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Wells Fargo and Citigroup have temporarily halted foreclosure sales in several states, taking precautions after a federal regulator released new guidance on minimum standards for foreclosure sales.
The Office of the Comptroller of the Currency (OCC) recently released the new standards. The OCC’s directive mostly consists of 13 questions banks need to ask themselves before selling a home in foreclosure, such as whether the borrower is protected from foreclosure by bankruptcy or if the borrower is in an active loan modification plan.
JPMorgan had also mostly stopped its foreclosure sales after the OCC’s standards were released, but has since resumed sales.
Wells Fargo, the nation’s largest mortgage originator, has seen a dramatic drop in foreclosure sales while significantly decreasing the number of sales it’s processing. For example, foreclosure sales by Wells Fargo in California, Nevada, Arizona, Oregon, and Washington plummeted from 349 a day in April to less than 10 a day, according to Foreclosure Radar, a real estate monitoring firm based in California.
“Wells Fargo has temporarily postponed certain foreclosure sales while we study the revised guidance from the OCC,” a Wells Fargo spokeswoman confirmed for American Banker. Citibank officials also confirmed the reason behind their halt in sales was to carefully review the new guidance.
“The OCC did not direct a slowdown or pausing,” says OCC spokesman Bryan Hubbard. “However, if servicers are not certain they are meeting these standards, pausing foreclosures is a responsible and productive step.”
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