Settlement Monitor: All Mortgage Servicers Made the Grade

In his summary of six reports filed with the U.S. District Court for the District of Columbia released on Thursday, Independent Settlement Monitor Joseph A. Smith, Jr. and his team revealed no failed metrics among the servicers that were party to the National Mortgage Settlement in 2012.

Smith’s summary, titled Update on Compliance, includes results for Bank of America, Chase, Citi, Ditech, SunTrust, and Wells Fargo. The compliance test includes a total of 33 metrics—29 originally set forth by the NMS and four more set forth by the Monitor in 2013. Thursday’s report covers the first half of 2015.

“My tests show that servicers are adhering to the NMS’s servicing rules, which aim to give borrowers better experiences,” Smith said. “Among six servicers and over six months, my professionals and I uncovered no fails.”

Thursday’s report does not include the results of compliance tests for Ocwen Financial for the first half of 2015. Smith said he was still currently testing Ocwen and he would release the results to the public when he is confident they are complete. Smith released his last update on Ocwen’s compliance with the terms of the NMS in October, at which time he revealed that the Atlanta-based servicer failed four metrics during the second half of 2014.

Thursday’s report was the sixth for Bank of America, Chase, Citi, and Wells Fargo. It was the fourth for Ditech and the first for SunTrust.

The NMS was originally finalized in April 2012 between 49 states and the District of Columbia, the federal government, and five banks and/or mortgage servicers (Bank of America, Citi, JPMorgan Chase, Ally/GMAC, and Wells Fargo). As part of the agreement, the five servicers were required to provide $20 billion in consumer relief and $5 billion in other payments. Ocwen falls under Smith's supervision due to the servicer’s acquisition of mortgage servicing rights from a unit of Ally Financial, one of the original banks included in the settlement.

SunTrust became party to the NMS in June 2014 when it settled with the DOJ for $968 million to resolve claims that the Atlanta-based bank engaged in improper mortgage origination practices as well as servicing and foreclosure abuses.

Ocwen entered into a new consent judgment with the Consumer Financial Protection Bureau (CFPB) in February 2014 that requires the servicer to provide $2.1 billion in consumer relief and to comply with the servicing standards set forth by the NMS.