OCC clamps down on foreclosure process

WASHINGTON, April 13 (UPI) -- Federal regulators said Wednesday they had clamped down on eight U.S. banks and two service providers to enforce new rules for foreclosures.

In response to a nationwide scandal that erupted last year regarding banks taking short cuts on foreclosure, the Office of the Comptroller of the Currency said it would enforce tighter rules for Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo.

The new rules also apply to two third party service providers, Lender Processing Services and MERSCORP and their subsidiaries.

Regulators said banks and third party services needed to react "promptly" to requirements of "dual-tracking" loans that are in foreclosure when homeowners are pursuing modifications to their loans, appointing a single point source for homeowners to communicate with lenders and to cease foreclosure processing if a loan has been approved for modifications.

In addition, the OCC said, lenders will be required to "establish robust oversight and controls pertaining to their third-party vendors."

The firms covered in the enforcement action are also expected to conduct a "multi-faceted review" of foreclosure actions they pursued between Jan. 1, 2009, and last Dec. 31.

Lenders must then "make submissions to be considered for remediation," concerning any foreclosures in that time frame that were subjected to any improper practices.

"These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance … and address financial harm to borrowers," acting Comptroller of the Currency John Walsh said in a statement.