exv99w1
Exhibit 99.1
UNITED STATES OF AMERICA
Before The
OFFICE OF THRIFT SUPERVISION
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In the Matter of |
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Order No.: NE-11-17 |
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SOVEREIGN BANK |
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Effective Date: April 13, 2011 |
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Wyomissing, Pennsylvania |
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OTS Docket No. 04410 |
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CONSENT ORDER
The Office of Thrift Supervision (OTS), as part of an interagency horizontal review of major
residential mortgage servicers, has conducted an examination of the residential real estate
mortgage foreclosure processes of Sovereign Bank, Wyomissing, Pennsylvania (Association). The OTS
has identified certain deficiencies and unsafe or unsound practices in the Associations
residential mortgage servicing and in the Associations initiation and handling of foreclosure
proceedings. The OTS has informed the Association of the findings resulting from the examination.
The Association, by and through its duly elected and acting Board of Directors (Board), has
executed a Stipulation And Consent To Issuance Of a Consent Order, dated April 13, 2011
(Stipulation and Consent), that is accepted by the OTS. By this Stipulation and Consent, which is
incorporated by reference, the Association has consented to the issuance of this Consent Order
(Order) by the OTS. The Association has committed to taking all necessary and appropriate steps to
remedy the deficiencies and unsafe or unsound practices identified by the
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OTS, and to enhance the Associations residential mortgage servicing and foreclosure
processes. The Association has begun implementing procedures to remediate the practices addressed
in this Order.
OTSs Findings.
The OTS finds, and the Association neither admits nor denies, the following:
1. The Association is a servicer of residential mortgages in the United States, and services a
portfolio of approximately $25 billion dollars in residential mortgage loans. During the recent
housing crisis, a large number of residential mortgage loans serviced by the Association became
delinquent and resulted in foreclosure actions.
2. In connection with certain foreclosures of loans in its residential mortgage servicing
portfolio, the Association engaged in the following unsafe or unsound practices:
(a) filed or caused to be filed in state and federal courts numerous affidavits executed by its
employees or employees of third-party service providers making various assertions, such as
ownership of the mortgage note and mortgage, the amount of the principal and interest due, and the
fees and expenses chargeable to the borrower, in which the affiant represented that the assertions
in the affidavit were made based on personal knowledge or based on a review by the affiant of the
relevant books and records, when, in many cases, they were not based on such personal knowledge or
review of the relevant books and records;
(b) filed or caused to be filed in state and federal courts, or in local land records offices,
numerous affidavits or other mortgage-related documents that were not properly notarized,
specifically that were not signed or affirmed in the presence of a notary;
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(c) failed to devote sufficient financial, staffing and managerial resources to ensure
proper administration of its foreclosure processes;
(d) failed to devote to its foreclosure processes adequate oversight, internal controls,
policies, and procedures, compliance risk management, internal audit, third party management, and
training; and
(e) failed sufficiently to oversee outside counsel and other third-party providers handling
foreclosure-related services.
Board Oversight of Compliance with Order.
3. Within five (5) days, the Board shall designate a committee to monitor and coordinate the
Associations compliance with the provisions of this Order (Oversight Committee). The Oversight
Committee shall be comprised of three (3) or more directors, which at least two (2) may not be
employees or officers of the Association or any of its subsidiaries or affiliates.
4. Within ninety (90) days, and within thirty (30) days after the end of each quarter thereafter,
the Oversight Committee shall submit a written compliance progress report to the Board (Compliance
Tracking Report). The Compliance Tracking Report shall, at a minimum:
(a) separately list each corrective action required by this Order;
(b) identify the required or anticipated completion date for each corrective action; and
(c) discuss the current status of each corrective action, including the action(s) taken or
to be taken to comply with each corrective action.
5. Within ten (10) days of receipt of the Compliance Tracking Report, the Board shall review the
Compliance Tracking Report and all reports required to be prepared by this Order. Following its
review, the Board shall adopt a resolution: (a) certifying that each director has reviewed the
Compliance Tracking Report and all required reports; and (b) documenting any
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corrective actions taken. A copy of the Compliance Tracking Report and the Board resolution
shall be provided to the Regional Director within five (5) days after the Board meeting at which
such resolution was adopted.
6. Nothing contained herein shall diminish the responsibility of the entire Board to ensure the
Associations compliance with the provisions of this Order. The Board shall review and adopt all
policies and procedures required by this Order prior to submission to the OTS.
Comprehensive Action Plan.
7. Within sixty (60) days of this Order, the Association shall submit to the Regional
Director an acceptable plan containing a complete description of the actions that are necessary and
appropriate to achieve full compliance with this Order (Action Plan). In the event the Regional
Director asks the Association to revise the Action Plan, the Association shall make the requested
revisions and resubmit the Action Plan to the Regional Director within ten (10) days of receiving
any comments from the Regional Director. Following acceptance of the Action Plan by the Regional
Director, the Association shall not take any action that would constitute a significant deviation
from, or material change to the requirements of the Action Plan or of this Order, unless and until
the Association has received a prior written determination of no supervisory objection from the
Regional Director.
