Govenment Orders 14 Lenders To Reimburse Homeowners

WASHINGTON – The federal government on Wednesday ordered 16 mortgage lenders and servicers, including four of the nation's largest banks, to reimburse homeowners who were incorrectly foreclosed upon.



The Federal Reserve, Office of Thrift Supervision and Office of the Comptroller of the Currency also directed the financial firms to hire auditors to determine if they improperly foreclosed on homeowners in 2009 and 2010. The Fed said it believed financial penalties were "appropriate" and that it planned to levy fines in the future. All three government agencies said they would review the foreclosure audits.


In the four years since the housing bust, about 5 million homes have been foreclosed upon. About 2.4 million primary mortgages were in foreclosure at the end of last year. Another 2 million were 90 days or more past due, putting them at serious risk of foreclosure.


Critics, including Democratic lawmakers in Congress, say the order is too lenient on the lenders. House Democrats introduced legislation Wednesday that would require lenders to perform a series of steps, including an appeals process, before starting foreclosures.


"I want to know what abuses (the government agencies) identified, which banks committed them and how their proposed consent agreement is going to fix these problems," said Rep. Elijah Cummings, D-Md., the ranking member of the House Government and Oversight Committee. "Based on what I have read ... I am not encouraged at all."


The lenders and service providers cited by the agencies include: Ally Financial Inc., Aurora Bank, Bank of America, Citigroup Inc. and its subsidiary Citibank, EverBank, HSBC, JPMorgan Chase, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank and Wells Fargo, and the service providers Lender Processing Services and MERSCORP.


Citigroup said in a statement that it had "self-identified" needed changes in 2009 and that it has helped more than 1.1 million homeowners avoid foreclosure.


"We are committed to working with our regulators to further strengthen our programs in these areas and meeting these new requirements," the company said.