The Federal Reserve Board (FRB) in the US has imposed a monetary penalty of $3.2m against MetLife, claiming that the US underwriter failed to manage its subsidiary bank's mortgage loan servicing and foreclosure processing operations.
The US apex financial regulator accused the insurer for its unsafe and unsound practices, and added that corrective measures were required by a formal enforcement action issued against the company on 13 April 2011.
FRB has been putting many firms under its radar for corrupt foreclosure practices since the autumn of 2010 amid clear evidences that banks used "robo-signers" to file foreclosure documents without personally verifying their contents.
The financial regulator said that the underwriter committed unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing from November 2010 to January 2011.
The Board's assessment order against MetLife contains similar terms to those in the assessment orders issued by the Board in February 2012, although MetLife was not a party to the settlement in February.
FRB's monetary sanctions against MetLife contemplate the possibility of a similar settlement under which MetLife agrees to provide borrower assistance or remediation.
MetLife enters into a settlement with the attorneys general and Justice Department similar to the February agreement, and agreed that by 30 June 2013, MetLife will pay the Board the amount not expended by MetLife within two years of its agreement for borrower assistance or remediation in compliance with the settlement agreement.
If the underwriter fails to reach an agreement, it will have to reimburse the Board the portion of the $3.2m that it has not expended by 6 August 2014, on funding to nonprofit organizations for counseling to borrowers who are facing default or foreclosure, or in connection with the independent foreclosure reviews required by the April 2011 enforcement actions.
The FRB said that it decided to fine the MetLife, as it is mulling to spin off and sell its banking arm, noting that such a sale would be approved by regulators other than the federal regulators, and would remove MetLife from Fed oversight as a banking regulator.
