Major banks told to review foreclosures

WASHINGTON – April 14, 2011 – Federal bank regulators announced new rules Wednesday for 14 of the nation’s largest mortgage servicers, saying the changes will curb past and future foreclosure abuses.

Spawned by a federal investigation that identified “significant weaknesses” in mortgage servicer practices, regulators said the changes they’re imposing represent major reforms in an industry that touches virtually every U.S. homeowner with a mortgage.

In the government’s most forceful response yet to the nation’s four-year foreclosure crisis, the regulators ordered the mortgage servicers to hire outside firms to review every foreclosure action they had pending from Jan. 1, 2009, through Dec. 31, 2010, identify borrowers harmed by the servicers’ deficiencies and compensate them. They also face unspecified financial penalties that are still to come, regulators said. Read More.

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