Donovan spoke after a meeting among regulators who will review foreclosure processes among the major servicers. Bank of America (BAC: 11.75 -0.42%), JPMorgan Chase (JPM: 38.10 +1.09%) and Ally Financial (GJM: 22.12 0.00%) suspended foreclosures in 23 states after admitting employees signed affidavits without reviewing documents or having a notary present.
The Federal Housing Administration is reviewing servicers for compliance with its loss mitigation requirements, and the review should be completed over the next nine weeks.
The Financial Fraud Enforcement Task Force, led by the Department of Justice will work with 20 federal agencies, 94 U.S. attorney's offices and dozens of state and local offices to share information on foreclosure and servicing practices. All 50 state attorneys general offices have launched investigations of their own.
The Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to force servicers into a review of its processes.
The Office of the Comptroller of the Currency directed all national mortgage servicers to review process as well. The OCC and the Federal Reserve System are examining foreclosure and securitization practices at the servicers as well, including reviews of internal loan modification processes.
The Office of Thrift Supervision has gathered preliminary information from its review of mortgage servicers, and issued letters to all savings associations that service mortgages on Oct. 8, requiring reviews.
The Federal Deposit Insurance Corp. is verifying that servicers it supervises are carrying out proper foreclosure processes and evaluating electronic registration systems.
The Federal Trade Commission is also monitoring servicers and is conducting reviews looking for fraud or foreclosure scams.
The Treasury Department issued a notice to mortgage servicers on Oct. 6 participating in the Home Affordable Modification Program, reminding them of the requirement to exhaust all possible loss mitigation options before foreclosing on a home.
And the Securities and Exchange Commission issued proposed rules designed to create more transparency in securitization disclosures for investors.
"Throughout our reviews, as we uncover bad practices, cutting corners or sloppy processes that disregard or ignore the rights and protections of any homeowner, we're committed to forcing institutions to change the way that they conduct business," Donovan said. "We will not tolerate business as usual in the mortgage market. Every American should expect to be treated fairly, justly, and we will force the changes to make sure that these types of problems don't happen again."
Donovan added that so far the review has shown significant differences among the servicers, and that while some have shown errors in the foreclosure process, others have not.
"Where there have been mistakes made or errors, we will hold those entities, those institutions accountable to stop those processes, review them, and fix them as quickly as possible," Donovan said.
Read on.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The players were here. That`s Treasury Secretary Timothy Geithner leaving a meeting that included SEC Chairman Mary Schapiro, FDIC Chairman Sheila Bair and top justice and housing officials. The goal? To coordinate the government`s response to the foreclosure fiasco. Housing and Urban Development Secretary Shaun Donavon was also there and he says it`s a big task.
SHAUN DONOVAN, SECRETARY, HOUSING AND URBAN DEVELOPMENT: The issues around documentation of foreclosures are only one part of the broader concerns that we have and what we`re looking at. We today assembled almost a dozen agencies from across the Federal government as part of an ongoing process to look comprehensively at this.
DHUE: The Federal Housing Administration is checking to make sure mortgage servicers are following procedures. Specifically, it wants to make sure borrowers are contacted about their options when they fall behind on loan payments. So far, the FHA has found significant differences in performance at different firms. Sources tell me that you`ve reviewed Bank of America`s processes. Next you`ll move to Wells Fargo and down the line. Where are you in your investigation?
DONOVAN: I`m not going to comment because it`s an ongoing review on the specifics of any particular institution or what we found. What I can tell you is we began right when the president came into office, in stepping up our oversight of servicing. It had never been done before this kind of review. And that we are very close to having completed these reviews, because we undertook them early on before these issues came to light.
DHUE: The FHA`s investigation won`t be complete for another nine weeks, well past the mid term elections and into the holidays. Why wait?
DONOVAN: Look, this is not political. We began this review in May. We expect to have the results much sooner than that. But we will follow due process in our procedures. We`ll present the findings to the servicers, give them the chance to respond, which is required for us to do and then to take action based on those.
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