The nation’s 16 largest mortgage servicers and lenders were given an extra month to provide federal regulators with a plan on how they will address problems with their foreclosure and loan modification procedures.

In April, federal regulators gave servicers and lenders 45 days to deliver plans--which would have been on Monday--but that timeline has been extended 30 days, the Fed says.

Federal regulators have asked servicers to identify and reimburse borrowers who have been wrongly foreclosed upon. They originally provided banks with the 45-day timeline to hire auditors and show how many home owners from 2009 and 2010 could have avoided foreclosure with workout plans. The servicers are to submit a plan to show how they plan to fix their foreclosure practices and prevent future problems.

The agreement also called on servicers to provide a single point of contact for delinquent borrowers to help ease the loan modification process, as well as banned servicers from negotiating loan modifications with borrowers while simultaneously working to foreclose on their properties.

The extended deadline will also provide more time to state and federal officials as they continue to try to reach a broad settlement with servicers and lenders over allegations of foreclosure practice abuses. The ongoing settlement talks may include as much as a $20 billion fine to banks as well as require them to cut loan balances of some borrowers and revamp their mortgage servicing standards.

The banks involved include Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial, SunTrust, HSBC, among others.

Source: “Government Extends Deadline for Banks to Comply with Foreclosure Review Mandate,” Associated Press (June 13, 2011) and “Mortgage Servicers Get More Time to Submit Foreclosure Plans,” The Washington Post (June 14, 2011) [Unavailable online.]