Federal regulators and state Attorneys General may be close to a settlement with several major mortgage servicers over foreclosure processing violations, according to Federal Housing Commissioner David Stevens.
The Federal Housing Administration (FHA) chief told a congressional panel late Wednesday that a settlement might be struck within the month. "We can work with other regulators to come up with one set of solutions or we could go individually. That process is being worked through right now," he said.
During the hearing, Rep. Patrick McHenry, R- N.C, pressed Stevens about the size and terms of the settlement. Stevens noted that servicers may be required to pursue loan modifications and principal reduction as part of a settlement. But regulators have not tallied up all the violations to determine the amount of penalties.
Prompted by the robo-signing revelations last fall, state AGs, FHA, and other regulators initiated special examinations of the largest servicers. Stevens reiterated at Wednesday's hearing that his agency found "irregularities and variable performance" of FHA servicers' loss mitigation and foreclosure practices.
According to National Mortgage News and the Quarterly Data Report, the five largest GNMA servicers are Wells Fargo, Bank of America, JPMorgan Chase, CitiMortgage, and GMAC Mortgage, a division of Ally Financial, a bank holding company controlled by the government.
GNMA securities are collateralized by FHA and VA-backed loans.