing practices, one details focuses on monetary issues and principal writedowns |
| 10-May-11 | Banks meet with state, federal officials in latest round of negotiations; following day the Wall Street Journal reports that banks are willing to pay $5 billion to settle claims over alleged improper mortgage-servicing practices |
| 10-May-11 | Principal writedowns still on the AG table (Huffington Post) |
| 10-May-11 | JPMorgan Chase & Co. hires Cindy Armine, head of global compliance at Citigroup Inc., to become chief control officer for its home lending business, starting in August, according to a memo reported by Dow Jones. “Cindy will develop the strategy and oversee overall operating controls in the business, front to back,” JPMorgan’s chief administrative officer, Frank Bisignano, says in his memo. “We will actively involve her in all aspects of the business, including new business initiatives.” Armine “will also serve as a strategic business partner to me,” wrote Bisignano, who has reportedly known Armine for some time and worked with her at Citi. Armine will be “critical” as JPMorgan is working to “deliver on” the enforcement action “and reshape our organization to better serve our customers,” writes Bisignano. |
| 11-May-11 | BAC Moynihan tells shareholders that bank still straining to curtail bad mortgages in a housing market that faces “enormous challenges” |
| 11-May-11 | Refunds, legal settlements drag down BAC Q1 profits 36 percent to $2.05 billion |
| 11-May-11 | Banks privately say they won’t agree to a fine above $10 billion, far below $20 billion figure floated two months ago, arguing that regulators have not provided evidence that servicing problems led to wrongful foreclosures |
| 12-May-11 | US Senate Committee on Banking, Housing & Urban Affairs holds a hearing on “The Need for National Mortgage Servicing Standards” with testimony by Nicole Clowers, Diane Thompson, Laurie Goodman, Anthony Saunders, David Stevens and Richard Harpootlian. |
| 12-May-11 | US Senate Committee on Banking, Housing & Urban Affairs holds hearing on “Oversight of Dodd-Frank Implementation: Monitoring Systemic Risk and Promoting Financial Stability” with testimony by Neal Wolin, Ben Bernanke, Sheila Bair, Mary Schapiro, Gary Gensler, John Walsh. In written testimony on progress to date and effectiveness of Dodd-Frank Act, outgoing FDIC chair Sheila Bair discusses mortgage servicing documentation problems and criticizes the Interagency Review as too narrow for looking only at processing issues, and expresses concern regarding the “thoroughness and transparency” of the look-back reviews mandated by the Consent Order, which she stressed “were only a first step in setting out a framework for these large institutions to remedy deficiencies and to identify homeowners harmed as a result of servicer errors.” |
| 12-May-11 | MBA releases its “White Paper” on Residential Mortgage Servicing Standards for the 21st Century; in short, a summary of the January 2011 conference (see above), “educational tool to provide background information and an environmental scan of the events leading up to the current crisis” and “provides information on what a servicer does; how a servicer is compensated; and the perspectives of consumers, regulators, and the legal community with regard to servicer performance in the current crisis and common misperceptions about servicer incentives during the loss mitigation process” |
| 12-May-11 | US Senators Jeff Merkley (D-OR) and Olympia Snowe (R-ME) introduce the “Regulation of Mortgage Servicing Act” to help homeowners stay in their homes by making the rules for mortgage servicers more fair and transparent. The bill would require banks and other mortgage servicers to create a single point of contact for borrowers, end the dual track process of foreclosing homes while homeowners are negotiating a modification, and provide an independent, third-party review before sending a family to foreclosure. |
| 13-May-11 | Media reports say the U.S. Securities and Exchange Commission is in talks with major Wall Street banks to settle allegations of fraud relating to sale of toxic mortgage bonds that helped unleash the financial crisis. Settlement agreements being hammered out by U.S. securities regulators and securities firms accused of fraud in mortgage-bond deals are likely to include civil charges against at least one person connected to each deal, according to people familiar with the situation. (Wall Street Journal) |
| 13-May-11 | AHMSI, building upon the Ross/Freidman plan floated by Wilbur Ross two years ago, releases White Paper calling for Treasury to organize plan to boost principal reductions for up to 1 million homeowners by unlocking loans from securities. |
| 16-May-11 | Fortress-backed residential mortgage loan servicer Nationstar Mortgage Holdings Inc files with U.S. regulators to raise up to $400 million in an initial public offering of its common stock. The preliminary filing doesn’t reveal how many shares the company planned to sell or their expected price. Underwriters for the IPO are also not revealed. Nationstar reportedly plans to list on NYSE. (Reuters) |
| 16-May-11 | Federal audits reportedly accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans. The five separate investigations were conducted by the Department of Housing and Urban Development’s inspector general and examined Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. (Huffington Post) |
| 16-May-11 | Media reports indicate that NY AG Eric Schneiderman is investigating big banks in conjunction with packaging of toxic loans into securities (New York Times , Wall Street Journal and others). |
| 17-May-11 | Connecticut AG George Jepsen says US bank-servicers aren’t offering enough and face “substantial” liability if states sue them (Bloomberg) |
| 17-May-11 | Jaime Dimon apologizes for foreclosure mistakes as hundreds of protesters at the annual meeting demanded he do more to help homeowners and small businesses recover from the financial crisis |
| 18-May-11 | MHA (Treasury) announces Supplemental Directive (11-04) for servicers to set up “single point of contact” for borrower assistance during the delinquency process, effective Sept. 1 2011. Servicers that have executed a Servicer Participation Agreement (SPA) and have a Program Participation Cap of $75,000,000 or more, as of May 18, 2011, must follow the guidance set forth in this SD. However, all servicers that have executed a SPA are encouraged to adopt this guidance. |
| 19-May-11 | Acting Comptroller of the Currency John Walsh says in speech before the Financial Services Roundtable’s Housing Policy Council that the mortgage industry (lending and servicing) faces a “tsunami” of regulations that could dramatically alter the business in the coming years with the Dodd-Frank financial overhaul. (Wall Street Journal) |
