OCC Issues Guidance Regarding Foreclosures By Banks | Servicers “Must ensure compliance with foreclosure laws”

Subject: Foreclosure Management

Date: June 30, 2011

To: Chief Executive Officers of All National Banks, Department and Division Heads, and All Examining Personnel

Description: Supervisory Guidance


The Office of the Comptroller of the Currency (OCC) is issuing guidance to communicate the OCC’s expectations for the oversight and management of mortgage foreclosure activities by national banks. Further, the OCC is directing national banks that have not already done so, to conduct self-assessments of foreclosure management practices to ensure that their practices conform to the expectations outlined in this guidance. The self-assessments should include testing and file reviews and be appropriate in scope, considering the level and nature of the bank’s mortgage servicing and foreclosure activity.

This guidance is focused on providing OCC expectations for national bank foreclosure management practices. It does not address detailed mortgage servicing requirements or broader issues related to working with troubled borrowers. The OCC and other federal bank regulatory and housing agencies are developing guidance to address the full range of mortgage servicing issues that have surfaced during the current housing crisis. The guidance on the broader mortgage servicing issues resulting from this effort will be released at a later date. For purposes of this guidance, bank managers should refer to the April 2011 Interagency Review of Foreclosure Policies and Practices.


In the fourth quarter of 2010, the OCC, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision (agencies) conducted reviews of foreclosure processing at 14 federally regulated mortgage servicers. The reviews were designed to evaluate the adequacy of controls and governance over servicers’ foreclosure processes and assess servicers’ authority to foreclose. Examiners focused on foreclosure policies and procedures; quality control and audits; organizational structure and staffing; and oversight and monitoring of third-party law firms and other vendors. The agencies found critical weaknesses in servicers’ foreclosure governance processes, foreclosure documentation preparation processes, and oversight and monitoring of third-party vendors, including foreclosure attorneys. The weaknesses resulted in unsafe and unsound practices and violations of applicable federal and state laws. Additional detail can be found in the April 2011 Interagency Review of Foreclosure Policies and Practices. The results raise concerns that similar weaknesses may exist in other servicing operations.

Foreclosure Management Standards

While the reviews at the 14 large mortgage servicers and subsequent supervisory responses address a large segment of the mortgage servicing market, the OCC wants to ensure that all mortgage servicers under its supervision adhere to appropriate foreclosure management standards. Thus, national banks engaged in mortgage servicing, whether for their own book or others, must ensure compliance with foreclosure laws, conduct foreclosure processing in a safe and sound manner, and establish responsible business practices that provide accountability and appropriate treatment of borrowers in the foreclosure process.

Foreclosure process governance

Management should ensure that foreclosure governance processes are sufficient to manage and control operational, compliance, legal, and reputation risk associated with foreclosure activities. Boards of directors should ensure that management has addressed these areas. Depending on the level of activity, this will generally require policies and procedures that provide effective guidance, control, and monitoring of all foreclosure-related activities, including appropriate vendor management and audit and quality-control standards. Management also should ensure sufficient staffing, organizational structure and training is in place to carry out foreclosure activities in a proper and legal manner.

Dual track processing

Borrowers are often confused when a servicer is working with them to modify their mortgage but continues with legal proceedings related to foreclosure. To reduce this confusion, management should suspend foreclosure proceedings for successfully performing trial period modifications where they have the legal ability to do so under servicing contracts.

Affidavit and notarization practices

Management must ensure that attestations in foreclosure-related affidavits are truthful, accurate, and adequately supported by file documentation, that affiants have sufficiently reviewed the documentation and have adequate knowledge to make the attestations, and that notary practices conform to state legal requirements.

Documentation practices

Management must ensure that all documents required supporting lawful foreclosure actions are maintained and have been properly endorsed or assigned. Further, management should ensure the maintenance of a clear audit trail reconciling foreclosure filings to servicer source systems of record. The accuracy of those records should be verified, including statements of total indebtedness and fees charged.

Legal Compliance

Management must ensure adherence to all laws and regulations related to mortgage foreclosures. In particular, management is reminded that certain borrowers are provided additional foreclosure protections through the Servicemembers Civil Relief Act and bankruptcy provisions.

Third-party vendor management

Management should properly structure, carefully conduct and prudently manage relationships with third-party vendors, including outside law firms assisting in the foreclosure process. Management should ensure that third-party vendors have the skills necessary to perform the assigned functions. Roles and responsibilities should be clearly defined and performance should be monitored. Refer to OCC Bulletin 2001-47, “Third-Party Relationships: Risk Management Principles,” for additional guidance on expectations for managing third-party relationships.

Self-Assessment of Foreclosure Management Practices

National banks should conduct a self-assessment of foreclosure management practices no later than September 30, 2011. Banks that identify weaknesses in their foreclosure processes through the self-assessment should take immediate corrective action. Banks should determine if the weaknesses resulted in any financial harm to borrowers and provide remediation where appropriate. Examiners will review the self-assessments, corrective actions, and any determinations of financial harm and related remediation in the next quarterly review or examination of the bank.

