A court-appointed monitor overseeing the $25 billion settlement between the nation’s five largest banks, 49 states and the U.S. Department of Justice issued a compliance report May 14 that said the banks are improving treatment of troubled borrowers, Bloomberg reported.
Joseph A. Smith, who has been responsible for monitoring banks’ compliance with the 2012 national mortgage settlement, reported that he’s seeing significant improvements. For example, mortgage servicers like Wells Fargo and Bank of America have actively addressed problems such as failing to notify customers when loan-modification application documents are missing or failing to cease force-placed insurance policies in a timely fashion.
“Certainly in our measurement of the servicers’ activities through the metrics, there has been an improvement,” Smith told Bloomberg. “Each of them had one or more fails and all of them have corrected the problems.”
Smith said the banks still have more to do, as he has only just begun reviewing how well banks are complying with things like prohibitions on foreclosing while simultaneously offering loan modifications.
Among the outstanding issues are failures by Green Tree in eight separate tests of servicing quality. Green Tree, a subsidiary of Walter Investment Management Corp., which acquired loans subject to the national settlement from Ally Financial, failed to confirm delinquencies before initiating foreclosure procedures, failed to accurately state how much borrowers owe in bankruptcy proceedings and failed to provide borrowers with timely foreclosure notifications, Bloomberg reported.
As a result, Smith is looking for Green Tree to make major changes.
Servicers also were required to offer consumers some form of loan forgiveness or short sale consideration. Smith’s report indicated that banks had, for the most part, completed this obligation, Bloomberg reported.