Under the original settlement, reached on Feb. 9, 2012, Wells Fargo, JPMorgan Chase, Citigroup, Bank of America and Ally Financial agreed to provide consumer relief as well as overhaul and improve their servicing operations. The settlement arose out of charges of so-called "robo-signing" foreclosure documents as well as other forms of mortgage fraud and improper servicing.
Among the five banks, 37 percent of credited total relief was in the form of principal forgiveness on primary mortgages. Second lien principal forgiveness made up 15 percent. Refinancing assistance made up 17 percent of total credited relief, and other relief, including assistance for short sales and deeds in lieu of foreclosure, accounted for 31 percent of credited relief.
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In an interview, Smith said he was pleased that the banks responded in a timely manner and that there was no need for any penalties, which could have been assessed had the banks not acted so quickly. Some of the banks, he noted, went above and beyond what was required in mortgage modifications and refinances.
As for the improved services for all borrowers, regardless of distress, "that wasn't as good news," said Smith.
The new standards require better communication with borrowers, a single point of contact, adequate staffing levels and training, and appropriate standards for executing documents in foreclosure cases, according to the settlement.
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Smith spent the last two years traveling the country to talk with borrowers and credit counselors about their experiences with mortgage servicers.
"As a result, we have four additional metrics to deal with on the loan modification process which are intended to address what I heard over those two years," said Smith.
The banks, however, claim they are addressing servicing issues and have already improved dramatically, failing on only a very small percentage of the necessary requirements.