8. The Board shall ensure that the Association achieves and thereafter maintains compliance with
this Order, including, without limitation, successful implementation of the Action Plan. The Board
shall further ensure that, upon implementation of the Action Plan, the Association achieves and
maintains effective mortgage servicing, foreclosure and loss mitigation activities (as used herein,
the phrase loss mitigation shall include, but not be limited to, activities related to special
forbearances, modifications, short refinances, short sales, cash-for-keys, and deeds-in-lieu
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of foreclosure and be referred to as either Loss Mitigation or Loss Mitigation
Activities), as well as associated risk management, compliance, quality control, audit, training,
staffing, and related functions. In order to comply with these requirements, the Board shall:
(a) require the timely reporting by Association management of such actions directed by the
Board to be taken under this Order;
(b) follow-up on any non-compliance with such actions in a timely and appropriate manner; and
(c) require corrective action be taken in a timely manner for any non-compliance with such actions.
9. The Action Plan shall address, at a minimum:
(a) financial resources to develop and implement an adequate infrastructure to support
existing and/or future Loss Mitigation and foreclosure activities and ensure compliance with this
Order;
(b) organizational structure, managerial resources and staffing to support existing and/or
future Loss Mitigation and foreclosure activities and ensure compliance with this Order;
(c) metrics to measure and ensure the adequacy of staffing levels relative to existing and/or
future Loss Mitigation and foreclosure activities, such as limits for the number of loans assigned
to a Loss Mitigation employee, including the single point of contact as hereinafter defined, and
deadlines to review loan modification documentation, make loan modification decisions, and provide
responses to borrowers; and
(d) governance and controls to ensure full compliance with all applicable federal and state laws
(including, but not limited to, the U.S. Bankruptcy Code and the
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Servicemembers Civil Relief Act (SCRA)), rules, regulations, court orders and
requirements, as well as the Membership Rules of MERSCORP, servicing guides of the
Government Sponsored Enterprises (GSEs) or investors including those with the Federal
Housing Administration and those required by the Home Affordable Modification Program
(HAMP), and loss share agreements with the Federal Deposit Insurance Corporation
(collectively Legal Requirements), and the requirements of this Order.
10. The Action Plan shall specify timelines for completion of each of the requirements of this
Order. The timeliness in the Action Plan shall be consistent with any deadlines set forth in this
Order.
Compliance Program.
11. Within sixty (60) days of this Order, the Association shall submit to the Regional Director an
acceptable compliance program to ensure that the mortgage servicing and foreclosure operations,
including Loss Mitigation and loan modification, comply with all applicable Legal Requirements,
supervisory guidance, and the requirements of this Order and are conducted in a safe and sound
manner (Compliance Program). The Compliance Program shall be implemented within one hundred twenty
(120) days of this Order. Any corrective action timeframe in the Compliance Plan that is in excess
of one hundred twenty (120) days must be approved by the Regional Director. The Compliance Program
shall include, at a minimum:
(a) appropriate written policies and procedures to conduct, oversee, and monitor mortgage
servicing, Loss Mitigation, and foreclosure operations;
(b) processes to ensure that all factual assertions made in pleadings, declarations, affidavits, or
other sworn statements filed by or on behalf of the Association are accurate, complete, and
reliable, and that affidavits, declarations, or other sworn statements are
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based on personal knowledge or a review of the Associations books and records when the
affidavit, declaration, or sworn statement so states;
(c) processes to ensure that affidavits filed in foreclosure proceedings are executed and notarized
in accordance with state legal requirements and applicable guidelines, including jurat
requirements;
(d) processes to review and approve standardized affidavits and declarations for each jurisdiction
in which the Association files foreclosure actions to ensure compliance with applicable laws,
rules, and court procedures;
(e) processes to ensure that the Association has properly documented ownership of the
promissory note and mortgage (or deed of trust) under applicable state law, or is otherwise a
proper party to the action (as a result of agency or other similar status) at all stages of
foreclosure and bankruptcy litigation, including appropriate transfer and delivery of endorsed
notes and assigned mortgages or deeds of trust at the formation of a residential mortgage-backed
security, and lawful and verifiable endorsement and successive assignment of the note and mortgage
or deed of trust to reflect all changes of ownership;
(f) processes to ensure that a clear and auditable trail exists for all factual information
contained in each affidavit or declaration, in support of each of the charges that are listed,
including whether the amount is chargeable to the borrower and/or claimable to the investor;
(g) processes to ensure that foreclosure sales (including the calculation of the default period,
the amounts due, and compliance with notice requirements) and post-sale
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confirmations are in accordance with the terms of the mortgage loan and applicable state and
federal law requirements;
(h) processes to ensure that all fees, expenses, and other charges imposed on the borrower
are assessed in accordance with the terms of the underlying mortgage note, mortgage, or other
customer authorization with respect to the imposition of fees, charges, and expenses, and in
compliance with all applicable Legal Requirements and supervisory guidance;
(i) processes to ensure that the Association has the ability to locate and secure all documents,
including the original promissory notes if required, necessary to perform mortgage servicing,
foreclosure and Loss Mitigation, or loan modification functions;
(j) ongoing testing for compliance with applicable Legal Requirements and supervisory guidance
that is completed by qualified persons with requisite knowledge and ability (which may include
internal audit) who are independent of the Associations business lines;
