Banks, N.Y. Reach Deal On Loan Robo-Signings
September 1, 2011 by UPI - United Press International, Inc.
NEW YORK, Sept. 1 (UPI) — Three banks and New York regulators reached a deal in which the banks agreed to rectify sloppy practices used in signing foreclosure documents.
Under the agreements, the three banks — Goldman Sachs Group, its Litton Loan Servicing business and Ocwen Financial Corp. — agreed to stop “robo-signing,” the practice of employees signing foreclosure documents without reviewing them as required by law, The Wall Street Journal reported Thursday.
The financial institutions also agreed to examine loan files for evidence they mishandled borrowers’ paperwork and to cut mortgage payments for some New York homeowners.
The settlement most affects mortgage servicers — companies collecting monthly payments from homeowners and pass them on to investors and lenders, officials said. Mortgage servicers also work with borrowers to restructure their debts, as well as process foreclosures.
People familiar with the settlement told the Journal the agreement could provide a blueprint for other state regulators pursuing settlements with large banks over allegations they failed to properly handle mortgages.
Nationwide, lenders are facing inquiries from regulators about alleged improper mortgage procedures. The five biggest mortgage banks — Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. — have been in settlement negotiations with state attorneys general that will result in the banks paying billions of dollars for protection from future legal action, the Journal reported.