Sales of homes in foreclosure by Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. ground nearly to a halt after regulators revised their orders on treatment of troubled borrowers during the 60 days before they lose their homes.
The banks said they paused the sales on May 6 to make sure that their late-stage foreclosure procedures were in accordance with the guidelines. The banks wouldn’t say exactly which issues had been under scrutiny.
Bank of America Corp., by contrast, continued foreclosure sales at a normal pace, apparently confident its procedures met the revised restrictions.
“We manage our mortgage servicing operations in compliance with all laws, regulations and standards for sound business practices,” BofA said Friday in a statement.
The halted foreclosures are the latest complication stemming from a settlement between 13 large mortgage servicers and their federal overseers. Banks and regulators also have struggled to distribute billions of dollars in aid to borrowers equitably as required under the settlement.
Chase resumed a normal volume of foreclosure sales last week, saying its practices complied with the latest bulletin from the Treasury Department agency that regulates national banks, the Office of the Comptroller of the Currency, or OCC.
“In response to the OCC guidance and in an abundance of caution, we temporarily halted foreclosure sales where we could to validate that our process covered the guidance,” Chase said in a statement. “We have since resumed sales.”
Wells and Citi were still on hold as of Friday, according to PropertyRadar.com, which tracks foreclosure filings in California, Nevada, Arizona, Oregon and Washington.
“We are in the process of complying and following the directive set forth in the OCC guidance,” Citigroup said.
Wells, saying the latest OCC bulletin had “slight changes from the previous,” declared that it “wanted to be absolutely sure that our interpretation of the language was the same as our regulators.”
“We simply needed to take the time to assure that we can validate and document our compliance,” the San Francisco bank said in a statement.
The bulletin, which changed the timing of certain measures aimed at preventing wrongful foreclosures, listed 13 issues for the banks to address -- “minimum guidelines” beginning with: “Is the loan’s default status accurate?”
The issues touched on a laundry list of the legal and procedural problem areas in which errors and short-cutting, including the “robo-signing” of court affidavits, were common during the wave of foreclosures that struck in 2009 and 2010.
American Banker, which first reported on the pause in foreclosure sales, called the hiatus “an echo of the 2010 foreclosure halt that kicked off several years of wrenching procedural scrutiny of the mortgage servicing industry.”
At Wells, the biggest mortgage servicer, foreclosure sales in the five Western states fell to 17 for the week beginning Monday, May 6, from 298 the previous week, the PropertyRadar data showed.
A bank official predicted Wells would soon resume selling the houses of defaulted borrowers. “It won’t be long,” Wells mortgage spokewoman Vickee J. Adams said, although she declined to say exactly when.