Three large banks not fully complying with mortgage settlement changes

Three of the nation’s largest banks are not fully complying with new standards for dealing with mortgage customers that were agreed to as part of a $25-billion settlement of foreclosure abuse allegations, the settlement’s monitor said Wednesday.

In the first half of the year, Bank of America Corp., failed three of the 29 metrics designed to test compliance with 304 new mortgage servicing standards, according to a report from the Office of Mortgage Settlement Oversight.

JPMorgan Chase & Co., and Citigroup Inc. each failed two of the standards.

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The other two banks that were part of the settlement, Wells Fargo & Co. and the so-called ResCap parties, formerly GMAC Mortgage and Ally Financial, did not fail any of the metrics in the first half of the year.

One measure failed by Bank of America, JPMorgan and Citigroup involved providing proper notification to customers that foreclosure proceedings were starting. Other problems by at least one bank were related to timely decisions on requests for modifications of monthly payments and short sales.

“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,” said Joseph A. Smith Jr., the settlement’s monitor.

Overall, the three banks failed six metrics in the first quarter of the year and one in the second quarter.

However, that doesn’t indicate improvement. Banks that failed a metric in the first quarter were required to develop plans to fix the problem and were not tested on that metric in the second quarter while those plans were being implemented, Smith said.

“The jury’s out on a lot of things,” he said, noting that his office will continue testing bank compliance with the settlement’s servicing requirements, and that better comparisons should come in reports next year.

“The objective in my mind is they pass them all and people out in the world experience better treatment because of it,” he said of the review of servicing standards compliance.

Bank of America said it has “worked diligently” to comply with the new standards and that “none of the failed metrics resulted in inaccurate foreclosures or improper loan modification denials.”


JPMorgan spokeswoman Amy Bonitatibus said the bank had “proactively addressed the monitor’s findings” and was pleased that its plans to fix the problems were approved.

Citigroup said the company “remains committed to fulfilling the terms” of the settlement and began taking steps in May to correct its problems meeting two of the metrics.

The banks must meet the new servicing standards as part of the settlement with 49 states and several federal agencies in early 2012. The settlement also required mortgage servicers to provide $20 billion in relief to consumers through principal reductions, short sales and other measures.

Based on the monitor’s reviews and continued complaints from borrowers and others in the industry about mortgage servicing problems, Smith added four new metrics last month.


They include ensuring banks provide a single point of contact for mortgage problems to avoid runarounds, confirming that monthly bills are accurate, as well as instituting procedures for customers seeking mortgage modifications. The banks will not be tested on those metrics until next year.

Smith said Wednesday that the addition of those metrics and plans by the banks to correct problems on other measures had him hopeful that customers would see improved service.

“Broadly speaking, I think distressed borrowers are being treated better now than they would be if there wasn’t a settlement, but I don’t think we’re finished,” he said.



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