Donovan, Attorneys General Comment on Settlement Monitor's Reports

by devteam June 20th, 2013 | Share

Housingrnand Urban Development Secretary Shaun Donovan and four staternattorney’s general, John Suthers (Colorado), Pam Bondi (Florida), TomrnMiller (Iowa), and Roy Cooper (North Carolina) held a pressrnconference Wednesday morning to present their views on the NationalrnMortgage Settlement monitor’s reports. The reports, one on each ofrnthe five servicers who were party to the 2012 settlement, werernsubmitted by the monitor, Joseph Smith, to the U.S. District Court inrnWashington, DC.</p

Donovanrncalled the reports a landmark moment in efforts to reform thernservicing industry, the first ever public and transparent report intornhow banks have been treating homeowners. The settlement, he said,rnhad two purposes, the first to speed relief to homeowners and thatrnhas been accomplished with the mailing of the last checksrncompensating borrowers for the problems they had encountered. Thernsecond purpose was to change the way that banks do business.</p

Therngood news about the report, he said, was that there have been changesrnand servicers are improving. The practice of robo-signing has ended,rnbanks are no longer charging a fee for processing modificationrnrequests and the incidence of lost documents has decreased. The badrnnews is that there are still problems but he said all parties arerndetermined to see those ended as well.</p

Bondirnsaid that the problems in the monitor’s report mirror her ownrnconcerns and those she hears from consumers. She has four dedicatedrnemployees who work full time handling customer complaints aboutrnservicing. </p

Wherernbanks have self-reported problems they mirror customer complaints asrnwell. One major problem has been with setting up a single point ofrncontact or borrowers. Donovan said the problem does not seem to be arnlack of those contacts, but rather the quality of the staff personsrnassigned who in some instances have “not been knowledgeable,rnresponsible, or effective.”</p

Thernother problem area has been with the five day deadline servicers havernfor notifying borrowers of incomplete applications. This causesrnfurther delays, increases the borrowers financial problems, and untilrnthe application is deemed complete the rules against dual tracking dornnot fall into place. </p

Cooperrnsaid he is encouraged by what he called significant improvement inrnbank behavior. “Foreclosures were the Wild West before thernsettlement,” he said. “Now there is a new sheriff and we havernspecific rules and special ways to monitor how well they performrnagainst those rules” </p

Thernfive all praised Smith’s performance and his willingness to work withrneach of the attorneys general to work out problems. Donovan pointedrnout that the settlement has built into it the ability to add newrnmetrics against which to measure bank performance as additionalrnproblems emerge. The monitor can also take steps toward enforcementrnwhich go from requiring a corrective action plan to levying $1rnmillion to $5 million fines, to “hauling them back into court.”</p

Suthersrnsaid the attorneys general had learned from the tobacco settlementrnand this time built remedies right into the settlement. Thusrnlitigation appears unlikely, he said, because they already have therntools and the clout for enforcement. Cooper added that even ifrnlitigation became necessary, the system of metrics now in place wouldrnhave the case virtually in place before participants ever entered therncourt.</p

Arnreporter asked Donovan about a statement he had made some time agornabout expanding the settlement to the next five largest servicers. Donovan said he could not comment on that, but reporters shouldrnexpect to hear some news in the next few weeks. He also said thatrnhis department is seeking authority from Congress that would forcernFHA to transfer servicing from some of their servicers which arerndoing a poor job. He pointed out that all servicing will soon comernunder regulation by the Consumer Financial Protection Bureau and theyrnhave been using the settlement as a template for developing theirrnservicing standards.</p

Alsorntoday New York Attorney General Eric T. Schneiderman released arnstatement noting that the Monitor’s report found that Wells FargornBank has failed to comply with the servicing standard setting a timernlimit for notifying borrowers about incomplete modificationrnapplications. He announced he planned to pursue enforcement actionsrnagainst both Well Fargo and Bank of American for these time linerninfractions. The Monitor was unable to assess Bank of American’srncompliance on this issue because the bank failed to report in timernfor the Monitor’s review. </p

Schneiderman said thatrn”Today’s report by the National Mortgage Settlement Monitorrnaffirms that the pattern of violations by Wells Fargo that my officerndocumented in New York is harming homeowners nationwide. Recentrnreports from Bank of America whistle blowers that the bank actuallyrnencouraged improper delays of modification applications are alsorndeeply disturbing, and reinforce our concern that these banks arernflouting their legal obligations under the settlement. These flagrantrnviolations put homeowners in New York and across the nation atrngreater risk of foreclosure. I intend to use every tool available tornmy office to hold these banks accountable under the terms of thernNational Mortgage Settlement.”

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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