| 19-May-11 | U.S. regulators said to be close to signing off on independent consultants picked by large U.S. banks to uncover the true depth of foreclosure misconduct seen at lenders as mandated by the Consent Orders. Consultants are expected to include Promontory Financial Group, Treliant Risk Advisors and PricewaterhouseCoopers (Reuters). |
| 19-May-11 | Utah AG Mark Shurtleff accuses BAC of breaking state law (Recon Trust Co. unit isn’t meeting legal requirements for conducting foreclosures) in letter to Moynihan dated May 19 and released May 25, according to Bloomberg |
| 20-May-11 | Connecticut AG George Jepsen says in May 20 letter released May 25 that BAC failed to fix “well-documented” problems in its mortgage-servicing business. |
| 23-May-11 | FT reports that NY AG has expanded probe to include RBS, UBS, JP Morgan Chase and Deutsche, in addition to Morgan Stanley, Goldman Sachs and BAC. FT also reports that Ambac and Assured Guaranty units had received subpoenas, while MBIA and Syncora Holdings confirmed receipt of subpoenas. |
| 23-May-11 | California AG Kamala Harris creates “Mortgage Fraud Strike Force,” a 25-person (17 lawyers, 8 special agents) task force to target mortgage fraud of any size in three major areas: corporate fraud (including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses), scams, fraudulent lending practices (including deceptive marketing, failure to fully disclose loan terms and qualifying people for loans who couldn’t afford the terms.) Harris says her initiative is distinct from the multistate investigation because it would go after all aspects of the mortgage-lending business. |
| 24-May-11 | State AGs tell five largest banks they face liabilities of $17 billion in civil lawsuits if settlement isn’t reached, sources tell the Wall Street Journal. Meeting reportedly first attempt to formally quantify potential liability |
| 25-May-11 | California AG Kamala Harris subpoenas LPS as part of continuing “robo-signing” problem |
| 25-May-11 | House Committee on Oversight and Government Reform ranking member Elijah Cummings (D-MD) sends letter to chairman Darrell Issa (R-CA) asking that subpoenas be issued to six major servicers (MetLife, PHH Mortgage, SunTrust, US Bank, Wells Fargo, Bank of America) for refusing to provide foreclosure-related documentation. Issa asks for more information before making decision. |
| 25-May-11 | NY Fed said investigating allegations that Litton Loan Servicing failed to conduct proper reviews before denying borrowers the option to lower their payments under a government loan modification program, according to the FT, which sent a letter by an anonymous whistleblower outlining this practice to the Fed. |
| 25-May-11 | Ilinois Attorney General Lisa Madigan issues subpoenas to Lender Processing Services Inc. and Nationwide Title Clearing Inc. seeking information about their business practices in light of allegations of “robo-signing” and other operational shortcuts that became common within the industry. |
| 26-May-11 | The Financial Industry Regulatory Authority (FINRA) announces that it has fined Credit Suisse Securities (USA) LLC $4.5 million, and Merrill Lynch $3 million for misrepresenting delinquency data and inadequate supervision in connection with the issuance of residential subprime mortgage securitizations (RMBS). |
| 27-May-11 | U.S. banks and state attorneys general, seeking to avoid $17 billion in court claims over faulty foreclosures, are discussing a settlement framework that may let firms choose from a menu of options for helping borrowers, two people briefed on the talks tell Bloomberg. Under the proposal, BAC, Wells Fargo, JPMorgan Chase, Citigroup, Ally would pay penalties and pledge billions of dollars in relief to home buyers. Firms may fulfill obligations to borrowers over time, choosing among options such as reducing loan principal, cutting fees or paying moving costs, the people said. Stitching flexibility into settlements may help defuse opposition from a group of Republican attorneys general, who object to principal reductions sought by other states, one of the people said. The pace of talks is accelerating, with parties also nearing agreement on an industrywide overhaul of procedures for handling mortgages, that person said. Under the proposal, banks would pay the penalties to the states, which would determine how to use the funds, according to the people briefed on the talks. The separate relief funds, which banks could decide how to provide, are expected to account for a majority of the companies’ costs, one of the people said. (Bloomberg) |
| 26-May-11 | NY State Supreme judge denies most of Morgan Stanley motions to dismiss mortgage putback lawsuit filed by MBIA; however, judge grants a motion to dismiss the “unjust enrichment” claim against Saxon Mortgage Services, as MBIA had “failed to allege that it paid fees to Saxon which were received unjustly.” MBIA filed its suit in December against Morgan Stanley and its subsidiaries Morgan Stanley C apital Holdings LLC and Saxon Mortgage Services, alleging “fraud and breach of contract,” related to a securitization of roughly 5,000 second-lien residential mortgage loans with a total balance of $269 million, as well as a “breach of Saxon Mortgage Inc.’s servicing obligations.” MBIA alleged that Morgan Stanley and its subsidiaries had misrepresented the quality of the underlying loans, misrepresented the underwriting diligence performed on the loans, the percentage of the loans confirming to Morgan Stanley’s underwriting requirements and the capabilities of Saxon Mortgage Services. In February, Morgan Stanley filed a motion to dismiss MBIA’s claims. Preliminary conference for the case is scheduled for June 23. |
| 2011-06-JUNE | |
| 3-Jun-11 | Fortune magazine runs an article on its web site detailing the results of an empirical investigation by one of their reporters (Abigail Field) into missing or incomplete foreclosure documentation relating to securitizations packaged by Countrywide. |
| 5-Jun-11 | Ocwen Financial Corporation and The Goldman Sachs Group, Inc. (“Seller”) enter into a Purchase Agreement pursuant to which, among other things, Ocwen agreed to acquire, subject to certain conditions (i) all of the outstanding partnership interests of Litton Loan Servicing LP (“Litton”), a subsidiary of Seller and provider of servicing and subservicing of primarily non-prime residential mortgage loans (the “Business”) and (ii) certain interest-only servicing strips currently owned by Goldman, Sachs & Co., a subsidiary of Seller. These and other transactions contemplated by the Agreement are referred to herein as the “Transaction”. The Transaction will result in the acquisition by Ocwen of a servicing portfolio of approximately $41.2 billion in unpaid principal balance of primarily non-prime residential mortgage loans as of March 31, 2011 and the servicing platform of the Business based in Houston, Texas and Dallas, Texas. The base purchase price for the Transaction is $263.7 million which is payable by Ocwen in cash at closing, subject to certain adjustments at closing. In addition, subject to adjustments based on outstanding servicer advances at closing, Ocwen will pay approximately $337.4 million to retire a portion of the outstanding debt on an existing advance facility currently provided by an affiliate of Seller to Litton, and will enter into a new facility to finance approximately $2.47 billion of servicing advances associated with the Business. (SEC filing) |
