Acting Comptroller of the Currency John Walsh defended bank regulators Thursday for moving forward with an enforcement action against the top 14 mortgage servicers even while several of those banks continue to negotiate with state attorneys general and other federal agencies.
As talks between law enforcement officials and the banks continued to drag on, Walsh said bank regulators had no choice but to take action — despite criticism from some corners that doing so helped the servicers gain leverage in the negotiations.
"The simple answer is that we all have our jobs to do and, while we fully supported the goal of reaching simultaneous conclusions to our various enforcement actions, having established the scope of problems in our area of jurisdiction, the bank regulators had to move forward," Walsh said in a speech to the Women in Housing and Finance.
Walsh said the regulators' move should not undercut the other talks.
"My hope is that our enforcement actions will establish a framework, and the actions that state law enforcement officials and the other federal agencies may take will be complementary to, and consistent with, what we are doing," he said.
Walsh said that delaying action could have exposed borrowers to additional harm, and left safety and soundness concerns unaddressed.
The order requires servicers to improve loss-mitigation efforts and foreclosure proceedings and create a single point of contact for troubled borrowers. Regulators are also forcing servicers to upgrade technology systems for record keeping, payments and fees, ban so-called dual tracking of mitigation efforts and foreclosure procedures, improve oversight of third parties and hire third-party consultants to review recent foreclosure activities.
Walsh said the order should restore credibility to the servicer process.
"That's very important because widely reported foreclosure-processing defects have not only harmed individual troubled borrowers but they have undermined confidence in the system," Walsh said.