Many of the nation's largest residential servicers — the subject of an intense federal audit that commenced last fall — have signed consent agreements to take corrective actions with regard to the processing of foreclosures and loan modifications, according to sources familiar with the matter.
Although no names were mentioned, the nation's "big four" servicers — Bank of America, Wells Fargo, JPMorgan Chase and Citigroup — control 60% of the receivables in the servicing market.
The consent agreements were signed on Wednesday, according to a Washington official familiar with the matter, but he noted that any enforcement actions will not be finalized until next week.
A consent agreement draft circulated in February was deemed too tough by servicers. One provision of that draft required servicers to obtain an independent contractor to review every foreclosure action between 2009 - 2010 to determine if borrowers were harmed or treated unfairly during the foreclosure or loss mitigation process.
Sources told ASR sister publication National Mortgage News that some of the requirements in that initial draft have since been watered down as a result of negotiations with the industry. The review by the independent contractor will now involve a sampling of foreclosure actions, not every foreclosure.
Observers said federal regulators grew tired of waiting for the state attorneys general to conclude a global settlement with servicers and moved ahead with their own enforcement actions.
Regulators are expected to levy penalties for various violations they uncovered during the audits. No dollar number has been mentioned yet.