By Dow Jones Business News, October 02, 2013, 11:35:00 AM EDT
The monitor appointed to oversee Bank of America Corp. ( BAC ), Wells Fargo & Co. ( WFC ) and three other lenders'
performance as part of a $25 billion mortgage settlement unveiled four new metrics on Wednesday to measure the banks'
compliance with new servicing standards.
The new metrics include a test to ensure banks provide customers' contact information for new single points of
contact, and a test to measure the servicers' monthly billing statements to confirm that accurate information is
provided. Compliance on these two metrics will begin Jan. 1.
These changes are meant to address issues that borrowers and consumers have complained about since the mortgage
settlement was announced last year, including confusion over the modification process and banks taking too much time to
respond to borrowers' questions.
Last year's settlement was reached with federal agencies and 49 state attorneys general over alleged foreclosure
abuses. In addition to Bank of America and Wells Fargo, the settlement also involved J.P. Morgan Chase & Co. ( JPM ),
Citigroup Inc. ( C ) and Ally Financial Inc.
The degree to which banks have struggled to improve the modification process has frustrated critics who say the banks
have had plenty of time--more than five years--to put better processes in place. Joseph A. Smith Jr., monitor of the
National Mortgage Settlement, said he has been surprised by the degree to which banks have been challenged to make even
minor changes to heavily automated processes.
Mr. Smith, a former state banking commissioner, said the new metrics address several pertinent issues involving the
loan modification process, single points of contact and billing accuracy.
The other two new metrics relate to the loan modification process, as well as certain disclosures made by single
points of contact. These metrics will test the banks' communications to borrowers during a loan modification application
and ensure that banks don't reject a borrower's modification application or proceed with a foreclosure for at least 30
days while the borrower is responding to requests for additional documents. Compliance testing will begin April 1.
In an interview with The Wall Street Journal last month, Mr. Smith said the constant refinements in the loan
modification processes have been "like triage on a battlefield." While the settlement has made progress in overhauling
the banks' management of troubled loans, he said there was still "unfinished business."
-Nick Timiraos and Andrew R. Johnson contributed to this story
Write to Nathalie Tadena at firstname.lastname@example.org
(CORRECTION: This item was corrected as the original incorrectly referred to the entity overseeing five lenders'
performance as a government monitor.)
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