Abuses by some of the country’s biggest mortgage servicers “shamefully endure,” the head of the Department of Housing and Urban Development said in response to a progress report on the national servicer settlement that found fewer than 10 failed servicing standards out of more than 300. He put the firms on notice.
The servicer settlement between 49 state attorneys general and Bank of America Corp, JPMorgan Chase & Co., Wells Fargo & Co., Citibank and Ally Financial was reached in February 2011.
Former North Carolina banking commissioner Joseph A. Smith Jr. was appointed in February 2012 by the Obama administration to monitor the settlement. Smith reported last month that more than $50.6 billion in relief has been provided by the servicers.
But despite the progress on providing relief, the five mortgage firms failed eight of the servicing standards established in the settlement, HUD announced.
HUD Secretary Shaun Donovan acknowledged that servicers are no longer charging fees to distressed borrowers for processing modification requests, and the practice of robo-signing has ended.
“Unfortunately, other abuses shamefully endure,” Donovan said in the statement. “Most notably, these financial institutions consistently fail to send notices and communicate decisions to stakeholders in a timely manner.
“This is unacceptable.”
Donovan warned the five companies that they are on notice that the problems must be corrected.
If servicers don’t pass all of the 304 standards, then “the Obama administration, along with the bipartisan group of 49 state attorneys general we partnered with on this effort, will fine them up to $5 million for each failure or haul them back into court.”
Donovan is holding a conference call this morning with attorneys general from Colorado, Florida, Iowa and North Carolina.