(k) measures to ensure that policies, procedures, and processes are updated on an ongoing basis as
necessary to incorporate any changes in applicable Legal Requirements and supervisory guidance;
(l) processes to ensure the qualifications of current management and supervisory personnel
responsible for mortgage servicing and foreclosure processes and operations, including
collections, Loss Mitigation and loan modification are appropriate, and a determination of whether
any staffing changes or additions are needed;
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(m) processes to ensure that staffing levels devoted to mortgage servicing and foreclosure
processes and operations, including collections, Loss Mitigation and loan modification, are
adequate to meet current and expected workload demands;
(n) processes to ensure that workloads of mortgage servicing, foreclosure and Loss Mitigation and
loan modification personnel, including single point of contact personnel as hereinafter defined,
are reviewed and managed. Such processes, at a minimum, shall assess whether the workload levels
are appropriate to ensure compliance with the requirements of this Order, and necessary
adjustments to workloads shall promptly follow the completion of the reviews. An initial review
shall be completed within ninety (90) days of this Order, and subsequent reviews shall be
conducted semi-annually;
(o) processes to ensure that the risk management, quality control, audit, and compliance programs
have the requisite authority and status within the organization so that appropriate reviews of the
Associations mortgage servicing, Loss Mitigation, and foreclosure activities and operations may
occur and deficiencies are identified and promptly remedied;
(p) appropriate training programs for personnel involved in mortgage servicing and foreclosure
processes and operations, including collections, Loss Mitigation, and loan modification, to ensure
compliance with applicable Legal Requirements and supervisory guidance; and
(q) appropriate procedures for customers in bankruptcy, including a prohibition on the collection
of fees in violation of bankruptcys automatic stay (11 U.S.C. § 362), the discharge injunction
(11 U.S.C. § 524), or any applicable court order.
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Third Party Management.
12. Within sixty (60) days of this Order, the Association shall submit to the Regional Director
acceptable policies and procedures for outsourcing foreclosure or related functions, including Loss
Mitigation and loan modification, and property management functions for residential real estate
acquired through or in lieu of foreclosure, to any agent, independent contractor, consulting firm,
law firm (including local counsel in foreclosure or bankruptcy proceedings retained to represent
the interests of the owners of mortgages), property management firm, or other third-party
(including any subsidiary or affiliate of the Association not specifically named in this Order)
(Third-Party Providers). Third-party management policies and procedures shall be implemented within
one hundred twenty (120) days of this Order. Any corrective action timetable that is in excess of
one hundred twenty (120) days must be approved by the Regional Director. The policies and
procedures shall include, at a minimum:
(a) appropriate oversight to ensure that Third-Party Providers comply with all applicable
Legal Requirements, supervisory guidance (including applicable portions of OTS Thrift Bulletin
82a), and the Associations policies and procedures;
(b) measures to ensure that all original records transferred from the Association to Third-Party
Providers (including the originals of promissory notes and mortgage documents) remain within the
custody and control of the Third-Party Provider (unless filed with the appropriate court or the
loan is otherwise transferred to another party), and are returned to the Association or designated
custodians at the conclusion of the performed service, along with all other documents necessary for
the Associations files, and that the Association retains imaged copies of significant documents
sent to Third-Party Providers;
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(c) measures to ensure the accuracy of all documents filed or otherwise utilized on behalf
of the Association or the owners of mortgages in any judicial or non-judicial foreclosure
proceeding, related bankruptcy proceeding, or in other foreclosure-related litigation,
including, but not limited to, documentation sufficient to establish ownership of the promissory
note and/or the right to foreclose at the time the foreclosure action is commenced;
(d) processes to perform appropriate due diligence on potential and current Third-Party
Provider qualifications, expertise, capacity, reputation, complaints, information security,
business continuity and financial viability, and to ensure adequacy of Third-Party Provider
staffing levels, training, work quality, and workload balance;
(e) processes to ensure that contracts provide for adequate oversight, including requiring
Third-Party Provider adherence to Association foreclosure processing standards, measures to
enforce Third-Party Provider contractual obligations, and processes to ensure timely action
with respect to Third-Party Provider performance failures;
(f) processes to ensure periodic reviews of Third-Party Provider work for timeliness, competence,
completeness, and compliance with all applicable Legal Requirements and supervisory guidance, and
to ensure that foreclosures are conducted in a safe and sound manner;
(g) processes to review customer complaints about Third-Party Provider services;
(h) processes to prepare contingency and business continuity plans that ensure the continuing
availability of critical third-party services and business continuity of the Association,
consistent with federal banking agency guidance, both to address short-term
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and long-term service disruptions and to ensure an orderly transition to new service providers
should that become necessary;
(i) a review of fee structures for Third-Party Providers to ensure that the method of compensation
considers the accuracy, completeness, and legal compliance of foreclosure filings and is not based
solely on increased foreclosure volume and/or meeting processing timelines; and
(j) a certification process for law firms (and recertification of existing law firm providers) that
provide residential mortgage foreclosure and bankruptcy services for the Association, on a periodic
basis, as qualified to serve as Third-Party Providers to the Association including that attorneys
are licensed to practice in the relevant jurisdiction and have the experience and competence
necessary to perform the services requested.
