Housing and Urban Development Secretary Shaun Donovan and four state attorney's general, John Suthers (Colorado), Pam Bondi (Florida), Tom Miller (Iowa), and Roy Cooper (North Carolina) held a press conference Wednesday morning to present their views on the National Mortgage Settlement monitor's reports. The reports, one on each of the five servicers who were party to the 2012 settlement, were submitted by the monitor, Joseph Smith, to the U.S. District Court in Washington, DC.

Donovan called the reports a landmark moment in efforts to reform the servicing industry, the first ever public and transparent report into how banks have been treating homeowners. The settlement, he said, had two purposes, the first to speed relief to homeowners and that has been accomplished with the mailing of the last checks compensating borrowers for the problems they had encountered. The second purpose was to change the way that banks do business.

The good news about the report, he said, was that there have been changes and servicers are improving. The practice of robo-signing has ended, banks are no longer charging a fee for processing modification requests and the incidence of lost documents has decreased. The bad news is that there are still problems but he said all parties are determined to see those ended as well.

Bondi said that the problems in the monitor's report mirror her own concerns and those she hears from consumers. She has four dedicated employees who work full time handling customer complaints about servicing.

Where banks have self-reported problems they mirror customer complaints as well. One major problem has been with setting up a single point of contact or borrowers. Donovan said the problem does not seem to be a lack of those contacts, but rather the quality of the staff persons assigned who in some instances have "not been knowledgeable, responsible, or effective."

The other problem area has been with the five day deadline servicers have for notifying borrowers of incomplete applications. This causes further delays, increases the borrowers financial problems, and until the application is deemed complete the rules against dual tracking do not fall into place.

Cooper said he is encouraged by what he called significant improvement in bank behavior. "Foreclosures were the Wild West before the settlement," he said. "Now there is a new sheriff and we have specific rules and special ways to monitor how well they perform against those rules"

The five all praised Smith's performance and his willingness to work with each of the attorneys general to work out problems. Donovan pointed out that the settlement has built into it the ability to add new metrics against which to measure bank performance as additional problems emerge. The monitor can also take steps toward enforcement which go from requiring a corrective action plan to levying $1 million to $5 million fines, to "hauling them back into court."

Suthers said the attorneys general had learned from the tobacco settlement and this time built remedies right into the settlement. Thus litigation appears unlikely, he said, because they already have the tools and the clout for enforcement. Cooper added that even if litigation became necessary, the system of metrics now in place would have the case virtually in place before participants ever entered the court.

A reporter asked Donovan about a statement he had made some time ago about expanding the settlement to the next five largest servicers. Donovan said he could not comment on that, but reporters should expect to hear some news in the next few weeks. He also said that his department is seeking authority from Congress that would force FHA to transfer servicing from some of their servicers which are doing a poor job. He pointed out that all servicing will soon come under regulation by the Consumer Financial Protection Bureau and they have been using the settlement as a template for developing their servicing standards.

Also today New York Attorney General Eric T. Schneiderman released a statement noting that the Monitor's report found that Wells Fargo Bank has failed to comply with the servicing standard setting a time limit for notifying borrowers about incomplete modification applications. He announced he planned to pursue enforcement actions against both Well Fargo and Bank of American for these time line infractions. The Monitor was unable to assess Bank of American's compliance on this issue because the bank failed to report in time for the Monitor's review.

Schneiderman said that "Today's report by the National Mortgage Settlement Monitor affirms that the pattern of violations by Wells Fargo that my office documented in New York is harming homeowners nationwide. Recent reports from Bank of America whistle blowers that the bank actually encouraged improper delays of modification applications are also deeply disturbing, and reinforce our concern that these banks are flouting their legal obligations under the settlement. These flagrant violations put homeowners in New York and across the nation at greater risk of foreclosure. I intend to use every tool available to my office to hold these banks accountable under the terms of the National Mortgage Settlement."