Fed to Fine U.S. Bank, 7 Others for Foreclosure Abuse
The Federal Reserve said Monday that it plans to fine eight U.S. bank holding companies, including Minneapolis-based U.S. Bancorp, for improperly foreclosing on homeowners.
The banks face sanctions for “unsafe and unsound practices in their loan servicing and foreclosure processing,” Suzanne G. Killian, a senior associate director at the Federal Reserve, said Monday at a congressional hearing in Brooklyn, New York. She added that the Fed believes that “monetary sanctions in those cases are appropriate.”
The Fed, however, did not offer specifics as to the size of the fines or when they would be levied.
U.S. Bancorp, meanwhile, issued a statement saying that regulators have notified the company of the potential fines and that they are “not significant.”
“We have long been committed to sound modification and foreclosure processes and have been revising our processes, where necessary, to satisfy the requirements of the regulators' consent orders,” the bank said. “We have always regarded foreclosure as the last resort, and we will continue to support our customers during these challenging economic times.”
The company added that U.S. Bank accounts for only 2 to 3 percent of the mortgage servicing market.
The seven other banks that face fines are: EverBank, Goldman Sachs, HSBC North America, OneWest Bank, MetLife, PNC Financial Services Group, and SunTrust Banks.
The nation's mortgage-servicing companies have been under federal and state scrutiny since many were accused in fall 2010 of “robo-signing” foreclosure documents without personally verifying their contents.
Last month, the federal government announced a $25 billion settlement of foreclosure-abuse allegations with the nation's five largest banks: Bank of America Corporation, Wells Fargo & Company, J.P. Morgan Chase & Company, Citigroup, Inc., and Ally Financial, Inc. As part of the settlement, the banks were collectively required to pay $766.5 million in fines and reimburse homeowners who were improperly foreclosed upon between January 1, 2008, and December 31, 2011.
Each regulated banking organization that offers mortgage services is also required to submit specific plans to improve its foreclosure practices to the Fed. These plans must ensure, among other things, that there is adequate staff to carry out foreclosure activities and that the staff receives adequate training.