(November 18, 2010) — Trustees of New York City’s pension funds — which consists of five retirement systems with a combined $106 billion in assets — have filed shareholder proposals at JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, alleging that they could be causing unnecessary foreclosures.
According to the release by the New York City comptroller, the four banks are the largest mortgage servicers in the country representing 56% of the nation’s $10.64 trillion mortgage industry.
“We raised concerns with the banks in July that misaligned incentives, inferior customer service and repeated requests for paperwork were undermining the loan modification process and leading to unnecessary foreclosures for homeowners,” Comptroller John Liu said in a release. “The magnitude of these problems suggests a larger systemic failure with consequences that have not only adversely affected homeowners and become a drain on regional economies, but also left shareholders vulnerable to substantial liabilities,” he stated.
The proposal, which will appear on proxy statements to be voted on between April and May of next year, calls for the Audit Committee of the Board of Directors at each bank to conduct an independent review of the bank’s internal controls related to loan modifications, foreclosures and securitizations and to report their findings to shareholders by September 2011.
“Directors are elected by shareholders and as shareholders we intend to hold them accountable,” Comptroller Liu continued.
Attorney generals in all 50 states have reportedly launched investigations into how large banks handle foreclosures.
To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742