Regulators Pressure Mortgage Servicers

State attorneys general and federal agencies are pressing numerous banks and other firms to settle allegations of poor treatment of mortgage customers, according to an official involved in the talks.

The potential settlements, which could run into the hundreds of millions of dollars, stem from continuing investigations of firms that handle billing and payments for borrowers, said Patrick Madigan, assistant attorney general for Iowa and leader of a committee that monitors major banks' compliance with a $25 billion national settlement reached in 2012 that established new mortgage-servicing standards.

The scrutiny shows that regulators remain concerned about problems that some homeowners continue to have with their mortgage-service providers.

"We anticipate that there will be additional settlements with other servicers," Mr. Madigan said in an interview this week. He declined to say which companies are being investigated and the other regulators involved, but said that in some cases, the settlements could include state and federal agencies.

The U.S. Consumer Financial Protection Bureau's deputy director, Steve Antonakes, said in a speech Wednesday that he is "deeply disappointed by the lack of progress the mortgage-servicing industry has made" in the treatment of customers. Meanwhile, the top Democrat on the House Financial Services Committee, Rep. Maxine Waters of California, wrote a letter to regulators asking them to scrutinize nonbank mortgage servicers that have taken business from banks.

Ocwen Financial Corp. OCN -1.20% , a fast-growing nonbank mortgage servicer, agreed in December to a $2.1 billion settlement with the CFPB and 49 states over allegations it flouted consumer financial laws in interactions with borrowers. As a result of the deal, Ocwen will become subject to servicing standards that were ushered in by the 2012 settlement.

Atlanta-based Ocwen is among a cadre of nonbank firms that have benefited from moves by banks to scale back in the servicing industry in light of increased regulatory scrutiny and higher capital requirements that are expected to make the business more costly for banks. The firm more than doubled the size of its mortgage-servicing portfolio last year, making it the fourth-largest servicer, according to industry newsletter Inside Mortgage Finance.

Other banks are moving toward finalizing settlements. SunTrust Banks Inc., STI -0.52% based in Atlanta, announced in October it had reached agreements in principle with the U.S. government that resolved, among other things, claims under the national mortgage settlement.

U.S. Bancorp USB -0.71% has also disclosed in past filings that the bank has had discussions with regulators about joining the national mortgage settlement.

Representatives for SunTrust and U.S. Bancorp declined to comment.

Additional settlements would be designed to address concerns that homeowners are continuing to face delays in obtaining loan modifications, lost paperwork and difficulty reaching appropriate customer-service representatives.

Mark McGinnis, a Carrollton, Texas, resident, said he began having problems with his mortgage shortly after the loan servicing on the mortgage was transferred to Ocwen from Bank of America Corp. BAC -0.95% late last year.

Ocwen recently sent Mr. McGinnis a notice that it would be increasing his monthly payments beginning in March because the company paid his annual property-tax bill, he said. Ocwen's payment resulted in a negative balance in Mr. McGinnis's escrow account, which is set up to pay for taxes and insurance, he added. But Bank ofAmerica had already paid the tax bill from funds set aside in the escrow account before it transferred loan servicing to Ocwen, Mr. McGinnis said. A spokeswoman for Ocwen didn't have an immediate comment.

Earlier this month, New York Superintendent of Financial Services Benjamin Lawsky raised concerns about how quickly nonbank servicers have grown, saying they may not be fully equipped to handle the number of new customers they have gained as a result of such deals. Mr. Lawsky said he was halting a deal in which Wells Fargo WFC -0.55% & Co., the country's largest mortgage servicer, agreed to sell to Ocwen the rights to service $39 billion of loans.

In his speech Wednesday, the CFPB's Mr. Antonakes said the agency will be closely scrutinizing the transfer of servicing rights, noting that the agency mandates the transfer of all consumer information.