Bank of America Corp. was penalized in the fourth quarter for delaying foreclosures — not for moving too quickly. B of A expects to pay an estimated $230 million of “compensatory fees” to Fannie Mae and Freddie Mac for the lag.
Now, experts are wondering whether the absence of any regulatory fines amounts to a green light to speed up the processing of foreclosures as long as the paperwork is in better order.
“It’s ironic that servicers are being fined for not foreclosing fast enough but have faced no penalties for their poor performance on loan modifications and not helping borrowers,” said Steven Gillan, the executive director of the American Alliance of Home Modification Professionals, an Astoria, N.Y., company that helps servicers with the government’s loan modification program.
Regulators have failed to punish servicers for noncompliance with the Home Affordable Modification Program because, they say, they lack the authority to assess penalties.
Fannie has assessed similar fees against other servicers for dragging their feet in completing foreclosures within its prescribed deadlines, said Maureen Davenport, a Fannie spokeswoman, but it has not disclosed the names of the other servicers or the amount of fees assessed.
Whether servicers should pay fines — and how much — for lapses is a focal point of settlement talks with state attorneys general and federal banking regulators.
Cease-and-desist orders are expected early this week from federal regulators against the top 14 mortgage servicers, but they are not expected to include any monetary penalties. Instead, the regulators likely will demand servicers hire more staff or slow down the foreclosure process.