Mortgage Electronic Registration System.
13. Within sixty (60) days of this Order, the Association shall submit to the Regional Director an
acceptable plan to ensure appropriate controls and oversight of foreclosure activities within
respect to the Mortgage Electronic Registration System (MERS) and compliance with MERSCORPs
membership rules, terms, and conditions (MERS Requirements) (MERS Plan). The MERS Plan shall be
implemented within one hundred twenty (120) days of this Order. Any corrective action timetable
that is in excess of one hundred twenty (120) days must be approved by the Regional Director. The
MERS Plan shall include, at a minimum:
(a) processes to ensure that all mortgage assignments and endorsements with respect to
mortgage loans serviced or owned by the Association out of MERS name are executed only by a
certifying officer authorized by MERS and approved by the Association;
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(b) processes to ensure that all other actions that may be taken by MERS certifying officers
(with respect to mortgage loans serviced or owned by the Association) are executed by a certifying
officer authorized by MERS and approved by the Association;
(c) processes to ensure that the Association maintains up-to-date corporate resolutions from MERS
for all Association employees and third-parties who are certifying officers authorized by MERS, and
up-to-date lists of MERS certifying officers;
(d) processes to ensure compliance with all MERS Requirements and with the requirements of the MERS
Corporate Resolution Management System (CRMS);
(e) processes to ensure the accuracy and reliability of data reported to MERSCORP, including
monthly system-to-system reconciliations for all MERS mandatory reporting fields, and daily capture
of all rejects/warnings reports associated with registrations, transfers, and status updates on
open-item aging reports. Unresolved items must be maintained on open-item aging reports and tracked
until resolution. The Association shall determine and report whether the foreclosures serviced by
the Association that are currently pending in MERS name are accurate and how many are listed in
error, and describe how and by when the data on the MERSCORP system will be corrected;
(f) an appropriate MERS quality assurance workplan, which clearly describes all tests, test
frequency, sampling methods, responsible parties, and the expected process for open-item follow-up,
and includes an annual independent test of the control structure of the system-to-system
reconciliation process, the reject/warning error correction process, and adherence to the
Associations MERS Plan; and
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(g) inclusion of MERS into the Associations third-party vendor management process, which
shall include a detailed analysis of potential vulnerabilities, including information security,
business continuity, and vendor viability assessments.
Foreclosure Review.
14. Within forty-five (45) days of this Order, the Association shall retain an independent
consultant acceptable to the Regional Director to conduct an independent review of certain
residential foreclosure actions regarding individual borrowers with respect to the Associations
mortgage servicing portfolio. The review shall include residential foreclosure actions or
proceedings (including foreclosures that were in process or completed) for loans serviced by the
Association, whether brought in the name of the Association, the investor, the mortgage note
holder, or any agent for the mortgage note holder (including MERS), that have been pending at any
time from January 1, 2009 to December 31, 2010, as well as residential foreclosure sales that
occurred during this time period (Foreclosure Review).
15. Within fifteen (15) days of the engagement of the independent consultant described in Paragraph
14, but prior to the commencement of the Foreclosure Review, the Association shall submit to the
Regional Director for approval an engagement letter that sets forth:
(a) the methodology for conducting the Foreclosure Review, including: (i) a description of the
information systems and documents to be reviewed, including the selection of criteria for files or
aspects of files to be reviewed; (ii) the criteria for evaluating the reasonableness of fees and
penalties; (iii) other procedures necessary to make the required determinations (such as through
interviews of employees and third parties and a process for the submission and review of borrower
claims and complaints); and (iv) any proposed sampling techniques. In setting the scope and review
methodology
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under clause (i) of this sub-paragraph, the independent consultant may consider any work
already done by the Association or other third-parties on behalf of the Association. The engagement
letter shall contain a full description of the statistical basis for the sampling methods chosen,
as well as procedures to increase the size of the sample depending on results of the initial
sampling;
(b) expertise and resources to be dedicated to the Foreclosure Review;
(c) completion of the Foreclosure Review and the Foreclosure Report within one hundred twenty (120)
days from approval of the engagement letter; and
(d) a written commitment that any workpapers associated with the Foreclosure Review shall be made
available to the OTS immediately upon request.
