Fed Fines Servicer $8.6 Million for Improper Execution of Residential Mortgage-Related Documents

On August 10, 2018, the Federal Reserve Board announced that it had levied an $8.6 million fine against a large mortgage servicer for its “improper execution of residential mortgage-related documents.”

In 2015, the servicer identified and reported various issues with several mortgage-related affidavits regarding the ownership of a lost mortgage note, executed by the servicers’ employees in connection with the servicer’s exit of the servicing business.  The servicer notified the Fed that although the affidavits represented that the assertions in the affidavit were based on the affiant’s “personal knowledge” or review of the relevant books and records, in some cases, the affiant had no such knowledge and had conducted no such review. Additionally, those affidavits were not properly notarized.  The servicer maintains that the affidavits were replaced with properly executed and notarized affidavits before being used.

When this conduct occurred, the servicer was still subject to a consent order with the Fed which required the servicer to remedy deficiencies relating to mortgage servicing. The Fed believed that the deficiencies with the affidavits constituted an “unsafe or unsound banking practice[] within the meaning of section 8 of the Federal Depository Institution Act.  Thus, the Fed levied an $8.6 million assessment of a civil money penalty against the servicer for violation of law.

The consent order is accessible here.