| 6-Jun-11 | Fannie Mae issues new standards for mortgage servicers regarding the management of delinquent loans, default prevention and foreclosure time frames under the Federal Housing Finance Agency’s Servicing Alignment Initiative. The new standards, reinforced by new incentives and compensatory fees, require servicers to take a more consistent approach for homeowner communications, loan modifications and other workouts, and, when necessary, foreclosures. |
| 7-Jun-11 | Six federal agencies extend the comment period on the proposed rules to implement the credit risk retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The comment period was extended to August 1, 2011, to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by June 10, 2011. The proposed rule generally would require sponsors of asset-backed securities to retain at least 5 percent of the credit risk of the assets underlying the securities and would not permit sponsors to transfer or hedge that credit risk. The proposal was issued by the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the U.S. Securities and Exchange Commission, the Federal Housing Finance Agency, and the Department of Housing and Urban Development. |
| 8-Jun-11 | Fitch Ratings places Ocwen Financial Corporation’s U.S. residential mortgage servicer ratings on Rating Watch Negative as follows: Primary servicer rating for subprime product ‘RPS2’; Residential special servicer rating ‘RSS2’. The Rating Watch Negative is based on concerns from the potential acquisition of Litton Loan Servicing, LLP, a wholly owned subsidiary of Goldman Sachs Group, Inc., which was announced on June 6, 2011 and expected to close by year-end 2011. These concerns reflect portfolio integration risk including loan transfers onto a new system of record and default management platform, time required for management involvement in planning, and execution of transfer and the assimilation of additional subprime loans requiring immediate high-touch efforts. Further, the acquisition of the additional loans from Litton will culminate in an increase of approximately 125% in subprime or highly defaulted loan servicing at Ocwen since mid 2010. |
| 8-Jun-11 | Fitch Ratings places Litton Loan Servicing LLP’s U.S. residential and small balance commercial mortgage servicer ratings on Rating Watch Negative: Primary servicer rating for Alt-A product ‘RPS1’; Primary servicer rating for subprime product ‘RPS1’; Primary specialty servicer rating for manufactured housing product ‘RPS2’; Primary specialty servicer rating for closed-end second liens product ‘RPS1’; Residential special servicer rating ‘RSS1’; U.S. Small balance commercial primary servicer rating ‘SBPS2+’; U.S. Small balance commercial special servicer rating ‘SBSS2+’. The Rating Watch Negative is based on concerns from the potential sale of Litton Loan Servicing, LLP (Litton), a wholly owned subsidiary of Goldman Sachs Group, Inc. (Goldman), to Ocwen Financial Corp., which was announced on June 6, 2011 and expected to close by year end 2011. Fitch believes the sale to Ocwen is likely to result in material changes to Litton’s servicing platform including reductions in senior management and staffing levels, outsourcing of borrower contact including default and collections, and potentially a conversion to a new system of record and default management platform. Fitch anticipates that if the transaction proceeds as expected to closing, the Litton servicer ratings would be either withdrawn or be no higher than those held by Ocwen. |
| 9-Jun-11 | U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury releases the May edition of the Obama Administration’s Housing Scorecard. New to this month’s report are detailed assessments for the 10 largest mortgage servicers participating in the Administration’s Making Home Affordable Program, setting a new industry benchmark for disclosure on servicer assistance to struggling homeowners. In addition to providing greater transparency about servicer performance in the program, the new assessments are intended to prompt mortgage servicers to correct identified deficiencies to improve program implementation and more effectively reach eligible homeowners. (see next entry) |
| 9-Jun-11 | For the first time ever, the U.S. Treasury withholds financial incentives from three servicers - Wells Fargo, Bank of America and JPMorgan Chase - for their alleged failure to take required steps to prevent foreclosures under the Obama Administration’s HAMP program. Ocwen is cited in Treasury report as needing “substantial improvement” but is not subject to financial penalties. “While we continue to get tens of thousands of new homeowners into mortgage modifications each month, we need servicers to step up their performance to meet the needs of those still struggling,” Treasury Secretary Timothy Geithner said in a statement. “We don’t have the power to impose fines,” Tim Massad, acting Treasury Assistant Secretary for Financial Stability, told reporters. “We have the power to publicize what they’re doing. We have the power to withhold incentives. That’s what we’re doing.” Wells Fargo said the Treasury’s assessment “paints an unfairly negative picture” of the bank’s efforts because it examined loan modifications that were attempted as far back as October 2009, when the program was still in development. “We are formally disputing this with the Treasury,” Wells spokeswoman Teri Schrettenbrunner says in a media report. JPMorgan spokesman Patrick Linehan said the bank “respectfully disagrees with the assessment.” “We have made significant improvements since the modifications that Treasury reviewed and continue to work hard to keep improving our processes and controls,” Linehan said in an e-mail reported by news outlets. Bank of America spokesman Rick Simon said the company continues to meet with Treasury to address concerns. “We acknowledge improvements must be made in key areas, particularly those affecting the customer experience,” Simon says in an e-mail to press. Funded with almost $50 billion in Troubled Asset Relief Program money, HAMP pays servicers $1,000 for each loan that is modified and $1,000 a year for three years if the borrower pays on time. The servicers penalized received about $24 million in payments in May, Treasury reported. |
