Regulators Ban Wells Fargo and HSBC from Acquiring New Mortgage Servicing Business
The Office of the Comptroller of the Currency recently restricted mortgage servicing operations at Wells Fargo, HSBC, JPMorgan Chase, Santandar Bank, U.S. Bank, and EverBank based on their failure to comply with the mortgage servicing standards the banks agreed to within the consent orders they entered into following “scandals involving the so-called robo-signing of foreclosure documents by officials without knowledge of the facts as well as other legal shortcuts, lost paperwork and improper fees,” according to a Los Angeles Times article. The same article reported that:
[t]he harshest penalties were against San Francisco-based Wells Fargo, California’s largest bank and one of the top four nationwide, and international giant HSBC, based in London. Wells Fargo and HSBC were banned from acquiring additional mortgage servicing rights or setting up servicing in other countries until they can show they are complying with the terms of consent orders. The banks will be permitted to service their existing mortgage portfolios as well as their own newly originated home loans. The restrictions are significant because big banks and nonbank servicers such as Ocwen Financial Corp., a specialist in handling troubled subprime borrowers, frequently trade these mortgage servicing rights.