The Federal Reserve Board this week released the last details of how two mortgage servicers—Citigroup Inc. and HSBC Finance Corp.—plan to fix problems in their home loan servicing and foreclosure processes.
The Fed and the Office of the Comptroller of the Currency issued orders in April requiring the 14 largest servicers to address deficiencies in their foreclosure practices and hire independent consultants to investigate past foreclosure errors.
Of the redacted documents released by the Fed, it included Citi’s 45-page action plan along with a 46-page plan by HSBC.
HSBC, however, according to a recent report published by National Mortgage News, is in the process of exiting the ‘A’ paper servicing business entirely, transferring that chore over to PHH Mortgage, the nation’s largest private label processor.
The plans establish detailed guidelines the servicers must follow to comply with the regulatory orders, covering such areas as board oversight, operations training and risk management. They also establish firm deadlines for meeting the orders’ requirements.
Citi specified a number of steps it was taking to correct weaknesses including strengthening their business model to improve the customer’s experience and institute better governance.
For its part, HSBC said it would be revising its policies to add an additional trigger point at which a single point of contact would be assigned to a customer during the foreclosure process.
The Fed also released an engagement letter between Ally Financial Inc. and its independent consultant, PricewaterhouseCoopers, which reviewed all the foreclosures the company processed in 2009 and 2010. The letter describes the procedures that will be followed by the independent consultant to determine whether Ally borrowers suffered financial injury as a result of any servicer errors.
Additionally, regulators also provided a supplemental agreement with Ally to address the company’s foreclosure review obligations in light of the fact that its mortgage servicing subsidiary is seeking protection under the U.S. Bankruptcy Code. The engagement letter describes the procedures:
“The Federal Reserve will closely follow the implementation of action plans to ensure that the financial institutions correct deficiencies and evaluate any harm that was done to homeowners in the foreclosure process in 2009 and 2010,” the agency said in a statement.
The agency has been under pressure from Congress and consumer groups to disclose the action plans of the 14 financial firms that were ordered by regulators last year to fix their foreclosure processes and hire third-party consultants to investigate past errors.
Last February it released the action plans of eight servicers – including Citigroup, Wells Fargo, Bank of America, and followed up this week by releasing the plans of HSBC, Ally Financial Inc., and IMB HoldCo. LLC.