Regulators Hit Servicers With Monetary Penalties for Robo-Signing

The Office of the Comptroller of the Currency (OCC) and the Federal Reserve issued statements Thursday detailing monetary penalties they have levied against the nation’s largest servicers for “unsafe and unsound mortgage servicing and foreclosure practices.”

The OCC is assessing a total of $394 million in penalties against Bank of America ($164M), Citibank ($34M), JPMorgan Chase ($113M), and Wells Fargo ($83M).

The Federal Reserve’s monetary sanctions total $766.5 million and target the same four institutions as well as Ally Financial. The breakdown of the Fed’s fines by servicer are: Ally ($207M), Bank of America ($175.5M), Citigroup ($22M), JPMorgan Chase ($275M), and Wells Fargo ($87M).

Both regulatory agencies said the penalties are based on “an agreement in principle” reached with the banking
organizations and stem from procedural deficiencies identified by examiners during reviews conducted from November 2010 to January 2011.

Corrective measures were required by formal enforcement actions issued by the OCC and Federal Reserve against the institutions on April 13, 2011. At that time, the regulators made it clear that they believed monetary sanctions were also warranted and they planned to pursue such actions separately.

The fines announced by the OCC and Fed came on the heels of Thursday’s long-awaited announcement that the robo-signing settlement between these same servicers, the Department of Justice, HUD, and state attorneys general is at last a done deal.

With the OCC and Fed finalizing the last piece of their punitive actions and the federal-state settlement in place, Thursday’s events are expected to bring some closure to the robo-signing problems that surfaced in September of 2010. Much of the work related to correcting servicing and foreclosure procedures, as well as independent reviews of past foreclosure cases, however, will continue through 2012.

“The actions announced [Thursday] mark important progress in addressing the problems associated with foreclosure processing and are a critical step toward restoring a functioning industry that protects the rights of the customers it serves,” acting Comptroller of the Currency John Walsh said in a statement.