Big Banks Post Substantial Settlement Compliance Errors

Several of the banks involved in the February 2012 $25 billion settlement withrnstate and federal government agencies “still have additional work to do inrntheir efforts to fully comply” with its terms, Joseph A. Smith, Jr., thernsettlement’s monitor said today, “and to regain their customers’ trust.”   </p

Smith released the results of compliance tests given to the banks during thernfirst and second quarters of 2013 as part of five compliance reports he filedrnwith the U.S. District Court. There were a total of 7 failures noted in thernreport, five of which were repeat infractions.</p

“My team and I tested the banks’ compliance with the National MortgagernSettlement’s original 29 metrics for the first half of this year,” said Smith.rn”My testing confirmed six fails in the first quarter of 2013 and one in thernsecond quarter of 2013. The banks are all taking action to address the failuresrnthrough detailed corrective action plans.</p

“The results I’ve discovered, along with the discussions I’ve had withrnattorneys general, counselors, advocates and distressed borrowers over the pastrnyear, have shaped four additional metrics, or tests, I recently created tornensure the banks’ compliance. These metrics address consumer concerns relatingrnto the loan modification process, single points of contact and billingrnstatement accuracy. I will begin testing these new metrics next year.  Smith said he was hopeful that the correctivernaction plans and the new metrics will result in meaningful improvement in how thernservicers treat their customers.</p

Bank of America failed to achieverna satisfactory error rate of 5 percent on each of three metrics; Motion forrnRelief from Stay, an 8.4 percent rate; Pre-Foreclosure initiation, 17.8 error;rnand Loan modification document collection timeline compliance, 10.16 percent.  JP Morgan Chase failed on two metrics, Pre-Foreclosurerninitiation, 5.6 percent and Loan Modification Decision Notification TimelinernCompliance, 19.3 percent.  Citi alsornfailed the Pre-Foreclosure Initiation with an error rate of 7.4 percent and Shortrnsale Document Collection Timeline Compliance, 25.3 percent.  </p

Wells Fargo had errors in thernfirst two reporting periods but was in compliance in the most recent twornperiod.  Because of loans transfers Ally/GMACrn(now Res-Cap) was excused from monitoring during the recent periods.  One part of its portfolio which was transferredrnto Greentree will be subjected to testing in the future.  </p

Smith continued, “My colleagues and I are currently working to verify fourrnbanks’ consumer relief activities and I plan to file my final set of reports tornthe Court detailing my findings early next year. My compliance testing andrnreporting will continue, and I look forward to sharing my findings with thernCourt and the public as this important process moves forward.”  Auditors spent 37,900 testing the banks,rnSmith said.</p

Housing and Urban DevelopmentrnSecretary Shaun Donovan released the following statement regarding Smith’srnreport:</p

“The Independent Monitor’s on-goingrnwork is playing a vital role in our work to reform the servicing industry andrnhold it accountable for how they treat homeowners. While today’s report showsrnthe National Mortgage Settlement’s compliance structure is identifying abusesrnand rectifying problems for consumers, it’s clear that these financialrninstitutions still need to improve in a number of areas. In particular, thernbanks must do a better job sending notices and communicating with strugglingrnhomeowners in a timely manner. In the next set of reports we expect that theyrnwill have rectified these problems or they will face severe penalties.”

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