| 10-Jun-11 | Fitch Ratings downgrades the operational risk ratings of several U.S. residential mortgage servicers, due to, among other reasons, “the growing burden of managing delinquent and defaulted mortgages in an environment of heightened regulatory scrutiny. Also factored into the downgrades were the increased areas of risk identified by various regulatory bodies which ultimately resulted in consent decrees, and the slower than expected pace that institutions have demonstrated in responding to the foreclosure crisis and implementing process changes.” The servicers downgraded include BAC Home Loans Servicing LP, Bank of America, NA; Chase Home Finance LLC; CitiMortgage, Inc.; MetLife Bank, NA; PNC Bank, NA; SunTrust Mortgage, Inc.; Wells Fargo Home Equity Group; Well Fargo Home Mortgage. |
| 13-Jun-11 | The OCC announces it had extended the timelines (to July 13) for submission of plans, programs, policies, and procedures and foreclosure review engagement letters required by consent orders issued on April 13 against eight large national bank residential mortgage servicers. At the request of the U.S. Department of Justice and to allow coordination of actions with other agencies at the state and federal level, the OCC extended the deadlines for requirements in Article III through Article IX of the consent orders by 30 days. |
| 13-Jun-11 | The OTS announces it has extended the deadlines for four OTS-regulated mortgage loan servicers to submit action plans to comply with enforcement actions related to critical weaknesses in processing home foreclosures. At the request of the U.S. Department of Justice, the OTS has extended the deadlines by 30 days for Aurora Bank, EverBank, OneWest Bank and Sovereign Bank. The orders require swift and comprehensive action to remedy the widespread and significant deficiencies identified by the Interagency review. |
| 13-Jun-11 | Wells Fargo Home Mortgage and the U.S. Conference of Mayors announced a three-year alliance aimed at preventing mortgage loan foreclosures. The mayors and Wells Fargo “share a deep-rooted commitment to sustainable homeownership,” said Tom Cochran, executive director of the mayors group in a statement announcing the alliance. “We intend to bring proven technical capabilities and educational materials — through our Leading the Way Home effort — to help municipalities address the current housing crisis,” said Mary Coffin, executive vice president of Wells Fargo Home Mortgage. The efforts will include up to three regional mayoral forums in each of the three years. The mayors and Wells Fargo experts will share best practices and strategies for preventing foreclosures and promoting sustainable homeownership. |
| 13-Jun-11 | A HUD assistant regional inspector general accuses BAC of “significantly” hindering a federal inquiry into the company’s foreclosure activities, according to the Wall Street Journal, which says the official cited various examples from 2010 in which BAC hindered investigators, in a report he filed June 8 with an Arizona state court in Phoenix. |
| 13-Jun-11 | Delaware Attorney General Joseph R. Biden III joins NY AG Eric Schneiderman’s investigation into paperwork surrounding the bundling of mortgages over the last decade, the New York Times reports. |
| 14-Jun-11 | In a letter to Acting Comptroller John A. Walsh, Senate Democrats urge the Office of the Comptroller of the Currency (OCC) with State Attorneys General, the U.S. Department of Justice (DOJ), and the U.S. Department of Housing and Urban Development (HUD) ”to hold mortgage servicers accountable for deficient servicing procedures and improperly foreclosing on homeowners and to develop a comprehensive solution to fix the broken foreclosure process.” |
| 14-Jun-11 | JPMorgan Chase & Co., removes mortgage lending chief David Lowman, Bloomberg reports, based on an internal employee memo it received. “Dave Lowman and I have decided he will leave the firm,” Frank Bisignano, CAO and head of home lending, says in the memo. |
| 16-Jun-11 | PMI Mortgage Insurance Co. announces the launch of an internal program designed to recognize and reward “high-performance” servicers for the work they do to prevent foreclosures. To be eligible for the program, servicers must exhibit superior foreclosure prevention results on PMI’s “Servicer Scorecard.” In addition, they will be asked to affirm that their operations substantially adhere to industry best practices as outlined in PMI’s “Best Practice Principles,” which were developed in collaboration with mortgage servicing industry leaders. |
| 22-Jun-11 | Illinois Attorney General Lisa Madigan and North Carolina Attorney General Roy Cooper, both members of the executive committee of attorneys general which, along with officials from federal agencies, is negotiating with the banks, threatened litigation if settlement talks with the companies, including Bank of America Corp. and JPMorgan Chase & Co., break down. “If we don’t get an agreement, we’re prepared to go to court,” Cooper tells homeowner advocates at a meeting of state attorneys general in Chicago. (Bloomberg) |
| 22-Jun-11 | CoreLogic reports a decline in the current residential shadow inventory as of April 2011 to 1.7 million units, representing a five months’ supply. This is down from 1.9 million units, also a five months’ supply, from a year ago. The decline was due to fewer new delinquencies and the high level of distressed sales, which helped reduce the number of outstanding distressed loans, the company said. |
| 29-Jun-11 | Bank of America Corp. reached an agreement to pay $8.5 billion to settle claims by investors who lost money on mortgage-backed securities purchased before the U.S. housing collapse, the bank confirmed Wednesday morning. The payment is the largest such settlement by a financial-services firm to date, exceeding the total profits of the Charlotte, N.C., bank since the onset of the financial crisis in 2008. Bank of America's board approved the settlement on Tuesday. See partial release below |
| 29-Jun-11 | 22 institutional investors represented by Gibbs & Bruns LLP announce they have achieved a settlement with Bank of America and Countrywide of repurchase and mortgage servicing claims on 530 Countrywide-issued residential mortgage backed securities trusts for which BNY Mellon serves as the Trustee. The settlement, which is subject to court approval, includes the following key terms: 1. Payment by Bank of America and/or Countrywide of $8.5 billion to settle mortgage repurchase and servicing claims owned by the 530 Covered Trusts; 2. Implementation of servicing changes and improvements, described in greater detail below, that are expected to improve outcomes for borrowers and investors; 3. The filing by BNY Mellon as Trustee of a proceeding seeking court approval of the settlement; and, 4. An agreement by the Institutional Investors to intervene in that proceeding and use their best efforts to obtain approval of the settlement. The settlement includes improvements in mortgage servicing that will benefit borrowers and investors alike. Bank of America has agreed to move the servicing of high-risk loans for troubled borrowers to qualified sub-servicing firms, at Bank of America's expense. The agreement also clarifies loss mitigation standards, improves servicing for borrowers and investors