Senators press federal agencies to hold mortgage servicers accountable for problems

On Monday, the OCC announced it was giving banks an additional 30 days to file “action plans” for how they will comply with new foreclosure requirements laid out in the OCC’s April 13 consent orders to allow for the coordination of actions with other agencies at the state and federal level.

Several federal agencies and state attorneys general opened investigations into foreclosure practices at major banks, including improperly prepared legal documents and the use of “robo-signers” who signed hundreds of unread foreclosure documents.

"It is clear that we need to stabilize our housing market, and the Office of the Comptroller of the Currency has a pivotal role to play in utilizing the full scope of its authority to correct the weaknesses of servicers in terms of foreclosure governance and foreclosure document preparation and in their ability to vigorously oversee and monitor third-party vendors, including foreclosure attorneys," the letter said. 

Recently, several servicers under OCC's jurisdiction have agreed to submit, in a matter of days, action plans that are supposed to contain complete explanations of all the steps that will be taken, including efforts to strengthen foreclosure and foreclosure prevention controls and procedures. 

The plans are intended to clarify and improve the roles of mortgage servicers while helping homeowners.  

"In this regard, we urge you to consider the servicing standards proposed by the state attorneys general, and to incorporate appropriate provisions of introduced legislation that will support the work that must be done to improve the foreclosure process and help homeowners avoid foreclosure, they wrote.

"Taken together, these policies would be a better basis for a more fair and equitable system going forward."

Sens. Jack Reed (D-R.I.), Richard Blumenthal (D-Conn.), Banking Committee Chairman Tim Johnson (D-S.D.), Judiciary Committee Chairman Patrick Leahy (D-Vt.), Sheldon Whitehouse (D-R.I.), Bob Menendez (D-N.J.), Daniel Akaka (D-Hawaii), Chuck Schumer (D-N.Y.), Sherrod Brown (D-Ohio), Dick Durbin (D-Ill.), Al Franken (D-Minn.), and Jeff Merkley (D-Ore.) wrote that "a persistently weak housing market represents one of the greatest threats to a sustained and lasting economic recovery." 

"We are at a critical moment to achieve a better sense of stability and confidence in the administration and processing of our nation’s mortgages," the senators wrote. "In short, your efforts are needed to help lay a foundation for our housing markets to firmly recover."