It seems that a few boutique mortgage lenders are playing a little fast and loose with the rules they agreed to follow when they agreed to pay $25 billion to get the government to leave them alone.
Joseph A. Smith said Wednesday that Bank of America Corp., J.P. Morgan Chase Co., Citigroup Inc. and Wells Fargo Co. each failed to meet at least one of 29 standards for how to provide relief to homeowners under threat of foreclosure.
The compliance exams "confirms what I've been hearing from people out in the field, which is that we still have work to do on the loan-modification process," he said in an interview. Mr. Smith is the independent monitor named by federal and state officials to oversee the mortgage-foreclosure deal.
On the bright side for the aforementioned, their compliance is being monitored by some people who may have a vested interest in the success of the settlement they negotiated. Conflicts of interest only exist in the private sector, after all.
Despite the failures, four attorneys general said during a conference call on Wednesday that the report showed the settlement is largely succeeding. Banks are providing greater transparency and accountability and doing a better job of working with borrowers, they said.
The time it takes banks to process loan modifications has "improved considerably," said Tom Miller, the Iowa attorney general. In Iowa, he said, the number of so-called "stale" loan modifications—those that have been unresolved for at least six months—had dropped from 50% three years ago to 10% for Bank of America, and from 30% three years ago to 5% for Wells Fargo. "Progress is clearly being made," he said.