Further Information

For more information, please contact: Kevin Russell, Director, Credit and Market Risk Division, (202) 874-5170.

Timothy W. Long

Senior Deputy Comptroller for Bank Supervision Policy

and Chief National Bank Examiner



22 Responses to “OCC Issues Guidance Regarding Foreclosures By Banks | Servicers “Must ensure compliance with foreclosure laws””
  1. leapfrog says:

    “Until a new swindle paradigm emerges it will be rough going across the board. This has absolutely nothing to do with Diamond Back Jamie’s laughable perception that the US has over-regulated (yes over-regulated) the financial sector and more to do with the legacy of toxic shit that is still clogging Wall Street’s pipes.

    It looks like downsizing a perversely bloated non-productive industry is the order of the day. There is a serious shortage of suckers and there is apparently little PhD douche weasels like Greenspan and Bernanke can do about it, with or without augmentation activities by Timmah the Hamp Hump.

    So on your way to wherever it is you are driving or taking the subway this weekend, smile and think about the Wall Street assholes who now have to worry like everyone else for a change. And if you happen to know one, tell him or her about…”


    • housemanrob says:

      I agree with all but the shortage of suckers……….I deal with plenty who are financially intact…..but will no be for long……and many more who are compulsive gamblers who are going to lose their shirts!

  2. Nora says:

    Office of Corruption Compliance. I actually put this in a letter to Anthony DeMarlo, a JP Morgan Chase attrny. and mentioned that business must be booming for him as their attorney! Bet he smiled when he read that!

  3. John Anderson says:

    Total horseshit as usual, made up by rascals, to impress fools.

  4. Beth A. says:

    As a regualtory professional, I just have to say that this is THEE WEAKEST directive I’ve seen in connection with any topic so serious in nature from a regulator. Shameful. I dub thee the “Office of Crappy Compliance”.

  5. Bill says:

    For us Californians, this the Lindsey Lohan version of the Banks “house arrest”. Make sure your ankle bracelet battery is working!

  6. myles says:

    Hello–in California, we can file a complaint against a judge or appellate justice with the COMMISSION ON JUDICIAL PERFORMANCE. I don’t know if Washington citizens have anything similar.


  7. This is just like asking a criminal to behave and to monitor themselves with out an ankle braclet on. Another slap in the face to their victims. You know they have read the senate report “Wall Street and the Financial Crisis; Anatomy of a Financial Collaspe”. You see only the smaller lenders being prosecuted and the new law the State of Washington passed looks like it is to lead the victims to the table to be foreclosed on by their predators, because their jobs, incomes and credit have been devistated by the banks, regulators, and S&P and every agency in the government. So it they make it look like the wonderful criminal banksters are willing to meet with you and a councilor you can be persuaded to believe you have no chance, no choice and no legal way out but to leave your home. The criminals need to go to jail. And the victims need to be helped. I am not impressed with the new bill. I will eat crow if it is a “[FAIR FORECLOSURE BILL] NOTICE THE FAIR FORECLOSURE ACT, NOT THE VICTIMS SURVIVAL ACT. Lets forget the banks have done the biggest crime, biggest heist, biggest ponzie scheme, willfully,. intentionally., and with malace to steal a free house and to bid at the stock market and steal insurance money, and TARP funds, and Steal HAMP funds with no intent to help the banks victims. And now Bernanke (the fed) helps the big banks my nickle and diming small and big business merchants out of more money skyrocketing the charges on the debt cards, another sneaky way to bank roll the theiving banks, which will put businesses under, create less jobs, and will effect every consumer in one way or another. Everyone needs to pull cash out at the bank and pay cash for everything and avoid the debt charges and visa charges to get themselves and this country out of debt. The debt cards and visa type cards will feed these banks while Americans are tossed into the streets.

  8. Jason Werner says:

    The OCC is a huge criminal enterprise; they actually aid and abet their national banks in the banks’ crimes against their borrowers and investors.

    There is no way a bank is going to be able to comply with their new rules, whereas the banks will just give the finger to the OCC again, thereby continuing to be too big to fail and regulate.

  9. avonics says:

    I don’t know what all the hullabaloo is about, the OCC won’t do shit to stop them regardless of their guidelines! As well as the rest of us……we will keep losing our homes.

  10. lvent says:

    If the Pretender Lender has to show proof of standing none of them will be able to fraudclose. This is why the judges are pressing hard for loan mods. If you ask the pretender lender to show proof of their standing of ownership and call out the fraud in your answer to the fraudclosure complaint and tell the judge you want the pretender lender to show proof and that you have evidence of fraud throughout your entire loan, (I do not think the judges read the answers to the complaints) the judge promptly tells asks you if you have an attorney and chases you out of the courtroom and tells you to do an out of court mediation between you , your attorney and the plaintiff(s). The Plaintiff’s attorney came to court that day with NO proof. That did not stop Fannie Mae’s attorney Fisher & Shapiro from filing an Amended Complaint which they gave me no time to answer and the next judge allowed the bastards to add a defendant even though the first complaint was not right. They are playing games and it not only HIGHLY DECEPTIVE, what they are doing is also ILLEGAL.. If the defendant asks for proof and the Plaintiff comes to court empty handed, the Complaint should be dismissed. That Plaintiff also claims they want to join us, the defendants to fraudclose on MERS and NONE of them were EVER assigned that loan..THEY ARE ALL HIGHLY DECEPTIVE CRIMINALS AND MOST PEOPLE ARE BEING GREATLY DECIEVED BECA– USE THEY DO NOT UNDERSTAND WHAT IS BEING DONE TO THEM IS ILLEGAL AND UNCONSTITUTIONAL..They are like lambs being led to their own slaughter.

