The major banks that signed on to the national mortgage settlement are still not fully complying with the requirements of the deal, but are working on fixing the issues, according to the latest report from the settlement’s monitor.
Joseph A. Smith, Jr., a former banking regulator in charge of reviewing banks’ compliance with the deal, said an independent auditor used 29 different tests to review whether the banks were following the terms they agreed to in the landmark settlement between themselves, several federal regulators and 49 of the 50 states’ attorneys general. The audit reviewed the activities of Bank of America, Chase, Citi, ResCap Parties and Wells Fargo through the first half of the year.
"My testing confirmed six fails in the first quarter of 2013 and one in the second quarter of 2013," Smith said in a statement. "The banks are all taking action to address the failures through detailed corrective action plans."
Problems detailed in the report include failure to properly notify homeowners that they were headed for foreclosure, failure to keep track of documents submitted by homeowners seeking loan modification and short sales and failure to properly notify homeowners about whether they had been granted a modification.
Smith said that, based on the results of the review as well as consultations with attorneys general and counselors for distressed borrowers, he’s adding four additional tests to the review to better track the loan modification process, and make sure that consumers have a single point of contact at the bank and that the statements they receive are accurate. The new test will be added to the next round of compliance testing, set for early next year. Bank of America and Citi each failed three tests, Chase and Wells Fargo two.
"The banks still have additional work to do in their efforts to fully comply with the National Mortgage Settlement and to regain their customers’ trust; however, I am hopeful that the corrective action plans and the new metrics will result in meaningful improvement in how the servicers treat their customers," Smith said in a statement.
