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An independent monitor of the 2012 National Mortgage Settlement (NMS) revealed in a summary of five reports he filed with the U.S. District Court for the District of Columbia that Citi failed one of the compliance tests in the second half of 2014, according to a release from the Office of Mortgage Settlement Oversight.
The summary, released by Monitor Joseph A. Smith, Jr., on Tuesday, includes updates on compliance with NMS mortgage servicing rules by Bank of America, Chase, Citi, Green Tree, and Wells Fargo, during the third and fourth quarters of 2014. Smith reported that Citi failed one of the new metrics the Monitoring Committee negotiated with regards to the loan modification process, while Bank of America, Chase, Green Tree, and Wells Fargo passed all metrics tested in the third and four quarters of 2014.
"I am pleased to see that the servicers are adhering to the NMS's servicing rules, which aim to ensure that borrowers have better experiences," Smith said. "Among five servicers and over six months, only one failure was uncovered, and of the servicers which had a total of 10 earlier fails to address, the corrective actions put in place were successful."
Smith reported that Green Tree had completed eight corrective action plans (CAPs) to address root causes of fails that had previously been uncovered, and that he found no evidence of any failures during the "cure period," which is the amount of time in which the servicer has a chance to fix the issues.
For the failed Citi metric, Smith reported that the bank implemented an approved CAP and cured the fail in the following quarter.
"Citi remains committed to fulfilling the terms of the National Mortgage Settlement for the best interests of its clients," Citi spokesman Mark Rodgers said. "Last year, we became aware of certain process flaws in our timeline which is tested under Metric 30 of the Settlement. We have now fully implemented the Corrective Action Plan approved by the NMS Monitor. One of our top priorities is continuing to work with distressed borrowers to help them avoid potential foreclosure and remain in their homes."
Smith's latest Compliance Update did not include a report on Ocwen's compliance. In April, he and his team reported issues they had discovered with the integrity of Ocwen's internal review group (IRG) and with the letter-dating process. In May, Smith reported the results of retesting for Q1 2014 and said that Ocwen had failed one of the metrics that was originally reported as a pass. In that same report, Smith outlined several actions Ocwen has taken to improve its IRG, which Smith has been investigating since May 2014.
Smith said he and his team were still reviewing the Atlanta-based servicer's compliance testing for the first and second quarters of 2014, and that he will report to the Court and the public when he is confident that the results are complete.
"The work involved has been extensive, and it is important that we take the time to verify the accuracy of Ocwen's work," Smith said.
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, ResCap Parties, and Wells Fargo), creating new servicing standards and providing relief to distressed homeowners as well as funding for state and federal governments. As part of the agreement, the five servicers were required to provide $20 billion in consumer relief and $5 billion in other payments. The settlement is considered landmark because it established the first-ever nationwide reforms to mortgage servicing that include better communication between servicers and borrowers as well as a single point of contact and appropriate standards servicers for executing documents in foreclosure cases.
Click here to see the entire Compliance Update report released Tuesday, which was the fifth report released by Smith to summarize the compliance of four of the original parties involved in the NMS (ResCap's assets were acquired by Ocwen and Green Tree after the settlement). Click here to see copies of the previous four reports.
