A Slap on the Wrist?

Here's news from Mortgage Daily about the Fed and the big lenders...I guess I'm pretty curious what the pending penalties will be. For sure housing inventories have been impacted as many banks have stopped the foreclosure process pending the outcome of the Fed actions. Time will tell...here's the report:
Mortgage News Daily - MND NewsWire
http://www.mortgagenewsdaily.com
Loan Servicer Sanctions Levied. Penalties Pending
BY JANN SWANSON
Posted 4/13/2011 2:02 PM
The Federal Reserve, Office of Comptroller of the Currency (OCC), FDIC, and Office of Thrift Supervision (OTC) have issued formal enforcement actions
against 14 banking and two loan servicing related organizations which they found had demonstrated a "pattern of misconduct and negligence related to
deficient practices in residential mortgage loan servicing and foreclosure processing." The Fed said that these deficiencies represent significant and
pervasive compliance failures and unsafe and unsound practices.
The banking organizations cited are: Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase
& Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company, Aurora Bank, EverBank,
OneWest Bank and Sovereign Bank. All 14 were named by FDIC, eight by OCC, ten by the Federal Reserve and four by OTC.
Three of the organizations, SunTrust, HSBC and Ally Financial, were singled out by the Federal Reserve and ordered to promptly correct many deficiencies
in loan servicing and foreclosures that were identified by examiners over the last few months.
Action is also being taken against Lender Processing Services (LPS) and Mortgage Electronic Registration Systems addressing what the Fed called
significant compliance failures and unsafe and unsound practices at the companies and their subsidiaries. LPS will be required to address deficient
practices related primarily to the document execution services it provides to servicers through two subsidiaries, DocX and LPS Default Solutions. MERS is
required to address significant weaknesses in oversight, management supervision, and corporate governance.
The action followed an interagency review of the banks by their respective regulators and FDIC which issued the following statement.
"The findings of the interagency review clearly show that the largest mortgage servicers had significant deficiencies in numerous aspects of their foreclosure
processing. These deficiencies included the filing of inaccurate affidavits and other documentation in foreclosure proceedings (so-called "robo-signing"),
inadequate oversight of attorneys and other third parties involved in the foreclosure process, inadequate staffing and training of employees, and the failure
to effectively coordinate the loan modification and foreclosure process to ensure effective communications to borrowers seeking to avoid foreclosures. The
interagency review was limited to the management of foreclosure practices and procedures, and was not, by its nature, a full scope review of the loan
modification or other loss-mitigation efforts of these servicers. A thorough regulatory review of loss mitigation efforts is needed to ensure processes are
sufficiently robust to prevent wrongful foreclosure actions and to ensure servicers have identified the extent to which individual homeowners have been
harmed."
The banking organizations have been order to provide corrective actions in servicing and foreclosure processes. Among other things, each must submit
plans acceptable to the Federal Reserve that:
􀁺 Provide borrowers a specific person to be their primary point of contact;
􀁺 Ensure that the foreclosure process ends once a modification has been approved and the borrower is performing under that modification.
􀁺 Establish oversight over third-party vendors of mortgage loan servicing, loss mitigation, or foreclosure-related support, including local counsel in
foreclosure or bankruptcy proceedings;
􀁺 Provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the
foreclosure process; and
􀁺 Strengthen programs to ensure compliance with state and federal laws regarding servicing, generally, and foreclosures, in particular.
In addition to ordering corrective action the Fed said it expects to levy financial penalties on the organizations. There are other actions under consideration
by federal and state regulatory and law enforcement organizations and the Fed said its actions are complementary to and do not preclude any actions that
may be taken by others. No penalties have been announced yet.
A few of the banks have already responded to the Federal Reserve action. Ally Financial confirmed it had entered into a consent order with both the
Federal Reserve and the FDIC as a result of the ongoing investigation into it loan processing procedures. MetLife also confirmed its consent order and said
it has committed to further enhance its oversight of risk management, audit and compliance programs.