The Consumer Financial Protection Bureau announced Aug. 21 that it has launched an investigation of alleged faulty mortgage servicing practices at banks and other financial firms accused of continuing “robo-signing” practices, The Washington Post reported.
The names of the accused institutions were not revealed, but the CFPB found that many engaged in sloppy payment processing that resulted in homeowners getting hit with extra fees and many failed to tell borrowers that their loans had been sold to other companies. Some firms also were found to have no formal procedures for addressing customer complaints or a dedicated consumer contact.
The CFPB noted that examiners have alerted servicers to their findings and offered remedial measures. However, in some instances, examiners referred cases for investigation, which could lead to enforcement actions and fines, the Post reported.
Financial firms already have been hit with billions in settlement fees for faulty mortgage practices. The nation’s biggest banks had to pay $25 billion to compensate victims of foreclosure, but some of those banks are alleged to still be dragging their feet.
“A lot of homeowners feel they are not getting the kind of response they need and deserve from their servicers to be able to stay in their homes,” Norma Garcia, manager of the Financial Service Program for Consumers Union, the policy and advocacy division of Consumer Reports magazine, told the Post.
Wells Fargo, JPMorgan Chase and Bank of America hold about 40 percent of the nation’s mortgage servicing business, the Post reported. When the housing crisis hit, these banks lacked the infrastructure to handle the volume of paperwork that resulted from delinquent payments and foreclosures.
The CFPB has issued new mortgage servicing standards to require banks to be more transparent with borrowers and to provide better customer service. Those rules formally take effect January 2014, the Post reported.