    • lvent says:

      The OCC only regulates the banks by the way, not the PRETENDER LENDER/ servicers. There is another agency who regulates them.

      • leapfrog says:

        Oh, I think I know that one…isn’t that the “Office of Theft (thrift) Supervision”?

        You know someone has to be supervising the thieves to make sure they fully rip off the little people.

        Must be a tough job…

  11. leapfrog says:

    Office of Complete Corruption? Haha, what a joke. Walsh needs to be fired and the whole crooked OCC dismantled.

    • lvent says:

      That’s good one leapfrog! LOL!!

      • leapfrog says:

        Over on Naked Capitalism, Yves had a little contest over what you could come up with for the acronym “OCC”. Quite a few were a lot better than this one, but I can’t remember them.

  12. Melanie says:

    A little late for them isn’t it? Trying to cover their asses now?

    • lvent says:

      There is a giant facade of deception. People have been dumbed down to go along with the program. Max Keiser has a name for them, DEBT ZOMBIES. Most people have no idea when they walk into that courtroom how they are being massively deceived by all parties including their own attorneys that they have hired to protect them.. The masses are sheeple and it is horrifying to watch what is being done to them in courtrooms across America everyday BY THEIR OWN ATTORNEYS AND THE JUDGES. IT IS JUST UNBELIEVABLE TO SIT IN A COURT OF LAW AND WATCH THE LIES AND DECEPTION THESE PEOPLE ARE TOLD AND THEY BELIEVE IT!!!!.. Judges are allowing WE THE PEOPLE to be thrown under the bus and lose their homes and businesses ILLEGALLY. Too many Judges are acting like the Nazi S.S. and ALLOWING these FOREIGN MULTINATIONAL PRETENDER LENDERS AND THEIR ATTORNEYS TO STRATEGICALLY AND DIABOLICALLY, SLAUGHTER THE MIDDLE CLASS, ONE HOMEOWNER AT A TIME. DAY AFTER DAY AFTER DAY..THIS HAS BEEN GOING ON FOR YEARS NOW. DESPICABLE!!!

      • The judge on my case sent me a notice to put a brief in, however I RECIEVED THE NOTICE TWO DAYS AFTER THE DEAD LINE, of the breif being due. When I sent her notice she had given me a negative two days notice with no time to put it together, she claimed I was a non moving party and my case is in the Appeals court. How fair is that. The envelope showed the court did not mail it out till days later. I am sure it was on purpose. We are in a corrupt State here in WA. I have seen greater hope of real justice in the Appeals courts. I hope the Appeals court puts egg on Judge Pechmans face. I had another case with the mayor of my small town here deceiving me using planners he paid a years severence pay to keep their mouths shut, and my attorney helped the city turn an unbeatable case around, with a fraud amendment I refused to sign and had a case governed by fraud law and policy fruad law thrown out on a flat statutes of limitations. I am still fighting for justice over that tooooo!!!!!! There are good judges we have to believe that! I think they are in the Appeals courts. and there are good attorneys. Our state and many states have tied their hands and our corrupt bars go after the good attorneys. Keep fighting! Give them all a hard enough time they have got to give in. Cut off all bank cost to your self you can , Dont feed the banksters. Starve them to death. Boycott the bank fees. Iceland turned their country around almost over night from what I hear, cutting of the bailouts of the banks. Our officials wont do that so cut them off yourself. Cash your checks and spend cash. Cut up your credit cards. Make it easier for your customers to pay cash. Give customers incentives to pay cash, if they have not figured out already they are harming themselves and America by being in debtors prison. Look at the list of fraudsters and co-conspirators and put your money and checking acct. in the credit unions and small banks not on that list.

      • lvent says:

        I do have hope don’t get me wrong. I have seen the deception first hand with the Judges and the Attorneys and it is rampant. More homeowners need to get educated and ask for their pretender lenders to show proof of the pretender lenders standing. I am saddened and it makes me sick to see people being greatly deceived in courtrooms by Judges and the attorneys that people actually pay money to help them and all the attorneys are doing is negotiating more fraud. I agree about boycotting the FDIC banks, the debit cards and the credit cards. WE THE PEOPLE must stop submitting ourselves to this tyranny. For the love of God, stand up for your rights people! This is America.

  13. Bill P says:

    “self asses” – what a joke!

    “Hey Capone! Make sure them employees ain’t doin nuttin illegal.”

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