Fed calls on banks to tighten mortgage rules

Yahoo! News

The Federal Reserve on Wednesday asked some of the largest US banks to tighten up their mortgage procedures and warned of coming fines, following a scandal over homes being unfairly repossessed.

The Fed issued so-called "consent orders" against 14 lenders — including Bank of America, HSBC, JPMorgan Chase and Wells Fargo — calling for better monitoring, standards and documentation.

The banks were told "to address a pattern of misconduct and negligence" related to foreclosure processing.

The scandal began with evidence that staff had signed documents pushing foreclosures forward without proper vetting, a practice that became known as "robo-signing."

There were no fines announced Wednesday, but they are expected.

"The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties."

Banks moved to repossess a record 2.87 million US homes in 2010, according to foreclosure specialist RealtyTrac.

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