WASHINGTON--The Federal Reserve Tuesday imposed a $3.2 million
penalty on MetLife Inc. (MET), saying the insurer hadn't adequately
overseen mortgage loan servicing and foreclosure processing
operations at its subsidiary bank.
"The oversight deficiencies represented unsafe and unsound
practices at MetLife," the Fed said.
The Fed announced the action as MetLife prepares to sell off
banking operations. The company, which became a bank holding
company more than a decade ago in order to sell savings products,
has been working to escape further Fed supervision.
"Because that sale is subject to formal approval by regulators
other than the [Fed] and would result in MetLife no longer being a
bank holding company, the Board believes it is appropriate to act
at this time," the Fed said.
MetLife earlier this month posted a second-quarter profit of
$2.3 billion, up from $1.1 billion a year earlier.
The nation's mortgage-servicing companies have been under
federal and state scrutiny since revelations emerged in the fall of
2010 that banks used "robo-signers" to file foreclosure documents
without personally verifying their contents.
The Fed and the Office of the Comptroller of the Currency in the
spring of 2011 ordered 14 large mortgage-servicing companies to
hire independent consultants to review and fix banks' foreclosure
practices. Consumers who suffered "financial injury" could be in
line for compensation after the consultant reviews the homeowners'
case.
The Fed said its order against MetLife is similar to a $25
billion settlement announced in February with the nation's five
largest mortgage servicing firms: Bank of America Corp. (BAC),
Wells Fargo & Co. (WFC), J.P. Morgan Chase & Co. (JPM),
Citigroup Inc. (C) and Ally Financial Inc. As part of the
state-federal settlement, the Fed announced $766.5 million in fines
against the five large banks.
Of the remaining institutions, HSBC Holdings PLC's (HBC,
HSBA.LN, 0005.HK) U.S. bank division, SunTrust Banks Inc., U.S.
Bancorp (USB), PNC Financial Services Group Inc. (PNC), EverBank
Financial (EVER), OneWest Bank and Goldman Sachs Group Inc. (GS)
also are likely to face sanctions.
The Fed "continues to believe that monetary sanctions in the
remaining cases are appropriate and plans to announce monetary
penalties against those organizations," the Fed said Tuesday.
-Alan Zibel contributed to this article.
Write to Jeffrey Sparshott at jeffrey.sparshott@dowjones.com
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