The largest U.S. mortgage servicers began signing agreements with regulators to improve procedures after federal investigations found they conducted foreclosures without proper review or complete documentation, two people with direct knowledge of the negotiations said.
The consent decrees, which could be signed by as many as 14 servicers including Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC), require companies to strengthen their systems for handling foreclosure documents and communicating with borrowers who are behind on their payments, said two people briefed on the matter, who spoke on condition of anonymity because the agreements aren’t public. The deals also require firms to improve auditing and risk-management practices, the people said.
One of the people said the agreements also would assign responsibility to boards of directors to supervise loan servicing more closely.
The agreements don’t include fines, the people said. Banking regulators issuing the consent decrees -- the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. -- are moving forward with procedural remedies while continuing negotiations over possible monetary penalties, they said.
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