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October 2, 2013

Banks Face Four New Mortgage Servicing EnforcementTests through National Mortgage Settlement

Wells Fargo & Bank of America also agree to better loan modification process

(DES MOINES, Iowa)  The five mortgage servicers that signed onto the National Mortgage Settlement must better address loan modifications, single points of contact for borrowers, and billing statement accuracy through four new servicing standards tests, called metrics, announced today by the settlement’s independent monitor.

“The National Mortgage Settlement forced mortgage servicers to fundamentally change how they handle troubled loans and treat their customers, but they can and must do more,” Attorney General Tom Miller, the settlement’s lead state negotiator, said.  “These new metrics will help the settlement monitor, state attorneys general and our federal partners put more pressure points on the banks to ensure they’re addressing our continued concerns.”

The servicers include JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial (formerly GMAC).  The settlement, announced early last year, began with an investigation into reports of widespread “robo-signing” of foreclosure documents, and broadened into other troubling mortgage servicing abuses and practices.

Joseph A. Smith, Office of Mortgage Settlement Oversight Monitor, announced the new metrics, which measure the banks’ compliance with the settlement’s servicing standards.

“We hope these new tests will help address some of the continuing complaints we’re hearing from borrowers,” Miller said.  “Borrowers tell us the servicers have to do a better job with how they modify loans, especially when the bank requests more paperwork from the borrower.”

Additional Commitments from Wells Fargo & Bank of America
Separately, Wells Fargo and Bank of America have committed to improve their loan modification procedures, following months of discussions with Miller and a committee of state attorneys general and federal agencies charged with monitoring settlement enforcement.  The monitoring committee has focused on the servicers’ implementation of the settlement requirements and additional operational changes designed to help homeowners seeking loan modifications and averting foreclosure.
The banks also agreed to improve communication with homeowners and their loan modification procedures by:

  • Reducing multiple requests for documentation, including creating direct contact between the homeowner and their mortgage servicer to discuss outstanding information requests;
  • Refining and enhancing customer communication regarding missing information, specifically providing greater clarity around why certain documents are needed;
  • Conducting an early underwriting review for customers with potentially complex transactions;
  • Providing an escalation process for customers experiencing multiple documentation or clarification requests;
  • Establishing a direct contact for housing counseling agencies that work on behalf of homeowners to manage questions and concerns and providing a pipeline for those homeowners; and
  • Adopting the use of an electronic online portal to submit documents to the bank to streamline communication and increase transparency for servicers, advocates and homeowners.

[Click here for Bank of America agreement]
[Click here for Wells Fargo agreement]

“We think this is a good step forward, but we plan to continue these discussions to ensure the banks follow through with their additional commitments to treat borrowers who face mortgage trouble, fairly and promptly,” Miller said.

Through the National Mortgage Settlement, the nation’s five largest mortgage servicers have provided more than $50 billion and adopted wide-ranging mortgage servicing standards aimed at curtailing past servicing abuses.  From March 1, 2012 to June 30, 2013:

  • The five servicers provided $39,580,069 in relief to 1,192 Iowa homeowners;
  • An additional 169 borrowers are currently in trial modifications worth at least $5.7 million;
  • The average relief in Iowa was slightly more than $33,205 per borrower;
  • 600 Iowa borrowers received more than $17 million in principal reductions;
  • 243 Iowa borrowers have obtained and completed mortgage refinances through the settlement.  The average rate reduction was nearly 3.5%.


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