16. The purpose of the Foreclosure Review shall be to determine, at a minimum:
(a) whether at the time the foreclosure action was initiated or the pleading or affidavit or
declaration filed (including in bankruptcy proceedings and in defending suits brought by
borrowers), the foreclosing party or agent of the party had properly documented ownership of the
promissory note and mortgage (or deed of trust) under relevant state law, or was otherwise a proper
party to the action as a result of agency or similar status;
(b) whether the foreclosure was in accordance with applicable federal and state laws, including,
but not limited to, the U.S. Bankruptcy Code and the SCRA;
(c) whether a foreclosure sale occurred when an application for a loan modification or other Loss
Mitigation was under consideration when the loan was performing in accordance with a trial or
permanent loan modification, or when the loan had not been in default for a sufficient period of
time to authorize foreclosure pursuant to the terms of the mortgage loan documents and related
agreements;
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(d) whether, with respect to non-judicial foreclosures, the procedures followed with respect
to the foreclosure sale (including the calculation of the default period, the amounts due, and
compliance with notice periods) and post-sale confirmations were in accordance with the terms of
the mortgage loan and state law requirements;
(e) whether a delinquent borrowers account was only charged fees and/or penalties that were
permissible under the terms of the borrowers loan documents, applicable Legal Requirements, and
were otherwise reasonable and customary;
(f) whether the frequency that fees were assessed to any delinquent borrowers account (including
broker price opinions) was excessive under the terms of the borrowers loan documents, applicable
Legal Requirement, or were otherwise unreasonable;
(g) whether Loss Mitigation Activities with respect to foreclosed loans were handled in accordance
with the requirements of the HAMP, and consistent with the policies and procedures applicable to
the Associations proprietary loan modifications or other Loss Mitigation programs, such that each
borrower had an adequate opportunity to apply for a Loss Mitigation option or program, any such
application was handled properly, a final decision was made on a reasonable basis, and was
communicated to the borrower before the foreclosure sale; and
(h) whether any errors, misrepresentations, or other deficiencies identified in the Foreclosure
Review resulted in financial injury to the borrower or the mortgagee.
17. The independent consultant shall prepare a written report detailing the findings of the
Foreclosure Review (Foreclosure Report), which shall be completed within thirty (30) days of
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completion of the Foreclosure Review. Immediately upon completion, the Foreclosure Report
shall be submitted to the Regional Director and the Board.
18. Within forty-five (45) days of submission of the Foreclosure Report to the Board, the
Association shall submit to the Regional Director an acceptable plan to remediate all financial
injury to borrowers caused by any errors, misrepresentations, or other deficiencies identified in
the Foreclosure Report by:
(a) reimbursing or otherwise appropriately remediating borrowers for impermissible or excessive
penalties, fees or expenses, or for other financial injury identified in accordance with this
Order; and
(b) taking appropriate steps to remediate any foreclosure sale identified in the Foreclosure Report
where the foreclosure was not authorized as described in this Order.
19. Within sixty (60) days after the Regional Director provides supervisory non-objection to the
plan set forth in paragraph (18) above, the Association shall make all reimbursement and
remediation payments and provide all credits required by such plan, and provide the Regional
Director with a report detailing such payments and credits.
Management Information Systems.
20. Within sixty (60) days of this Order, the Association shall submit to the Regional Director an
acceptable plan for operation of its management information systems (MIS) for foreclosure and Loss
Mitigation or loan modification activities to ensure the timely delivery of complete and accurate
information to permit effective decision-making. The MIS plan shall be implemented within one
hundred twenty (120) days of this Order. Any corrective action timeframe that is in excess of one
hundred twenty (120) days must be approved by the Regional Director. The plan shall include, at a
minimum:
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(a) a description of the various components of MIS used by the Association for
foreclosure and Loss Mitigation or loan modification activities;
(b) a description of and timetable for any needed changes or upgrades to:
(i) monitor compliance with all applicable Legal Requirements, supervisory guidance, and
the requirements of this Order;
(ii) ensure the ongoing accuracy of records for all serviced mortgages, including, but not
limited to, records necessary to establish ownership and/or the right to foreclose by the
appropriate party for all serviced mortgages, outstanding balances, and fees assessed to
the borrower; and
(iii) measures to ensure that Loss Mitigation, loan foreclosure, and modification staffs have
sufficient and timely access to information provided by the borrower regarding loan foreclosure
and modification activities; and
(c) the testing of the integrity and accuracy of the new or enhanced MIS to ensure that
reports generated by the system provide necessary information for adequate monitoring and
quality controls.
