(Reuters) - U.S. bank regulators are finalizing punishments against mortgage servicers after a probe found "critical deficiencies" with the industry's foreclosure processes. John Walsh, the acting head of the Office of the Comptroller of the Currency, said a national probe of foreclosure paperwork and procedures found that mortgage servicers broke laws, and that a small number of homeowners were wrongly evicted.
"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," Walsh said in congressional testimony obtained on Wednesday by Reuters.
Walsh did not identify any servicers, but his testimony noted that the probe included Bank of America, Citibank, JPMorgan, and Wells Fargo, among others.
In separate testimony on Wednesday, David Stevens, the commissioner of the Federal Housing Administration, said the penalties could range from fines paid to the government to loan modifications to banks forgiving some of the principal balance on the loan.
Asked if the magnitude of the potential penalties could reach the range of billions or even tens of billions of dollars, Stevens declined to comment.
Continue reading at Reuters...
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UPDATE 2-BofA subpoenaed over VIP home loans
CHARLOTTE, N.C., Feb 16 (Reuters) - The head of the U.S. House of Representatives oversight committee issued a subpoena on Wednesday to Bank of America Corp (BAC.N) for information about mortgage lender Countrywide's home loans program for so-called VIPs.
The subpoena is the latest in a two-year probe by U.S. Representative Daniel Issa, chairman of the committee, into Countrywide Financial Corp's mortgage program that allegedly gave better loan terms and preferential treatment to allies of former Chief Executive Angelo Mozilo.
The program was known informally as the "Friends of Angelo" inside the mortgage lender.
http://www.reuters.com/article/2011/02/16/bankofamerica-subpoena-idUSN1620214120110216
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Fed's Sarah Raskin warns on mortgage servicing
(Reuters) - A top Federal Reserve official on Friday warned mortgage servicing industry executives they could face enforcement actions and that they shoulder some of the blame for a sluggish economic recovery.
"I have seen little or no evidence of improvement in the operational performance of servicers since the onset of the crisis in 2007," Fed Governor Sarah Raskin said in remarks to an industry conference in Park City, Utah.
"Until these operational problems are addressed once and for all, the foreclosure crisis will continue and the housing sector will languish," she said.
Raskin, formerly the top bank regulator for the state of Maryland, said a review of loan servicing practices shows widespread weaknesses still exist.
http://www.reuters.com/article/2011/02/12/us-usa-fed-raskin-idUSTRE71B08E20110212
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UPDATE 3-U.S. SEC charges ex-IndyMac execs with fraud
WASHINGTON, Feb 11 (Reuters) - A former chief executive of failed mortgage lender IndyMac Bancorp and two former chief financial officers were accused of securities fraud for concealing the bank's financial condition, U.S. securities regulators said on Friday.
The Securities and Exchange Commission alleged in one lawsuit that former IndyMac CEO Michael Perry and former CFO Scott Keys filed false disclosures about the financial health of the company and its IndyMac Bank subsidiary.
California-based IndyMac, which specialized in a type of mortgage that often required minimal documentation from borrowers, was seized by banking regulators in July of 2008 as the financial crisis gathered steam.
Its failure cost the Federal Deposit Insurance Corp, which stands behind bank deposits, about $12.8 billion.
Another former IndyMac CFO, Blair Abernathy, settled a related SEC lawsuit without admitting or denying the allegations, paying $125,000 plus prejudgment interest.
The SEC alleges that the three executives received internal reports about the deteriorating capital and liquidity positions at the bank in 2007 and 2008. But the SEC said they kept that information under wraps even as the company filed to sell millions of dollars in new stock.
http://www.reuters.com/article/2011/02/11/sec-indymac-idUSN1115950420110211
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