The term “robo signing” could be destined for the history books and future generations, as Americans in upcoming years and decades seek a deeper and more comprehensive understanding of what truly went wrong with the mortgage crisis of recent years and the role that mortgage lending banks – especially big banks – played in the process.
To backtrack, the federal Office of the Comptroller of the Currency (OCC) ordered a number of banks in 2011 to hire independent auditors to reexamine their home loan documentation for 2009 and 2010. The goal was to identify foreclosure abuses and fully understand their parameters and extent, while making things right with wronged homeowners.
Last year, many of the large involved banks settled with attorneys general in many states, agreeing to ante up $25 billion in consumer debt relief.
In the meantime, the audit review continued, with it becoming eminently clear that reviews were costing far more money than initially envisioned and taking too much time to be helpful to many thousands of homeowners underwater on their loans.
And, thus, earlier this week a settlement was announced by the OCC, with regulators stating that the review process has now been terminated and that 10 of the banks being reviewed – including the Bank of America, JPMorgan Chase, Wells Fargo and Citibank – will pay an additional $8.5 billion to borrowers either via direct payments or mortgage assistance.
The settlement serves as tacit acknowledgment by the OCC that the reviews weren’t working as envisioned, although the agency states that the agreement will now allow many borrowers to “benefit more quickly and in a more direct manner.”
Not everyone is happy with the development, with some critics saying that fraudulent bank practices will now never be adequately scrutinized and that the banks should be paying much higher penalties.
Source: CNBC, “Banks pay big for robo-signing … again,” Diana Olick, Jan. 7, 2013