Several of the banks involved in the February 2012 $25 billion settlement with
state and federal government agencies "still have additional work to do in
their efforts to fully comply" with its terms, Joseph A. Smith, Jr., the
settlement's monitor said today, "and to regain their customers' trust."
Smith released the results of compliance tests given to the banks during the
first and second quarters of 2013 as part of five compliance reports he filed
with the U.S. District Court. There were a total of 7 failures noted in the
report, five of which were repeat infractions.
"My team and I tested the banks' compliance with the National Mortgage
Settlement's original 29 metrics for the first half of this year," said Smith.
"My testing confirmed six fails in the first quarter of 2013 and one in the
second quarter of 2013. The banks 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. 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. Smith said he was hopeful that the corrective
action plans and the new metrics will result in meaningful improvement in how the
servicers treat their customers.
Bank of America failed to achieve
a satisfactory error rate of 5 percent on each of three metrics; Motion for
Relief from Stay, an 8.4 percent rate; Pre-Foreclosure initiation, 17.8 error;
and Loan modification document collection timeline compliance, 10.16 percent. JP Morgan Chase failed on two metrics, Pre-Foreclosure
initiation, 5.6 percent and Loan Modification Decision Notification Timeline
Compliance, 19.3 percent. Citi also
failed the Pre-Foreclosure Initiation with an error rate of 7.4 percent and Short
sale Document Collection Timeline Compliance, 25.3 percent.
Wells Fargo had errors in the
first two reporting periods but was in compliance in the most recent two
period. Because of loans transfers Ally/GMAC
(now Res-Cap) was excused from monitoring during the recent periods. One part of its portfolio which was transferred
to Greentree will be subjected to testing in the future.
Smith continued, "My colleagues and I are currently working to verify four
banks' consumer relief activities and I plan to file my final set of reports to
the Court detailing my findings early next year. My compliance testing and
reporting will continue, and I look forward to sharing my findings with the
Court and the public as this important process moves forward." Auditors spent 37,900 testing the banks,
Housing and Urban Development
Secretary Shaun Donovan released the following statement regarding Smith's
"The Independent Monitor's on-going
work is playing a vital role in our work to reform the servicing industry and
hold it accountable for how they treat homeowners. 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. 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."