Bankruptcy

OCC Findings: Illegal Foreclosures, Critical Deficiencies

By Alan White

At today's Senate Banking Committee hearing on Dodd-Frank implementation, Comptroller John Walsh's testimony gave a preview of some findings from the federal agencies' investigation of mortgage servicing and the robosigning scandal:

"In general, the examinations found critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third party law firms and vendors. These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole."

More specifically, federal examiners looked at 2800 foreclosure files, and found "a small number" of plainly illegal, completed foreclosure sales, that violated a bankruptcy stay, the Servicemembers Civil Relief Act, or a temporary modification agreement.  The Wall Street Journal reports that the OCC plans to impose fines; the affected homeowners are probably hoping for more remedial measures.  In the meantime, the state attorneys general investigation is proceeding.  It will be interesting to see whether in the post-Dodd/Frank era, the OCC is more willing to play nice with the state AGs. 

Full post as published by Credit Slips on February 17, 2011 (boomark / email).