Major servicers still find it difficult to provide troubled borrowers with timely notice that more documents are needed to process a loan modification application.
Settlement monitor Joseph Smith said the three mega-servicers are taking corrective actions to expedite loan modification processing.
However, the state attorneys generals that pressed for the settlement with the mega-servicers may impose a new servicing metric to expedite processing and approval/denial decision making.
During a press briefing Wednesday morning, Iowa AG Tom Miller said his fellow AGs are working on a new servicing metric that requires servicers to stop the foreclosure process when they receive a loan modification applicant that is substantially complete. “The prohibition on dual tracking would kick in at that point,” Miller said, rather than the point” when the bank considers it complete. “It is not final,” he added, but it would give banks an incentive to be more efficient and speed up the decision making process.
JPMorgan Chase and ResCap are also subject to audits by the monitor as part of the settlement to stop abusive and unfair servicing practices and provide borrowers with better service. The settlement monitor tests for compliance with 29 servicing metrics.
Smith reported that JPMorgan Chase failed to terminate force-placed insurance within 15 days of receipt of evidence that the borrower has homeowners insurance.
Chase voluntarily provided remediation and refunded premiums to over 2,000 borrowers, according to the monitor’s report that was released Wednesday morning. “This amounts to more remediation than the National Mortgage Settlement requires for a widespread error,” the report says.
The monitor has tested ResCap (formally Ally/GMAC) on 11 servicing metrics and has not “found evidence of a failed metric,” the report said.
“The settlement is allowing us to uncover areas in which more work needs to be done. The banks are now working to correct these errors and will be tested again to determine their level of improvement,” Smith said.
Dan Frahm, a spokesman for the Charlotte, North Carolina-based Bank of America, told Bloomberg News on Wednesday in an e-mail that B of A is back in compliance with that metric, and that it didn’t result in improper foreclosures or modification denials.
“This relates to the amount of time it takes us to notify customers that they have not submitted all the necessary documents for us to make a decision,” Frahm said. “We have adjusted processes to reduce the time it takes to generate these notices.”
Citigroup is “working to implement corrective actions as soon as possible under the direction of the monitor,” Mark Rodgers, a bank spokesman, said in an e-mailed statement to Bloomberg Wednesday.
Mary Eshet, a spokeswoman for the San Francisco- based lender, told Bloomberg Wednesday that Wells Fargo brought the shortcoming to the monitor’s attention.
“We remain firmly committed to meeting the standards established by the National Mortgage Settlement and we will continue to improve our services for customers,” Eshet said.
“In November, we self-identified a potential gap,” said Mark Kornblau, a spokesman for New York-based JPMorgan told Bloomberg. “We quickly fixed the issue.”