Laura Marcinek and Michael J. Moore, Bloomberg
JPMorgan Chase & Co. and Bank of America Corp. told regulators they were straining last year to hire and keep enough qualified people who could clear a backlog of foreclosure complaints.
JPMorgan, the largest U.S. bank by assets, vowed to expand training after its review found that the mortgage-servicing unit “struggled to absorb rapid staffing growth and, in many cases, hired representatives with little or no home lending industry experience.” Bank of America, ranked second, said compliance operations were understaffed as of midyear 2011 and that some people lacked the skills or stature needed to do their jobs.
The assessments, released yesterday by the Federal Reserve, were contained in action plans submitted after U.S. banks were ordered last April to clean up foreclosures and mortgage servicing. The order followed a deluge of borrower complaints about lost paperwork, broken promises and missed deadlines that cost some of them their homes. The accord compels the 14 largest servicers to repay homeowners for any losses tied to the errors.
The documents describe how firms will strengthen communications with borrowers, limit certain foreclosures and bolster compliance programs, the Fed said in a statement.
“Examiners found unsafe and unsound processes and practices in residential mortgage loan servicing and foreclosure processing at a number of supervised institutions” during reviews from November 2010 to January 2011, the Fed said. The central bank will “closely follow” implementation of the plans to ensure deficiencies are fixed, it said.
In documents dated Dec. 8, New York-based JPMorgan (JPM) said lack of training contributed to high error rates. The bank started a new training program for its default underwriting staff, and after 2,900 employees attended an average of 8 hours of instruction, the average score on a test improved to 92.2 percent from 81.7 percent.by