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New York says Morgan Stanley, other major firms agree to mortgage practice reforms
ALBANY, N.Y. (AP) ' More national mortgage companies agreed Thursday to new internal practices aimed at protecting borrowers as they face foreclosure.
New York state Financial Services Superintendent Benjamin Lawsky said Morgan Stanley, Saxon American Home Mortgage and Vericrest Financial will end several practices.
They include "robo-signing" affidavits that say documents were reviewed when they weren't, and sending borrowers directly into foreclosure, even when they are trying to modify their loans to save their homes.
Lawsky said this is the same set of rules previously agreed to by Goldman Sachs Bank, Ocwen Financial, and Litton Loan Servicing.
"These new reforms are now spreading out into the industry at a time when homeowners truly need relief in the wake of the financial crisis," Lawsky said. He commended the companies for leading the industry and urged other companies to follow.
Under the agreements, companies will improve what Lawsky called "weak internal controls and oversight that compromise the accuracy of foreclosure documents." They'll end improper denials of borrowers' attempts to modify loans, provide borrowers with a single customer service representative to curb delays, and stop imposing what Lawsky determined were improper fees. Companies will make sure the equity is restored for any borrower who was foreclosed upon improperly and that the property is returned. If the property was sold, the original borrower would have to be compensated.
The companies didn't immediately release their statements.