Servicers Struggling with National Mortgage Settlement Compliance Monitor Says

The Monitor of the National Mortgage Settlement submitted separaternreports today to the U.S. District Court for the District of Columbiarndetailing the compliance efforts of each of the five bank servicersrninvolved in the settlement. Monitor Joseph A. Smith reported therernwere three “fails” of testing metrics in 2012 and five more thusrnfar this year.</p

The five banks, Bank of America, JP Morgan Chase, Citi, ResCaprnParties, and Wells Fargo, appear to have complied with all of thernfinancial terms of the settlement reached in 2012 between the banksrnand 49 of the states’ attorneys general as well as several federalrnagencies. However, their compliance with agreed-upon measures tornimprove their handling of delinquent mortgages and customer servicernstill need improvement. </p

In a press release about the compliance reports Smith said, “Overrnthe past six months my team and I have tested the banks’rncompliance. My testing through the end of last year resulted inrnthree testing fails, and I can disclose five additional fails inrn2013. These results demonstrate that the Settlement is allowing us tornuncover areas in which more work needs to be done. The banks are nowrnworking to correct these errors and will be tested again to determinerntheir level of improvement. </p

“These findings, combined with the complaints I have heard fromrnattorneys general, counselors and distressed borrowers, tell me therernis still work to be done. While I believe distressed servicing isrnbetter this year than it was last, it is not yet where it needs tornbe. My team and I will continue our efforts to improve it. </p

The headlines about the report in most media indicated majorrnfailures. However each failure was of a single metric such as failurernto remove forced placed insurance in a timely manner or continuing torncharge a modification fee. The failures flagged by the monitorrnappear to be principally with the single source of contact servicersrnare supposed to provide to distressed borrowers, bill and statementrninaccuracies, and issues with the loan modification process such asrnfailure to meet deadlines to informing customers about missingrndocumentation. </p

Smith said, “While there is more work to be done, I remainrnconfident that the Settlement is helping to improve the mortgagernfinance system. I hope this report will help contribute to thernconversation on this topic, and I look forward to making additionalrninformation public as this process continues.” </p

Four attorneys general who were active in settlement negotiationsrnand Housing and Urban Development Secretary Shaun Donovan held arnpress conference regarding the release of the five reports. Information from that conference will be reported separately.

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