"Almost Two Years Later, Banks Are Flouting Terms Of The Mortgage Settlement"
Three of the five financial giants that struck a deal with the government over mortgage servicing abuses in 2012 are still violating provisions of that agreement nearly two years after the deal was announced, the National Mortgage Settlement (NMS) Monitor reported Wednesday.
The new report covers the first half of 2013 and illustrates that there has been little improvement in bank compliance since the last one, which found similar violations by four banks in the latter half of 2012. The monitor, Joseph Smith, further reported that his office had received 44,570 separate complaints against the mortgage servicers in the first half of this year, pushing the total number of complaints filed against the firms for alleged violations of the settlement to 112,419 in a single year.
Part of Smith’s job is to audit the banks’ compliance with 29 separate metrics. Of the five banks that are party to the settlement — JP Morgan Chase (JPM), Bank of America (BOA), CitiMortgage (Citi), Wells Fargo (WF), and a three-company conglomerate called ResCap Parties (RCP) — only RCP and WF were in full compliance with all 29 performance metrics. The report cards for the other banks are messier. Citi failed on two of the 29 measures in 2013, and Smith has not yet been able to confirm that it has corrected a third failing that dates from 2012. JPM failed two metrics in 2013, though Smith says the errors were “not widespread,” and it provided a satisfactory solution to a third failing from 2012.
BOA has failed three of the monitor’s tests, one of which relates to accurate statements about how much borrowers owe. BOA has been among the worst actors in the broadly abusive mortgage servicing industry, with whistleblowers revealing that the company routinely instructed employees to lie to borrowers and even to commit paperwork fraud.
But as the huge tally of complaints in Smith’s report indicates, the industry as a whole is rotten. Tens of thousands of consumers continue to be misled about the status of their loans, banks still fail to provide a single point of contact for borrowers to work with on the loan modification process, and servicers continue to mishandle payments. Those findings apply to the five banks that are party to the NMS, which has itself been a broad failure in providing relief to victimized homeowners and underwater borrowers, but they are not isolated to these companies. A Consumer Financial Protection Bureau investigation found that the industry as a whole is rife with such abuses.