Mortgage Servicing.
21. Within sixty (60) days of the Order, the Association shall submit to the Regional Director an
acceptable plan, along with a timeline, for ensuring effective coordination of communications with
borrowers, both oral and written, related to Loss Mitigation or loan modification and foreclosure
activities: (i) to ensure that communications are timely and effective and are designed to avoid
confusion to borrowers; (ii) to ensure continuity in the handling of borrowers loan files during
the Loss Mitigation, loan modification and foreclosure process by personnel knowledgeable about a
specific borrowers situation; (iii) to ensure that reasonable and good
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faith efforts, consistent with applicable Legal Requirements, are engaged in Loss Mitigation
and foreclosure prevention for delinquent loans, where appropriate; and (iv) to ensure that
decisions concerning Loss Mitigation or loan modifications continue to be made and communicated in
a timely fashion. Prior to submitting the plan, the Association shall conduct a review to determine
whether processes involving past due mortgage loans or foreclosures overlap in such a way that they
may impair or impede a borrowers efforts to effectively pursue a loan modification and whether
Association employee compensation practices discourage Loss Mitigation or loan modifications. The
plan shall be implemented within one hundred twenty (120) days of this Order. Any corrective action
timeframe that is in excess of one hundred twenty (120) days must be approved by the Regional
Director. The plan shall include, at a minimum:
(a) measures to ensure that staff handling Loss Mitigation and loan modification requests routinely
communicates and coordinates with staff processing the foreclosure on the borrowers property;
(b) appropriate deadlines for responses to borrower communications and requests for consideration
of Loss Mitigation, including deadlines for decision-making on Loss Mitigation activities, with the
metrics established not being less responsive than the timelines in the HAMP;
(c) establishment of an easily accessible and reliable single point of contact for each borrower so
that the borrower has access to an employee of the bank to obtain information throughout the Loss
Mitigation, loan modification, and foreclosure processes;
(d) a requirement that written communications with the borrower identify such single point of
contact along with one or more direct means of communication with the contact;
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(e) measures to ensure that the single point of contact has access to current information and
personnel (in-house or third-party) sufficient to timely, accurately, and adequately inform the
borrower of the current status of the Loss Mitigation, loan modification, and foreclosure
activities;
(f) measures to ensure that staff are trained specifically in handling mortgage delinquencies, Loss
Mitigation and loan modifications;
(g) procedures and controls to ensure that a final decision regarding a borrowers loan
modification request (whether on a trial or permanent basis) is made and communicated to the
borrower in writing, including the reason(s) why the borrower did not qualify for the trial or
permanent modification (including the net present value calculations utilized by the Association,
if applicable), by the single point of contact within a reasonable time before any foreclosure sale
occurs;
(h) procedures and controls to ensure that when the borrowers loan has been approved for
modification on a trial or permanent basis that: (i) no foreclosure or legal action predicate to
foreclosure occurs, unless the borrower is deemed in default on the terms of the trial or permanent
modification; and (ii) the single point of contact remains available to the borrower and continues
to be referenced on all written communications with the borrower;
(i) policies and procedures to enable borrowers to make complaints regarding the Loss Mitigation or
loan modification process, denial of modification requests, the foreclosure process, or foreclosure
activities which prevent a borrower from pursuing Loss Mitigation or loan modification options, and
a process for making borrowers aware of the complaint procedures;
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(j) procedures for the prompt review, escalation, and resolution of borrower complaints,
including a process to communicate the results of the review to the borrower on a timely basis;
(k) policies and procedures to ensure that payments are credited in a prompt and timely manner,
that payments, including partial payments, to the extent permissible under the terms of applicable
legal instruments, are applied to scheduled principal, interest, and/or escrow before fees, and
that any misapplication of borrower funds is corrected in a prompt and timely manner;
(l) policies and procedures to ensure that timely information about Loss Mitigation options is sent
to the borrower in the event of a delinquency or default, including plain language notices about
Loss Mitigation, loan modification, and the pendency of foreclosure proceedings; and
(m) policies and procedures to ensure that foreclosure, Loss Mitigation, and loan modification
documents provided to borrowers and third-parties are appropriately maintained and tracked, that
borrowers generally will not be required to resubmit the same documented information that has
already been provided, and that borrowers are notified promptly of the need for additional
information; and
(n) policies and procedures to consider loan modifications or other Loss Mitigation Activities with
respect to junior lien loans owned by the Association, and to factor the risks associated with such
junior lien loans into loan loss reserving practices, where the Association services the associated
first lien mortgage and becomes aware that such first lien mortgage is delinquent or has been
modified. Such policies and procedures shall require the ongoing maintenance of appropriate loss
reserves for junior lien mortgages
Sovereign Bank
Consent Order
Page
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owned by the Association and the charge-off of such junior lien loans in accordance
with Federal Financial Institutions Examination Council (FFIEC) retail credit
classification guidelines.
