By Dow Jones Business News,
May 14, 2014, 10:15:00 AM EDT
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
Andrew R. Johnson contributed to this article
Write to Saabira Chaudhuri at firstname.lastname@example.org
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