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Financial Services Law Insights and Observations

OCC issues cease and desist order and $250 million penalty against national bank

Federal Issues OCC Enforcement Cease and Desist Loss Mitigation

Federal Issues

On September 9, the OCC announced a cease-and-desist and consent order and a $250 million civil money penalty against a national bank for alleged unsafe or unsound practices related to deficiencies in its home lending loss mitigation program and for violations of a 2018 consent order. According to the OCC, the bank, among other things: (i) failed to fully implement and maintain adequate loss mitigation practices; (ii) had mitigation decisioning tools and operational deficiencies that caused errors in loss mitigation processes; (iii) failed to timely detect, prevent, and quantify inaccurate loan modification decisions, due to inadequate controls, insufficient independent oversight, and ineffective governance related to loss mitigation activities; and (iv) had deficient internal auditing, which failed to consider aspects of previously identified issues. The cease and desist order requires the bank, among other things, to establish significant improvements to its loss mitigation program and cease taking on certain new bulk residential mortgage servicing rights from third parties. The September 9 civil money penalty order, which notes that the bank has taken steps to comply with the 2018 consent order but failed to effectively implement corrective actions, requires the bank to pay a civil penalty of $250 million.

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