The Office of the Comptroller of the Currency is advising all national banks to thoroughly assess their own foreclosure policies to ensure that they treat borrowers fairly and are in compliance with foreclosure laws.
In supervisory guidance issued Thursday, the OCC said that all banks that service mortgages should complete the self-assessment by Sept. 30 if they have not already done so and take "immediate corrective action" if they find weaknesses in their foreclosure management practices. The agency also said that banks can expect regulators to conduct a thorough review of these self-assessments next time they are examined.
The guidance is aimed not at the nation's 14 largest servicers that are currently under federal investigation for allegedly foreclosing on borrowers without going through the proper channels, but rather the smaller banks that service mortgages for their own books or for others.
Regulators have found "critical weaknesses" in the foreclosure processes of larger servicing firms and that raised concerns that similar weaknesses may exist at smaller firms, the OCC said. Much of the guidance centered on documentation. The OCC advised banks to ensure that all foreclosure-related affidavits are supported by documents that are properly signed and notarized and to closely monitor third-party vendors, including attorneys, to ensure that they are following proper procedures.
The OCC also said that servicers should suspend foreclosure proceedings if they are working with borrowers to modify delinquent mortgages.
