Not every mortgage servicer was required to sign consent orders with the Office of the Comptroller of the Currency, the Federal Reserve or the Office of Thrift Supervision.
But for them, a blend of 50 state attorneys general and smaller regulators are quietly building their case for applying separate punitive damages.
When foreclosure issues arose in the servicing industry last fall, the problems did not solely belong to the largest institutions. Smaller companies had to hold up foreclosures fix faulty affidavits and other breakdowns in the loss- mitigation process. Along with the 10 major settlements announced Wednesday, the OTS cracked down on four smaller thrifts that serviced loans as well.
But some of the other financial firms that flesh out the top 25 spots in terms of total mortgage servicing fall between the regulatory cracks.
Litton Loan Services, which is currently being shopped by Goldman Sachs (GS: 155.13 -0.42%), halted foreclosures in October 2010 to refile affidavits. Saxon Mortgage, owned by investment bank Morgan Stanley (MS: 26.98 +0.71%) fell under scrutiny as well. American Home Mortgage has been under investigation from the Texas AG Greg Abbott since 2010. And Ocwen Financial Corp. (OCN: 10.75 +1.13%), which never instituted a foreclosure moratorium of its own, did fall under investigation.
Each of those mortgage servicers is registered to do business in their respective states as non-bank lenders. Therefore these companies do not fall under the jurisdiction of either the OCC, Fed, or OTS.
A spokesperson with the Office of Financial Regulation for the State of Florida did confirm the state regulator was still looking into Ocwen, which has offices in Orlando. Litton and Saxon may have to answer to their respective state attorneys general.
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