Banks Outsource Mortgage, Foreclosure Work to India
U.S. banks are outsourcing mortgage and foreclosure work to India to keep costs down and keep up with growing regulatory demands created since the financial crisis of 2008.
The banks are using technology firms on the sub-continent to supplement some of the needed work rather than hire more people in the United States, The Wall Street Journal reports.
But regulators worry that there is poor supervision by banks of third-party vendors. And consumer advocates fear that in the long run, it will be harder for banks to be sure that the work is done properly.
“The lack of oversight so far away may be too much for these banks to handle, considering how badly they’ve handled overseeing their own staff,” said Ira Rheingold, executive director of the National Association of Consumer Advocates.
After 2008, the U.S. government demanded changes to every aspect of the mortgage and foreclosure process. Banks are outsourcing to meet the changing rules and demands.
The Indian companies say that their role won’t be giving final approval for mortgages or foreclosures.They will help the banks by preparing the necessary documents that the banks will have to sign off on.
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Plaintiffs Commerce Bank, Cedar Hill Capital Partners LLC, Citizens Bank & Trust Co., Pinnacle Bank of South Carolina and Wells River Savings Bank claim they collectively invested in 28 residential mortgage-backed securities, for which U.S. Bank was the trustee, and suffered massive losses…
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