A review of how mortgage servicers have complied with requirements of last year’s massive settlement found that they came up short in several areas — though they are addressing the shortcomings.
Reports on compliance with the national mortgage servicing settlement have been filed in U.S. District Court for the District of Columbia.
The reports cover the first-half 2013 and detail the results of tests to determine how the five servicers — Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., firms related to Residential Capital LLC, and Wells Fargo & Co. — have complied with the settlement rules.
A summary of the reports was issued by Joseph A. Smith Jr., who was appointed by President Obama to monitor the $25 billion settlement originally announced in February 2012.
Out of 29 metrics originally outlined in the settlement, Smith identified seven fails — though he noted that the servicers are all taking action to address the failures through detailed corrective action plans.
“The results I’ve discovered, along with the discussions I’ve had with attorneys general, counselors, advocates and distressed borrowers over the past year, have shaped four additional metrics, or tests, I recently created to ensure the banks’ compliance,” Smith said in a statement Wednesday. “These metrics address consumer concerns relating to the loan modification process, single points of contact and billing statement accuracy. I will begin testing these new metrics next year.”
He expressed optimism that the servicers’ action plans and the new metrics will lead to meaningful improvement in how borrowers are treated.
Department of Housing and Urban Development Secretary Shawn Donovan issued a statement indicating that five of the metrics services failed were mentioned in Smith’s prior reports.
“While today’s report shows the National Mortgage Settlement’s compliance structure is identifying abuses and rectifying problems for consumers, it’s clear that these financial institutions still need to improve in a number of areas,” Donovan said. “In particular, the banks must do a better job sending notices and communicating with struggling homeowners in a timely manner. In the next set of reports we expect that they will have rectified these problems or they will face severe penalties.”
