Actions against 10 big banks terminated – but five pay penalties totaling $35 million

Penalties of $35 million were assessed against five big banking organizations for mortgage servicing deficiencies, the Federal Reserve said Friday, while at the same time the central bank terminated enforcement actions against those institutions and five others.

The civil money penalties announced are: $14 million against Goldman Sachs; $8 million against Morgan Stanley; $5.2 million against CIT (as successor to IMB); $4.4 million against U.S. Bancorp; and $3.5 million against PNC.

In a release, the Fed said it has terminated enforcement actions related to residential mortgage loan servicing and foreclosure processing issued in 2011 and 2012 against 10 banking organizations.

However, the civil money penalties (CMPs) of $35.1 million against five of the 10 were assessed because those banks had not yet been fined for their mortgage servicing deficiencies related to those enforcement actions, the Fed said.

“When it issued the mortgage servicing enforcement actions, the Board announced that it believed monetary penalties were appropriate for all firms subject to the actions for their mortgage servicing deficiencies,” the Fed stated. “The Board previously assessed penalties against the other firms under mortgage servicing enforcement actions.

“With the penalties announced today, the Board has now assessed penalties totaling approximately $1.1 billion against all Federal Reserve supervised firms under mortgage servicing enforcement actions,” the Fed release stated.

The 10 banking organizations subjection to action terminations are:

  • Ally Financial Inc.;
  • Bank of America Corporation;
  • CIT Group, Inc. (as successor to IMB HoldCo LLC);
  • The Goldman Sachs Group, Inc.;
  • HSBC North America Holdings, Inc.;
  • JPMorgan Chase & Co.;
  • Morgan Stanley;
  • The PNC Financial Services Group, Inc.;
  • SunTrust Banks, Inc.;
  • U.S. Bancorp.

The Fed said that its actions required all of the firms to “improve oversight of residential mortgage loan servicing and required the firms with mortgage servicing subsidiaries supervised by the Federal Reserve to correct deficiencies in residential mortgage loan servicing and foreclosure processing.”

The central bank said the termination of the actions was based on evidence of “sustainable improvements in the firms’ oversight and mortgage servicing practices.”

The Fed also announced the termination of a supplemental agreement with Ally, issued in 2012 after Ally’s mortgage servicing subsidiaries sought bankruptcy protection, which addressed the parent company’s contingent obligations under the 2011 enforcement action. “This agreement is no longer necessary after the termination of the 2011 action announced on Friday,” the Fed said.

Also Friday, the Board announced the termination by the Fed (and the Federal Deposit Insurance Corp. [FDIC] and Office of the Comptroller of the Currency [OCC]) of joint enforcement actions issued in 2011 against Lender Processing Services, Inc. (LPS), which was succeeded by ServiceLink Holdings, LLC, and against MERSCORP Holdings, Inc., formerly known as MERSCORP, Inc. (MERS). The termination of the actions, the Fed said, “was based on evidence of sustainable improvements in the foreclosure-related practices of LPS and MERS.”

Separately, a penalty of $90,000 was assessed against Goldman Sachs Bank USA by the Fed Friday for violating flood insurance requirements for loans. Under the provisions of the National Flood Insurance Program (NFIP), a bank “shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan.” The law states that, where a pattern or practice of violations is found, civil money penalties of up to $2,000 for each violation are required.

Federal Reserve Board announces termination of enforcement actions against 10 banking organizations, civil monetary penalties against five of the 10 organizations, and termination of two joint orders against service

Federal Reserve Board announces enforcement action with Goldman Sachs Bank USA