Foreclosure Scandal Penalties Coming Soon
US bank regulators are reportedly close to handing out punishments to mortgage servicers after an investigation into the way foreclosures were handled. John Walsh, who heads up the Office of the Comptroller of the Currency, said that the investigation into foreclosure procedures found that servicers had broken laws, leading to a number of wrongful seizures of Americans’ homes.
“These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole,” Walsh stated in testimony before Congress.
Walsh stopped short of naming specific servicers, but his testimony indicated that Bank of America, JPMorgan Chase, Citibank, and Wells Fargo were all among the banks investigated. The commissioner of the Federal Housing Administration David Stevens, meanwhile, said in separate testimony that penalties could include fines paid to the government and loan modifications to banks forgiving some of the principal balance on loans.
“There are a variety of discussions. There are different views,” Stevens told members of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, saying that no final decisions on penalties have been made. When asked when the decisions may come, Stevens answered: “I would say a month timeframe is probably in the reasonable range if we are to reach some sort of conclusion.”
