Three of the largest U.S. mortgage servicers have rectified
failures to comply with parts of a $25 billion landmark national
mortgage settlement, the watchdog overseeing the process said
Wednesday.
Bank of America Corp., J.P. Morgan Chase & Co. and Citigroup
Inc. passed all tests reviewing their compliance with the National
Mortgage Settlement during the third and fourth quarters of last
year, said the monitor for the settlement, Joseph A. Smith.
In December, Mr. Smith had released a report saying those banks
had each failed at least two of 29 metrics that measure standards
over how to provide relief to homeowners under threat of
foreclosure. In total, the three banks failed on seven metrics in
the first half of 2013.
The latest report said mortgage servicer Ocwen Financial Corp.
also fully implemented all the servicing standards for the portion
of the portfolio it acquired from Residential Capital LLC, or
ResCap. The report said Wells Fargo Corp. had passed all metrics on
which it was tested. The San Francisco lender was deemed to have
failed on one metric tied to its loan modification program in a
report released in June of last year.
"Bank of America continues to work hard to ensure that our
customers in need of assistance know they are being treated fairly
and receiving timely and accurate decisions," said a spokesman for
Bank of America in an emailed statement.
"We've worked very hard to meet the servicing standards and have
helped more than one million families avoid foreclosure over the
last five years," said a spokeswoman for J.P. Morgan.
"We are very pleased that the Monitor has reported that Wells
Fargo passed all of the metrics in place to assess our performance
against the National Servicing Standards during the most recent
testing period," said a spokesman for Wells Fargo. "The Monitor
also has confirmed that we successfully resolved issues with one
metric that we missed by a small margin during a single reporting
period in 2012, which clearly demonstrates that effectiveness of
the process established under the terms of the settlement."
"Citi remains committed to fulfilling the terms of the National
Mortgage Settlement for the best interests of our clients, and we
are pleased with the results announced in today's report. One of
our top ongoing priorities is to help distressed borrowers in their
efforts to avoid potential foreclosure or explore other appropriate
solutions to assist them," said a spokesman for Citigroup.
A representative of Ocwen didn't immediately respond to an
emailed request for comment.
The report said Green Tree Servicing LLC, a unit of Walter
Investment Management Corp., failed on eight metrics, including
whether it accurately stated amounts due from borrowers and whether
it gave borrowers sufficient time when sending them notifications
about foreclosures. Green Tree, along with Ocwen, won an auction to
buy ResCap's loan servicing unit in 2012. Green Tree was tested for
the loans it acquired from ResCap. A representative of Green Tree
didn't respond to several requests for comment.
Walter Investment said in February that the Federal Trade
Commission and Consumer Financial Protection Bureau had advised its
Green Tree unit that the agencies sought authority to file an
action against the company over "alleged violations of various
federal consumer financial laws."
The company said in a filing earlier this month that it has had
discussions with both agencies to determine if it can reach a
settlement, which could include changes to its business practices
and penalties.
During a conference call with analysts in February, Chief
Investment Officer Denmar Dixon said the company is proud of the
servicing standards that it maintains.
Handling mortgages for consumers, once an attractive business
for banks, in recent years has become more difficult as banks
struggled to deal with the foreclosure surge that followed the
financial crisis.
Federal agencies and 49 state attorneys general agreed to settle
certain foreclosure processing abuses with the four banks and Ally
Financial Inc. in March 2012, in a deal valued at $25 billion.
The settlement included a detailed list of hundreds of new
standards governing various aspects of the loan modification and
foreclosure process. Banks were required to pay $5 billion in fines
and to provide consumer relief, including mortgage write-downs and
refinancing, valued at $20 billion.
Separate to the settlement, Wells was hit with a federal lawsuit
in 2012 that accused the bank of "reckless" lending through the FHA
program. The bank has said it acted in good faith and it is
fighting the lawsuit in federal court in Manhattan.
Andrew R. Johnson contributed to this article
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
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