alike, and benchmarks Bank of America's servicing performance to industry norms. Bank of America has committed to pay agreed upon fees to the Covered Trusts if these servicing standards are not met on loans it continues to service. ● BlackRock Financial Management, Inc. ● Federal Home Loan Bank of Atlanta ● The Federal Reserve Bank of New York's Maiden Lane entities ● AEGON USA Investment Management LLC ● Bayerische Landesbank ● Goldman Sachs Asset Management L.P. ● ING Investment Management L.L.C., ING Bank, fsb, and ING Capital LLC ● Invesco Advisers, Inc. ● Kore Advisors, L.P. ● Landesbank Baden-Wuerttemberg and LBBW Asset Management (Ireland) plc, Dublin ● Metropolitan Life Insurance Company ● Nationwide Mutual Insurance Company and its affiliate companies ● Neuberger Berman Europe Limited ● New York Life Investment Management LLC ● Pacific Investment Management Company LLC (PIMCO) ● Prudential Investment Management, Inc. ● Teachers Insurance and Annuity Association of America ● Thrivent Financial for Lutherans ● Trust Company of the West and its affiliated companies controlled by The TCW Group, Inc. ● Western Asset Management Company The agreement requires a series of improvements in mortgage servicing that, over time, are expected to improve outcomes for borrowers and investors alike. These improvements include: a. An agreement to transfer certain high-risk loans owned by the Covered Trusts to qualified subservicers, at BAC Servicing's expense, for "high touch" servicing to achieve the twin goals of improving responsiveness to troubled borrowers and reducing loss severities in the Covered Trusts; b. Benchmarking loan servicing by BAC Servicing against defined industry standards such as default-servicing timelines (with the payment of agreed-upon fees to the Covered Trusts if those benchmarks are not met); c. Clarifying loss mitigation standards under the agreements that govern the Covered Trusts, to ensure borrowers are considered for all applicable modification programs at once, reflecting a shared commitment to efficient and timely procedures to assist distressed borrowers; and, d. Implementation of a cure process for mortgage and title documentation, coupled with an agreement by BAC Servicing to indemnify the Covered Trusts for any losses caused by their inability to liquidate a mortgage as a first-lien mortgage. In total, Bank of America estimates the cost to implement the servicing improvements will be approximately $400 million. |
| 28-Jun-11 | Fannie Mae will retroactively charge mortgage servicers for failing to process severely aged loans, according Housing Wire. The government-sponsored enterprise sent an alert to servicers in the first quarter of 2011, saying it would issue fees going forward. But last week, under guidance from its regulator the Federal Housing Finance Agency, Fannie alerted servicers it would levy fines for actions taken – or in this case not taken – in 2010. A Fannie Mae spokesperson said the GSE is not disclosing which servicers will receive the invoices or the amount of fees Fannie will recoup. According to Fannie Mae guidelines, the fees will be based on the outstanding principal balance of the mortgage loan, the applicable pass-through rate, the length of the delay and any additional costs, Housing Wire says. |
| 28-Jun-11 | CreditSights Inc suggest that PMI Group Inc. (PMI), the third-largest guarantor of U.S. home loans, may be headed toward default following four years of losses, as indicated by trading in credit derivatives. Credit-default swaps on PMI at about a 16-month high imply an 85 percent probability of default within five years, according to data-provider CMA. The Walnut Creek, California- based company’s ability to write new business may be frozen if it fails to meet regulatory capital requirements by the end of September, CreditSights says. PMI, which pays lenders when homeowners default and foreclosures fail to recoup all of the mortgages, has posted 15 straight quarterly losses amid the worst slump in U.S. housing prices since the Great Depression. Home prices decreased in the year ended in April by the most in 17 months, according to the S&P/Case-Shiller index of property values in 20 cities. |
| 27-Jun-11 | A drop in some mortgage loan limits for Fannie Mae and Freddie Mac and the Federal Housing Administration scheduled to occur on Oct. 1 will reduce housing demand and place downward pressure on home prices in major housing markets, according to a report from the Economics and Housing Policy Group at the National Association of Home Builders. |
| 28-Jun-11 | News outlets report that U.S. lenders and community bankers had voiced their concern to lawmakers over proposed federal rules aimed at reducing risk-taking on mortgage lending, saying the guidelines could hurt small banks and impair credit markets. The rules -- mandated by the passage of the Dodd-Frank Wall Street overhaul bill -- are under consideration by regulators to establish guidelines for originators of securitized loans, the types of instruments that are blamed for fueling the 2007-2009 financial crisis. Regulators intend to reduce risk-taking by forcing lenders to hold a 5 percent stake in any debt instrument pooled in the secondary market. "Should this proposal be adopted, it will surely drive many banks from mortgage lending and shut many borrowers out of the credit market entirely," Christopher Dunn, chief operating officer of South Shore Savings Bank in South Weymouth, Massachusetts, told a Senate Banking Committee hearing on behalf of the American Bankers Association. |
| 29-Jun-11 | Bank of America announces plans to set aside $14 billion to pay investors who bought securities it assembled from mortgages that later soured, an agreement that the company expected would lead to a second-quarter loss of $8.6 billion to $9.1 billion. |
| 29-Jun-11 | The performance of first-lien mortgages serviced by national banks and federal thrifts improved in the first quarter, according to a report by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS). The latest mortgage metrics report shows that 88.6% of the 32.7 million loans reviewed were current and performing at the end of the first quarter. The report covers about 63% of all first-lien mortgages in the U.S. |
| 30-Jun-11 | Former President Bill Clinton tells Bloomberg TV that Bank of America Corp. (BAC)’s accord with mortgage-bond investors may give more “underwater” borrowers a chance to cut the amount owed on their home loans. “You’d relieve the anxiety of countless Americans who would know they could hold onto their homes,” Clinton said. By unclogging the housing market, “you lift not only an economic, but a psychological burden off of the homeowners and the banks,” Clinton said. “And we’re free to start lending again, we’re free to engage in normal economic activity.” Bloomberg TV *preview |
