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Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners. Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.
August 31 -
The proposed attorneys generals' settlement of mortgage servicing practices threatens a high-margin business that brings in hundreds of millions of dollars every year for servicers.
March 10
The Federal Trade Commission is investigating several residential servicing shops for abusive practices — including inaccurate payment records and charging excessive fees — according to FTC associate director Joel Winston.
"We continue to be active in the mortgage servicing area," Winston told attendees at a Mortgage Bankers Association regulatory compliance conference this week.
The director declined to disclose the names or number of shops the agency is targeting. However, in March it was publicly disclosed that the FTC was investigating Ocwen Financial Corp., a large specialty/subprime servicer based in West Palm Beach, Fla.
Winston acknowledged as much, but declined to discuss the matter further. "I can't tell you specifically what we are looking at with Ocwen," Winston told National Mortgage News.
He added that the firms under investigation know who they are. "We wouldn't open an investigation without contacting the company right off the bat,” he said.
FTC recently distributed $108 million in settlement money to 45,000 defaulted and foreclosed borrowers who were charged excessive fees by the servicing division of Countrywide Financial Corp., now a unit of Bank of America.
FTC had cited CFC for marking up the costs of property inspections, lawn mowing and other property services from January 2005 through June 2008. B of A, which bought CFC in August of 2008, paid the settlement.
Winton also told mortgage executives that the FTC and Consumer Financial Protection Bureau share jurisdiction over residential servicers, adding that the two agencies are coordinating efforts to avoid duplication, and the publishing of confusing standards.
FTC recently held a seminar where new CFPB attorneys were briefed on the commission's litigation and investigation practices.