Effective Date, Incorporation of Stipulation.
22. This Order is effective on the Effective Date as shown on the first page. The Stipulation is
made a part hereof and is incorporated herein by this reference.
Duration.
23. This Order shall remain in effect until terminated, modified, or suspended by written notice of
such action by the OTS, acting by and through its authorized representatives.
Time Calculations.
24. Calculation of time limitations for compliance with the terms of this Order run from the
Effective Date and shall be based on calendar days, unless otherwise noted.
25. The Regional Director, or an OTS authorized representative, may extend any of the deadlines set
forth in the provisions of this Order upon written request by the Association that includes reasons
in support for any such extension. Any OTS extension shall be made in writing.
Submissions and Notices.
26. All submissions, including any reports, to the OTS that are required by or contemplated by this
Order shall be submitted within the specified timeframes.
27. Except as otherwise provided herein, all submissions, requests, communications, consents or
other documents relating to this Order shall be in writing and sent by first class U.S. mail (or by
reputable overnight carrier, electronic facsimile transmission or hand delivery by messenger)
addressed as follows:
Sovereign Bank
Consent Order
Page
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To the OTS1: |
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Regional Director
OTS Northeast Regional Office
Harborside Financial Center Plaza 5, Suite 1600
Jersey City, New Jersey 07311 |
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To the Association: |
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Mr. Jorge Moran
President and Chief Executive Officer
Sovereign Bank
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610-1210 |
Scope of Board Responsibility.
28. In each instance in this Order in which the Board is required to ensure adherence to, and
undertake to perform certain obligations of the Association, it is intended to mean that the Board
shall:
(a) authorize and adopt such actions on behalf of the Association as may be necessary for the
Association to perform its obligations and undertakings under the terms of this Order;
(b) require the timely reporting by Association management of such actions directed by the Board to
be taken under the terms of this Order;
(c) follow-up on any material non-compliance with such actions in a timely and appropriate manner;
and
(d) require corrective action be taken in a timely manner of any material non-compliance with such
actions.
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Following the Transfer Date, see Dodd-Frank Wall Street Reform and Consumer
Protection Act, Pub. Law No. 111-203, § 311, 124 Stat. 1520-21 (2010), all submissions, requests,
communications, consents or other documents relating to this Order shall be directed to the
Comptroller of the Currency, or to the individual, division, or office designated by the
Comptroller of the Currency. |
Sovereign Bank
Consent Order
Page
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No Violations Authorized.
29. Nothing in this Order or the Stipulation shall be construed as allowing the Association, its
Board, officers, or employees to violate any law, rule, or regulation.
IT IS SO ORDERED.
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OFFICE OF THRIFT SUPERVISION |
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By:
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Michael E. Finn |
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Regional Director, Northeast Region |
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Date: See Effective Date on page 1 |
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Sovereign Bank
Consent Order
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UNITED STATES OF AMERICA
Before The
OFFICE OF THRIFT SUPERVISION
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In the Matter of
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Order No.: NE-11-17 |
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SOVEREIGN BANK
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Effective Date: April 13, 2011 |
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Wyomissing, Pennsylvania
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OTS Docket No. 04410
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STIPULATION AND CONSENT TO ISSUANCE OF A CONSENT ORDER
The Office of Thrift Supervision (OTS) intends to impose a Consent Order on Sovereign Bank
(Association) pursuant to 12 U.S.C. § 1818(b), for unsafe or unsound banking practices relating to
mortgage servicing and the initiation and handling of foreclosure proceedings;
The Association, in
the interest of compliance and cooperation, enters into this Stipulation and Consent to Issuance of
a Consent Order (Stipulation) and consents to the issuance of a Consent Order (Order);
In consideration of the above premises, the OTS, through its authorized representative, and the
Association, through its duly elected and acting Board of Directors, stipulate and agree to the
following:
Jurisdiction.
1. The Association is a savings association within the meaning of 12 U.S.C. § 1813(b) and 12
U.S.C. § 1462(4). Accordingly, the Association is an insured depository institution as
that term is defined in 12 U.S.C. § 1813(c).
Sovereign Bank
Stipulation and Consent to Issuance of a Consent Order
Page 1 of 5
2. Pursuant to 12 U.S.C. § 1813(q), the Director of the OTS is the appropriate Federal banking
agency with jurisdiction to maintain an administrative enforcement proceeding against a savings
association. Therefore, the Association is subject to the authority of the OTS to initiate and
maintain an administrative cease and desist proceeding against it pursuant to 12 U.S.C. § 1818(b).