| 30-Jun-11 | The OCC clarifies expectations for the oversight and management of mortgage foreclosure activities by national banks. The guidance is is intended to ensure that all mortgage servicers under OCC supervision adhere to appropriate foreclosure management standards. OCC Bullettin 2011-29 stresses that banks engaged in mortgage servicing must ensure compliance with foreclosure laws, conduct foreclosures in a safe and sound manner, and establish responsible business practices that provide accountability and appropriate treatment of borrowers. The bulletin also directs all national banks to conduct a self-assessment of foreclosure management practices no later than September 30, 2011, and correct any weaknesses identified. National bank examiners will review the self-assessments and corrective actions in the next quarterly review or examination of the bank, the OCC said. |
| 30-Jun-11 | Laurie Goodman of Amherst Securities argues that the proposed Bank of America settlement on legacy Countrywide assets, announced on June 29, if it is adopted, will take a while for the settlement to be realized, and there is a not insignificant chance of derailment. She also attempts to estimate the allocation of claims based on an expected loss methodology. She also notes that there is no disclosure on the mechanics of allocation, which obviously puts investors in a precarious position when deciding whether or not to accept the offer. She says that the settlement, if adopted, provides some improvements on the servicing side, which is a plus for investors. She also notes that the State Attorneys’ General settlement is likely to be less stringent than originally advocated.Click here for report |
| 2011-07-JULY | |
| 5-Jul-11 | Walnut Place investors challenge Bank of America Corp's $8.5 billion settlement with holders in soured mortgage-backed securities, saying it may be unfair to other bond investors. In court papers filed in New York State Supreme Court in Manhattan, 11 companies sharing the name Walnut Place said they had "serious concerns about the secret, non-adversarial, and conflicted way in which the proposed settlement was negotiated and about the fairness of the terms." Walnut Place called the earlier settlement "inadequate." It said it plans on July 13 to ask Justice Barbara Kapnick, whose approval is required for the settlement, to excuse it from the accord, or else to compel greater disclosures about the pact. |
| 6-Jul-11 | Finkelstein Thompson LLP announces that it is investigating Bank of America's proposed global settlement of claims related to Countrywide-backed RMBS mortgages. The investigation is focused on whether the settlement is fair, adequate, and reasonable, as well as the circumstances surrounding the parties' agreement to the settlement and its terms, the law firm said in a press release. Reportedly, Bank of America would be released from certain investor claims for a payment that amounts to only two cents on the dollar, according to the release. |
| 6-Jul-11 | Wells Fargo agrees to pay $125 million to settle accusations by investors that the bank misled them about the risks of mortgage-backed securities it sold. The plaintiffs in the consolidated group case, or class action, include the General Retirement System of Detroit, New Orleans Employees’ Retirement System and other public pensions, according to the proposed settlement filed in federal court in San Jose, California. Wells Fargo, the largest U.S. home lender, and several investment banks that underwrote the securities were sued in 2009 over alleged violations of securities laws in connection with sales of $36 billion in mortgage pass-through certificates in 2005 and 2006. The securities were backed by pools of mortgage loans that Wells Fargo or its affiliates originated or purchased. In 28 offerings, the bank misrepresented the quality of the loans, failing to disclose that it hadn’t followed appropriate underwriting standards and loans were made based on inflated appraisals, investors said in a complaint. The bank and the underwriters deny wrongdoing, according to the proposed accord, which is subject to a judge’s approval. (Bloomberg) |
| 7-Jul-11 | Republican members of Congress lash out at state attorneys general investigating big-bank mortgage servicers, arguing they’re trying to achieve in a sweeping settlement what Democrats were unable to accomplish in Congress, according to MarketWatch. “The settlement proposal requires the resuscitation of policies and programs that have not worked or that Congress has explicitly rejected,” said Rep. Randy Neugebauer, (R., Texas) at a hearing on mortgage problems at big banks. At issue are discussions between state attorneys general and the Justice Department and large bank servicers to settle an investigation into problems uncovered in foreclosure practices at large financial institutions. |
| 7-Jul-11 | More than 2 million homeowners hit by a foreclosure in 2009 or 2010 can demand reviews of their cases and they'll receive letters explaining their rights, Julie Williams, chief counsel of the Office of the Comptroller of the Currency, tells a congressional hearing. The letters are intended to help identify homeowners who believe they were harmed financially because of improper foreclosure practices by mortgage servicers, Williams said. (USA Today) |
| 7-Jul-11 | The Federal Reserve Board will monitor mortgage servicers as they work to address “significant deficiencies” in servicing and foreclosure practices, the Fed's Board of Governors testified before the House Financial Services subcommittee. “We will continue to monitor and assess the corrective actions taken by the servicers and the holding companies, as required by the enforcement actions, and take further action when necessary to address failures,” the board said. (Bloomberg) |
| 7 Jul-11 | Mortgage servicing will be one of the CFPB's top priorities, Raj Date, associate director for research, markets and regulation at the CFPB, says in testimony on mortgage servicing standards before the House Committee on Financial Services. (Reported by WSJ) |
| 7-Jul-11 | The Obama Administration announces changes to FHA requirements that will require servicers to extend the forbearance period for unemployed homeowners from four months, to 12 months. The Administration also intends to require servicers participating in the Making Home Affordable Program to extend the minimum forbearance period to 12 months wherever possible under regulator and investor guidelines. These adjustments will provide much needed assistance for unemployed homeowners trying to stay in their homes while seeking re-employment, HUD said, adding that these changes are intended to set a standard for the mortgage industry to provide more robust assistance to unemployed homeowners in the economic downturn. "The current unemployment forbearance programs have mandatory periods that are inadequate for the majority of unemployed borrowers," U.S. Housing and Urban Development Secretary Shaun Donovan said. "Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six. Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home." (HUD press release) |
