WASHINGTON -(Dow Jones)- The largest U.S. banks have submitted plans to fix their troubled mortgage-servicing operations, responding to orders issued in April, a bank regulator said Wednesday.
The Office of the Comptroller of the Currency, which regulates national banks, said eight institutions–including Bank of America Corp. (BAC), J.P. Morgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and Citigroup Inc. (C).–have met a July 13 deadline for submitting detailed plans. The OCC will now review the banks’ action plans, which will remain confidential, a spokesman said.
The four big banks, along with 10 other home-loan servicers, have been under investigation by federal regulators and state officials over breakdowns in procedures for handling foreclosures and requests for loan assistance.
Banks, state attorneys general and federal officials are working on a broad settlement of the allegations, which emerged last autumn after several mortgage services acknowledged using what are known as robo-signers, who filed documents to foreclose on homeowners without personally verifying the documents’ contents.
Each bank is required to hire an independent consultant to conduct a “look back” of all foreclosure proceedings from 2009 and 2010 to evaluate whether they improperly foreclosed on any homeowners.
The OCC is establishing a public-complaint process through which borrowers who contend they were harmed by banks’ foreclosure practices can have their complaints reviewed by an independent consultant. The banks are also required to have their consultants conduct reviews of certain segments of borrowers, including military members, for improper foreclosures.
On Capitol Hill, Democrats who have long called the OCC too friendly to banks have been skeptical that the review process is going to be thorough or fair. They are pressing the regulator to make public the findings of the bank consultants. The OCC has said it plans to publish only general reports on the reviews.
“There is a loss of credibility by the regulators–specifically by the OCC– that more disclosure would address,” said Rep. Brad Miller (D., N.C.) said in an interview this week. “We’re still at a stage where we have a hope of shaping [ the look-back process] to make it tough and appropriately independent.”
Miller also said he is pushing to make the bank consultants’ reports be subject to a second review by an interagency group of regulators, which would examine the consultants’ work.
An OCC spokesman said the agency “may require changes” to the banks’ plans and said the agency aims to coordinate the banks’ plans with the efforts of other regulators.