OCC Settles Civil Money Penalties Against Large National Bank Mortgage Servicers for $394 Million; Penalty Assessment Coordinated with Servicers’ Actions and Payments Under Federal-State Settlement

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today announced agreements in principle with four large national bank mortgage servicers to settle civil money penalties in connection with the unsafe and unsound mortgage servicing and foreclosure practices that were the subject of comprehensive cease and desist orders issued by the OCC in April 2011.

Today’s announcement involves Bank of America, Citibank, JPMorgan Chase, and Wells Fargo. The OCC’s actions were announced in coordination with the Board of Governors of the Federal Reserve System and the announcement of the federal-state settlement involving the U.S. Department of Justice, the Department of Housing and Urban Development, other federal agencies, and state attorneys general.

In the agreements in principle struck by the OCC with these mortgage servicers, the servicers do not contest the OCC’s ability to impose penalties aggregating $394 million, and the OCC agrees to hold in abeyance imposition of such penalties provided the servicers make payments and take other actions under the federal-state settlement with a value equal to at least the penalty amounts that each servicer acknowledges that the OCC could impose. The amounts for each servicer are $164 million for Bank of America, $34 million for Citibank, $113 million for JPMorgan Chase, and $83 million for Wells Fargo. If after three years, a servicer has not paid an amount equal to its respective penalty, the OCC will assess a penalty against the servicer for the difference between the aggregate value of the actions and payments under the agreement and that servicer’s OCC penalty amount.

“The actions announced today mark important progress in addressing the problems associated with foreclosure processing and are a critical step toward restoring a functioning industry that protects the rights of the customers it serves,” said acting Comptroller of the Currency John Walsh. “The OCC has worked closely with the Department of Justice and other federal agencies throughout the federal-state foreclosure settlement negotiations. We have worked to coordinate the comprehensive fixes to mortgage servicing and foreclosure practices that we required in our April 2011 cease and desist orders to ensure that work complements actions required by the federal-state settlement.”

These actions follow the issuance of consent orders in April 2011 against Bank of America, Citibank, JPMorgan Chase, and Wells Fargo to correct deficient, unsafe and unsound mortgage servicing and foreclosure practices.

Those enforcement actions required extensive fixes to mortgage servicing and foreclosure processes. Much of that work will continue throughout the balance of 2012. The orders also required servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity by these servicers in 2009 and 2010. As part of that effort, an independent foreclosure review process began in November 2011 which gives more than four million people the opportunity to request a review of their case if they believe they suffered injuries as a result of errors, misrepresentations, or other deficiencies in a foreclosure action on their primary residence in 2009 or 2010 by one of these servicers. More information about that process is available at www.independentforeclosurereview.com.