Regulators impose limits on mortgage business for six banks
Federal regulators have slapped restrictions on the mortgage businesses of six banks, saying they haven't fully complied with requirements imposed on them to resolve allegations that they abused the foreclosure process after the collapse of the housing market.
The Office of the Comptroller of the Currency (OCC), part of the United States Treasury Department, announced the action Wednesday against the banks: JPMorgan Chase, Wells Fargo, US Bank, HSBC, Santander and EverBank.
The agency said the banks haven't met all the requirements of the 2011 enforcement orders issued by the government, which found that some lenders rushed the foreclosure process without carefully reviewing documents.
The case was known as the "robo-signing" scandal.
The restrictions include limits on buying rights from other banks to service mortgages. They vary according to the specific situation of each of the six banks. A chart issued by the OCC shows that the restrictions are tougher for Wells Fargo and HSBC than for the other banks, by banning some activities as opposed to requiring banks to obtain regulators' approval to pursue them.
At the same time, the agency lifted its enforcement orders against Bank of America, Citigroup and PNC, finding them to be in compliance with the orders.
The "robo-signing" scandal prompted a government investigation and eventually a US$8.5 billion settlement between the OCC and 15 banks.
In addition, the federal government and 49 states reached a US$25 billion settlement over foreclosure practices in February 2012 with five major banks: Bank of America, Citigroup, JPMorgan, Wells Fargo and Ally Financial.
JPMorgan said in a statement that the bank has made "significant" progress, "and we believe we're in a position to complete our remaining items by the end of the summer."
Mike Heid, president of Wells Fargo Home Mortgage, said the bank has made key changes in its mortgage servicing business and is now in compliance with "major elements" of the enforcement order. "We will continue to work with the OCC to address the remaining items, and we have an action plan in place to complete that work in the coming months," Heid said in a statement. He said the bank's mortgage-making business or servicing of its own mortgages won't be affected.
HSBC spokesman Rob Sherman said the OCC "recognised areas of progress in our mortgage servicing and identified other areas that need improvement. We are actively addressing the remaining issues. "
Dan Frahm, a spokesman for Bank of America, said that by ending the enforcement order, the OCC recognised improvement made by the bank in its mortgage business. "We continue to simplify our business, resulting in improved and more consistent customer service," Frahm said.