| 7-Jul-11 | Alabama Attorney General Luther Strange tells the House Financial Services Committee that he fears a settlement with the nation's top mortgage servicers could lead to too many regulations and slow the housing market's recovery. Strange, a Republican, tells lawmakers that he supports current negotiations by state attorneys general and agrees the mortgage servicers should be punished, but added that he didn't want a settlement that would violate states' rights. (Legal Newsline) |
| 11-Jul-11 | The Huffington Post reports that state and federal prosecutors are pressing to complete a proposed settlement with the nation's five largest home loan companies over alleged mortgage abuses, even though they've only initiated a limited investigation that hasn't examined the full extent of the alleged wrongdoing, according to interviews with more than two dozen officials and others familiar with the state and federal probes. The deal with the mortgage companies would broadly absolve the firms of wrongdoing in exchange for penalties reaching $30 billion and assurances that the firms will adhere to better practices going forward, these sources told The Huffington Post. |
| 11-Jul-11 | The New York Times reports that tens of thousands of Bank of America’s most distressed borrowers could be evicted and lose their homes more quickly as a result of a proposed settlement between the bank, which is the country’s largest mortgage servicer, and investors in its troubled mortgage securities. For struggling borrowers in better financial shape, the paper says, the outcome could be more positive: The deal would include incentives for mortgage servicers to help homeowners who have fallen behind on their payments and whose homes are worth less than they borrowed. “The goal is to reinstate as many borrowers in a modification that performs well,” Tony Meola, a servicing executive with Bank of America, told the NYT. “It also is likely to lead to faster resolution in those unfortunate situations where foreclosure is inevitable. While not a desirable outcome, the recovery of the housing markets depends on moving through the foreclosure process as quickly and fairly as possible.” |
| 11-Jul-11 | HOPE NOW releases May 2011 mortgage industry data estimating declines in foreclosure sales for the second straight month. According to the survey data, foreclosure sales nationwide were approximately 68,000, down from 73,000 in the month of April, representing a decrease of 7%. Foreclosure starts were up for the month, with 176,000 reported versus 163,000 for the month of April, an increase of 8%. For the month, permanent loan modifications for homeowners were approximately 85,000, virtually unchanged from the month of April (86,000). Of the total number, approximately 53,000 were proprietary modifications and 32,398 were completed under the Home Affordable Modification Program (HAMP). |
| 11-Jul-11 | The Senate Judiciary Committee will investigate charges of abuses by mortgage servicers, including improper loan modification agreements and shoddy foreclosure procedures, which might have resulted in improper home seizures, Sen. Richard Blumenthal announces. |
| 12-Jul-11 | A report by the California Reinvestment Coalition (CRC), "Race to the Bottom: An Analysis of HAMP Loan Modification Outcomes by Race and Ethnicity for California", reveals that California homeowners are having trouble accessing sustainable home loan modifications, and that borrowers of color are disproportionately facing specific problems that are making it more difficult for them to access modifications. The report analyzes recently released data from the Treasury Department about the HAMP program, in conjunction with CRC's April/May 2011 survey of nonprofit housing counselors. |
| 13-Jul-11 | The OCC says eight institutions—including Bank of America Corp., J.P. Morgan Chase & Co. Wells Fargo & Co. and Citigroup Inc.—have met a July 13 deadline for submitting detailed plans. The OCC will now review the banks’ action plans, a spokesman said. The four big banks, along with 10 other home-loan servicers, have been under investigation by federal regulators and state officials over breakdowns in procedures for handling foreclosures and requests for loan assistance. (WSJ) |
| 18-Jul-11 | The Wall Street Journal reports that U.S. regulators are barring certain law firms from assisting in ferreting out foreclosure abuses, citing their perceived coziness with the mortgage-servicing industry. In one instance, the Federal Reserve rejected a GMAC Mortgage LLC proposal that Bradley Arant Boult Cummings LLP would assist with an independent, U.S.-mandated review of past home seizures, sources told the paper. The reason: The Birmingham, Ala., law firm has ties to GMAC, including serving last year as defense counsel in a lawsuit in U.S. District Court in Florida alleging GMAC employees approved foreclosure documents without properly reviewing them, the paper said, adding that the suit was dismissed. A GMAC spokeswoman said, "We intend to fully comply" with regulatory requirements, including "using third-party firms that are able to conduct independent reviews." Bradley Arant declined to comment. |
| 18-Jul-11 | The Associated Press and Reuters independently report the results of their own separate investigations showing that robo-signing is still taking place. |
| 18-Jul-11 | The New York Post reports that the mega-servicers are still weeks from reaching a potential multibillion-dollar deal with federal and state officials to settle the foreclosure fiasco. Key sticking points, the Post says, include the amount each bank will have shell out and whether the firms will be released from future lawsuits once a broad accord is struck, sources said. Banks could be hit with as much as $25 billion in fines. The paper said negotiators had hoped to reach an agreement in principle sooner but that a source close to the talks between the five biggest US banks and 50 state attorneys general and federal regulators revealed that discussions aren't as far along as hoped and that an agreement might be reached in the next three to four weeks. The settlement as it is now structured would form two types of funds -- one national and funds for each of the states -- that would settle most state and federal civil foreclosure claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, formerly known as GMAC, the paper said. |
| 20-Jul-11 | A group of senators ask several federal agencies to release information about mortgage servicers' foreclosure practices. Sens. Maria Cantwell (D-Wash.), Robert Menendez (D-N.J.) and eight other senators, in a letter to the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp., requested information regarding each mortgage servicer’s performance in preventing illegal foreclosure practices. The request for disclosures also is based on concerns that the consultants performing the foreclosure reviews have conflicts of interest because they were chosen by the mortgage servicers they investigating and have done business with the firms. The senators are requesting public release of engagement letters, action plans, foreclosure reviews and other plans, policies or processes submitted by mortgage servicers or third-party servicers to ensure that abuses in foreclosure practices are being handled during the review process. (The Hill) |
