U.S. Bancorp Announces $80 Million Foreclosure Settlement

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U.S. Bancorp Issues Statement in Response to Independent Foreclosure Review Settlement Agreement

MINNEAPOLIS -- (BUSINESS WIRE) -- Jan. 7, 2013 -- U.S. Bancorp issued the following statement in response to this morning’s announcement from the OCC and the Federal Reserve regarding the Independent Foreclosure Review settlement agreement:

U.S. Bancorp has long been committed to sound modification and foreclosure practices. We have always regarded foreclosure as a last resort, and have helped thousands of borrowers over the past several years to stay in their homes through a variety of modification programs.

U.S. Bancorp’s share of the settlement will include a cash payment of $80 million (pretax), which is expected to reduce fourth-quarter 2012 earnings per share by approximately 3 cents. In addition, the settlement includes a commitment to provide approximately $128 million of other mortgage assistance, such as loan modifications, which is covered by existing loan loss reserves.

U.S. Bancorp Issues Statement in Response to Independent Foreclosure Review Settlement Agreement

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OCC: Mortgage Performance Deteriorates from Prior Quarter, Improves from Year Ago

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OCC News Release: Mortgage Performance Improved from a Year Ago, OCC Report Says

(OCC; September 27, 2012)

WASHINGTON — The overall quality of first-lien mortgages serviced by large national and federal savings banks improved from the same period a year ago but showed seasonal decline from the prior quarter, according to a report released today by the Office of the Comptroller of the Currency (OCC).

The OCC Mortgage Metrics Report for the Second Quarter of 2012 showed the percentage of mortgages that were current and performing at the end of the quarter was 88.7 percent, compared with 88.9 percent the prior quarter and 88.1 percent a year earlier. The percentage of mortgages that were 30 to 59 days past due was 2.8 percent, up 12.1 percent from the prior quarter but down 7.5 percent from a year ago. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 or more days past due—fell to their lowest level in three years. The percentage of mortgages that were seriously delinquent was 4.4 percent, down 0.8 percent from the prior quarter and 9.2 percent from a year earlier.

Several factors contribute to the year-over-year improvement, including strengthening economic conditions, servicing transfers, and the ongoing effects of both home retention loan modification programs as well as home forfeiture actions.

Servicers continued to emphasize alternatives to foreclosure during the quarter. Servicers implemented 416,036 new home retention actions during the quarter, while starting 302,636 new foreclosures. The number of home retention actions implemented by servicers increased 17.9 percent from the prior quarter but decreased 8.8 percent from a year earlier.

Other key findings included:

* On average, the modifications implemented in the second quarter of 2012 reduced borrowers’ monthly principal and interest payments by 24.6 percent, or $381. Modifications made under the Home Affordable Modification Program (HAMP) reduced payments by 35.3 percent on average, or $576.

* Modifications that reduced payments by 10 percent or more performed better than those that reduced payments by less. At the end of the second quarter of 2012, 55.4 percent of modifications made since the beginning of 2008 that reduced payments by 10 percent or more were current and performing, compared with 34.3 percent of modifications made during that time that reduced payments by less than 10 percent.

* Since the beginning of 2008, servicers have modified 2,645,290 mortgages through the end of the first quarter of 2012. At the end of the second quarter of 2012, 48.6 percent of those modifications remained current or had been paid off. Another 7.6 percent were 30 to 59 days delinquent, and 14.9 percent were seriously delinquent. There were 10.5 percent in the process of foreclosure and 6.5 percent had completed the foreclosure process.

The report covers 30.5 million first-lien mortgages worth $5.2 trillion in outstanding balances, about 60 percent of all first-lien mortgages in the United States. The complete report can be downloaded from the OCC Web site, www.occ.gov.

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OCC Penalizes American Express for Deceptive Debt Collection Practices

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OCC Assesses Civil Money Penalty Against American Express, Orders $6 Million in Restitution

(OCC; October 1, 2012)

WASHINGTON - The Office of the Comptroller of the Currency (OCC) today announced a $500,000 civil money penalty against American Express Bank, FSB, for violations of section 5 of the Federal Trade Commission Act and ordered the bank to provide approximately $6 million in restitution to an estimated 17,000 affected customers.

The OCC also ordered the bank to establish an effective vendor management program to oversee the provision of products to the bank’s customers.

The OCC based its penalty on the bank’s failure to properly manage vendors who engaged in deceptive debt collection practices in violation of the statute. The estimated $6 million in restitution will be paid to compensate consumers for the injury suffered as the result of these violations.

The OCC is taking these actions in coordination with separate actions by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau (CFPB), and Federal Deposit Insurance Corporation against American Express companies under their jurisdictions. In addition to the penalty assessed by the OCC against American Express Bank, FSB, the CFPB is assessing a $1.2 million penalty which covers both violations of the Truth in Lending Act, for which the bureau has exclusive enforcement authority, and the deceptive debt collection practices addressed by the OCC penalty and order.

Restitution payments made by the bank pursuant to the OCC’s order will also satisfy identical payment obligations required by the CFPB. The civil money penalties assessed by the OCC are payable to the U.S. Treasury.

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Bank Loan Underwriting Standards Largely Unchanged

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Office  of the Comptroller of the Currency

OCC News Release: OCC Survey Showed Banks' Underwriting Standards Largely Unchanged

WASHINGTON — The Office of the Comptroller of the Currency’s 18th Annual Survey of Credit Underwriting Practices, released today, shows that underwriting standards remained largely unchanged from last year, although some easing was noted in select commercial and retail products.

Banks continued to react to changing economic conditions, competition, and ongoing portfolio risk. Examiners reported banks that eased standards generally did so in response to changes in economic outlook, competitive environment, and the bank’s risk appetite including a desire for growth. Large banks, as a group, reported the highest share of eased underwriting standards. Loan portfolios that experienced the most underwriting easing included indirect consumer, credit cards, large corporate, asset-based lending, and leveraged loans. Loan portfolios that experienced the most underwriting tightening included high loan-to-value home equity, international, construction, and residential real estate loans.

“This year’s survey showed the continued normal progression toward stable or easing underwriting standards as the economic environment stabilizes,” said John Lyons, Senior Deputy Comptroller and Chief National Bank Examiner. He went on to indicate “examiners will be focusing on underwriting standards as banks ease standards to improve margins and compete for limited good loans.”

Banks should ensure appropriate attention to underwriting, loan structures, and loan administration as competition and the anxiety for earnings can lead to heightened risk. This is especially notable for loan products that have already seen easing such as leveraged lending, asset-based lending, indirect consumer lending, and credit cards.

The survey is a compilation of examiner observations and assessments of credit underwriting standards. The 2012 survey included 87 of the largest national banks and federal savings associations and covers the 12-month period ending February 29, 2012. The aggregate total of loans was $4.6 trillion as of December 31, 2011, which represents approximately 91 percent of total loans in the national bank and federal savings association system.

Survey of Credit Underwriting Practices

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