BofA, Wells Fargo Fail Mortgage Servicing Tests

BofA, Wells Fargo Fail Mortgage Servicing Tests
By The original uploader was Henry W. Schmitt at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], <a href="">via Wikimedia Commons</a>

Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC) and other banks have violated the terms of national mortgage settlement designed to end mortgage servicing abuses.

BofA, Wells Fargo Fail Mortgage Servicing Tests

A progress report evaluating compliance of banks with the mortgage servicing standards has been released today by National Mortgage Settlement Monitor Joseph A. Smith, Jr.

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The monitor evaluated Ally Financial Inc (NYSE:GMA), Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) for their compliance with mortgage servicing standards mandated by National Mortgage Settlement.

Wells Fargo Failed:

Joseph A. Smith found Wells Fargo & Co (NYSE:WFC) failed to comply with the servicing standard governing the timeline for notifying borrowers of deficiencies in applications for mortgage modifications.

In May, New York state Attorney General Eric Schneiderman notified a committee monitoring the agreement that he intended to sue Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC)  for violations of the servicing standards. However, a Bank of America Corp (NYSE:BAC) spokesperson said the bank took immediate steps to resolve the deficiencies.

Last year, Eric T. Schneiderman sued three of the country’s biggest banks, over their use of a national private electronic mortgage registry, accusing them of deceptive and unlawful practices, including false documents in foreclosure proceedings.

Findings Of Mortgage Servicing Tests

According to the monitor, four of the largest U.S. mortgage servicers failed to comply with parts of a $25 billion landmark national mortgage settlement. Bank of America Corp (NYSE:BAC), JP Morgan Chase & Co (NYSE:JPM), Citigroup Inc (NYSE:C), and Wells Fargo & Co (NYSE:WFC) each failed to at least one of the 29 metrics to measure the effectiveness of relief provided by banks to homeowners who are under threat of foreclosure.

The $25 billion settlement was brokered last year between five banks and 49 state attorney general, wherein banks have agreed to provide relief to homeowners and comply with a set of servicing standards to atone for foreclosure misconduct.

The settlement also includes 304 Servicing Standards that participating servicers are required to adhere to. These standards are intended to smoothen the process for homeowners to seek loan modifications.

Bank of America Corp (NYSE:BAC) and J.P. Morgan said last month that they had recently completed doling out the required aid under the settlement, while Wells Fargo & Co (NYSE:WFC)  had said it was 90 percent complete. National Mortgage Settlement Monitor Smith said the first audit, which would examine all aid completed through 2012, would be done by next month. He had certified earlier this year that Ally Financial Inc (NYSE:GMA) had satisfied that portion of the settlement.

The mortgage servicing standards would remain in effect for three years. Banks can be tested on their compliance even if they have fulfilled the consumer-relief portions of the settlement.

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