| 20-Jul-11 | Stan Kurland, founder and CEO of PennyMac, in an article titled "How to Fix Mortgage Servicing" in the American Banker, recommends that the minimum servicing fee on conforming and private-label loans be reduced. The "inappropriately high minimum servicing fees," Kurland writes, have resulted in inefficient capital investment requirements for mortgage servicing rights, which, in turn, "has concentrated loan servicing at a handful of large financial enterprises with the stockpiles of capital required to carry volatile mortgage service rights." |
| 21-Jul-11 | Wells Fargo & Co. has agreed to pay $85 million to settle civil charges that it falsified loan documents and pushed borrowers toward subprime mortgages with higher interest rates during the housing boom, Reuters reports. The fine is the largest ever imposed by the Federal Reserve in a consumer-enforcement case, the central bank said. Wells Fargo, the nation's largest mortgage lender, neither admitted nor denied wrongdoing as part of the settlement. The bank agreed to compensate borrowers who were steered into higher-priced loans or whose income was exaggerated. |
| 22-Jul-11 | A push by U.S. banks to win broad liability releases has become one of the main obstacles in talks to resolve a nationwide probe of mortgage-servicing and foreclosure practices, two people briefed on the matter tell Bloomberg. The mortgage servicers want protection from additional state and federal claims over their mortgage practices as part of reaching a settlement that may exceed $20 billion, according to the people, who declined to be named because the talks are private. The banks are seeking releases that go beyond servicing of mortgages to include lending and securitization of loans, one of the people said. That effort has encountered resistance from at least two states. Delaware Attorney General Beau Biden and New York Attorney General Eric Schneiderman, who are investigating the bundling of mortgage loans into securities, don't want their probes blocked by a broad settlement of liability. Biden said he has "strong reservations" about a deal that provides releases of claims related to practices such as securitization and lending, because servicing is the focus of the nationwide settlement talks. (Bloomberg) |
| 26-Jul-11 | The newly formed Financial Stability Oversight Council, in its first annual report, says the current regulatory structure overseeing the U.S. housing sector poses a risk to the larger economic system. The report includes a series of recommendations to contain future economic crises including a proposal to establish national mortgage servicing standards to limit a repeat of issues stemming from the 2008 financial crisis. The report says the mortgage servicing industry was unprepared and poorly structured to address the rapid increase in defaults and foreclosures that came about because of the financial crisis. (MarketWatch) |
| 27-Jul-11 | The California Housing Finance Agency announces that Bank of America is participating in Keep Your Home California’s Principal Reduction Program, giving eligible cash-strapped homeowners the opportunity to lower their outstanding mortgage balances and avoid foreclosure. The program is part of a $2 billion, federally funded effort to help hard-hit families remain in their homes and ease the California foreclosure crisis. Bank of America has been engaged in a pilot of the principal reduction program since February, and is now moving into full participation to provide assistance to more qualified homeowners facing hardship. The bank, one of the largest servicers of single family mortgages in California, joins 6 other servicers, including Vericrest Financial and GMAC, that are participating in Keep Your Home California's Principal Reduction Program. |
| 25-Jul-11 | Massachusetts AG Martha Coakley says her office has started investigating MERS for its role in connection with illegal foreclosures, according to Reuters. |
| 26-Jul-11 | MERS says it is cooperating with an investigation by Delaware AG Beau Biden. (Reuters) |
| 27-Jul-11 | Reuters reports that MERS, facing multiple investigations for its role in thousands of problematic foreclosure cases, has changed its rules to lower its profile in court-supervised foreclosures. In rule changes announced to MERS members on July 21, the company forbade members to file any more foreclosure actions in MERS's name, Reuters said, adding that MERS is also requiring that mortgage servicers obtain mortgage assignments and record them with county clerks before beginning foreclosures. Servicers perform routine duties for the investment trusts that own pools of mortgages, including collecting mortgage payments and, when necessary, filing foreclosures. MERS, a unit of Merscorp Inc. of Reston, Virginia, owns the computerized registry, Mortgage Electronic Registration Systems, which was established by Fannie Mae and Freddie Mac and several of the largest U.S. banks in 1995 to circumvent the costly and cumbersome process of transferring ownership of mortgages and recording the changes with county clerks. |
| 28-Jul-11 | SIGTARP quarterly report questions whether the Treasury Department’s decision, announced in June, to sanction mortgage servicers for poor performance in the government’s Home Affordable Modification Program, punished enough servicers. “Clearly, many homeowners are not getting the fair shake they deserve from some of the largest servicers in determining who gets the benefit of a HAMP mortgage modification,” the report says. |
| 28-Jul-11 | Bank of America Corp. faces a new securities-fraud lawsuit filed by former Countrywide Financial Corp. investors including BlackRock Inc. that opted out of a $624 million settlement last year. Countrywide, acquired by Bank of America in 2008, misled shareholders about its finances and lending practices, according to the complaint filed in federal court in Los Angeles. Plaintiffs including the California Public Employees’ Retirement System and funds managed by BlackRock, T. Rowe Price Group Inc. and TIAA-CREF are the largest group of those who rejected the deal, saying the terms were inadequate. “These prominent institutional investors made every effort to amicably resolve their claims for recovery of damages caused by the massive and pervasive fraud at Countrywide without filing formal litigation, but were unsuccessful,” their attorney, Blair Nicholas, a partner at Bernstein Litowitz Berger & Grossmann LLP, said in an e-mail. The investors hope to “maximize” their returns in a jury trial, he said. (Bloomberg) |