Consent.
3. The Association, without admitting or denying any wrongdoing, consents to the issuance by the
OTS of the accompanying Order. The Association further agrees to comply with the terms of the Order
upon the Effective Date of the Order and stipulates that the Order complies with all requirements
of law.
Finality.
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The Order is issued by the OTS under 12 U.S.C. § 1818(b). Upon the Effective Date, the
Order shall be a final order, effective, and fully enforceable by the OTS under the provisions of
12 U.S.C. § 1818(i). |
Waivers.
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(a) the right to be served with a written notice of the OTSs charges against it as provided
by 12 U.S.C. § 1818(b) and 12 C.F.R. Part 509; |
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(b) the right to an administrative hearing of the OTSs charges as provided by 12 U.S.C. §
1818(b) and 12 C.F.R. Part 509; |
Sovereign Bank
Stipulation and Consent to Issuance of a Consent Order
Page 2 of 5
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(c) the right to seek judicial review of the Order, including, without limitation, any such
right provided by 12 U.S.C. § 1818(h), or otherwise to challenge the validity of the Order;
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(d) any and all claims against the OTS, including its employees and agents, and any other
governmental entity for the award of fees, costs, or expenses related to this OTS
enforcement matter and/or the Order, whether arising under common law, federal statutes, or
otherwise. |
OTS Authority Not Affected.
6. Nothing in this Stipulation or accompanying Order shall inhibit, estop, bar, or otherwise
prevent the OTS from taking any other action affecting the Association if at any time the OTS deems
it appropriate to do so to fulfill the responsibilities placed upon the OTS by law.
Other Governmental Actions Not Affected.
7. The Association acknowledges and agrees that its consent to the issuance of the Order is solely
for the purpose of resolving the matters addressed herein, consistent with Paragraph 6 above, and
does not otherwise release, discharge, compromise, settle, dismiss, resolve, or in any way affect
any actions, charges against, or liability of the Association that arise pursuant to this action or
otherwise, and that may be or have been brought by any governmental entity other than the OTS.
Miscellaneous.
8. The laws of the United States of America shall govern the construction and validity of this
Stipulation and of the Order.
Sovereign Bank
Stipulation and Consent to Issuance of a Consent Order
Page 3 of 5
9. If any provision of this Stipulation and/or the Order is ruled to be invalid, illegal, or
unenforceable by the decision of any Court of competent jurisdiction, the validity, legality, and
enforceability of the remaining provisions hereof shall not in any way be affected or impaired
thereby, unless the Regional Director in his or her sole discretion determines otherwise.
10. All references to the OTS in this Stipulation and the Order shall also mean any of the OTSs
predecessors, successors, and assigns.
11. The section and paragraph headings in this Stipulation and the Order are for convenience only
and shall not affect the interpretation of this Stipulation or the Order.
12. The terms of this Stipulation and of the Order represent the final agreement of the parties
with respect to the subject matters thereof, and constitute the sole agreement of the parties with
respect to such subject matters. Nothing in this Stipulation or the Order, express or implied,
shall give to any person or entity, other than the parties hereto, and their successors hereunder,
any benefit or any legal or equitable right, remedy or claim under this Stipulation or the Order.
13. The Stipulation and Order shall remain in effect until terminated, modified, or suspended in
writing by the OTS, acting through its Regional Director or other authorized representative.
14.For purposes of, and within the meaning of 12 C.F.R. §§ 563.555, 563.560, and 565.4, this
Consent Order shall not be construed to be a cease-and-desist order, consent order, or order,
unless the OTS informs the Association otherwise.
Signature of Directors/Board Resolution.
15. Each Director signing this Stipulation attests that he or she voted in favor of a Board
Resolution authorizing the consent of the Association to the issuance of the Order and the
execution of the Stipulation.
Sovereign Bank
Stipulation and Consent to Issuance of a Consent Order
Page 4 of 5
WHEREFORE, the Association, by its directors, executes this Stipulation.
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SOVEREIGN BANK |
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OFFICE OF THRIFT SUPERVISION |
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Wyomissing, Pennsylvania |
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By:
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By:
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Gabriel Jaramillo, Chairman
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Michael E. Finn
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Regional Director, Northeast Region |
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Date:
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See Effective Date on page 1 |
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John Hamill, Director
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Marian Heard, Director
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Gonzalo De Las Heras, Director
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Nuno Matos, Director
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Alberto Sanchez, Director
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Wolfgang Schoellkopf, Director
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Jorge Moran, Director
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Juan Andres Yanes, Director
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Sovereign Bank
Stipulation and Consent to Issuance of a Consent Order
Page 5 of 5