Not only are state attorneys general pushing the nation's megabanks to sign a servicing settlement tied to faulty foreclosure practices, but they want these institutions to sign a regulatory consent order, holding their boards' responsible for correcting deficiencies.
The consent order would be entered into by a servicer and be binding with their federal bank regulator.
Directors of these institutions will then be responsible for assuring that their banks act as "effective" servicers in regard to foreclosures and loss mitigation practices.
According to a copy of one consent order provided to National Mortgage News, banks will have 90 days to submit a written compliance report to regulators. After that, board members will be on the hook for "documenting any corrective actions" taken by the servicer.
One representative of a major servicer called the consent order "outrageous," adding, "Can you imagine?" He declined to be identified and would not name his client for obvious reasons.
The sample consent order is 21 pages long.
But in signing such a consent order the bank will not admit or deny a panoply of charges levied against them. These charges include allegations that their representatives (on staff or outside the company) filed foreclosure papers in state court houses without having the documents properly notarized and signed.
The AGs also accuse these servicers of failing to "devote to its foreclosure processes adequate internal controls, policies, and procedures, compliance risk management, internal audit, third party management, training and Board oversight."