When the first progress report emerged last month on how the five banks in the $25 billion mortgage servicing settlement have helped homeowners, it showed that the aid had skewed toward short sales.
These relieve the borrowers debt, but the home is lost. Housing advocates wondered whether the banks aid would soon become more balanced.
All I can say at this early stage is, I have my eye on the same thing, mortgage-settlement monitor and former N.C. banking commissioner Joseph Smith said Monday, while speaking at the National Foundation for Credit Counseling conference in Charlotte.
Smith gave the conference a status report on the settlement, reached earlier this year between 49 state attorneys general and several federal agencies on one side, and Bank of America, Wells Fargo and three other large servicers on the other. It resolved months-long investigations into servicing practices like robosigning, in which bank employees allegedly signed hundreds of foreclosure documents a day without reading them.
The settlement was an admirable feat, Smith said Monday, saying the alternative was years of court battles. Like any compromise, the settlement didnt leave anyone completely satisfied. But because they reached this compromise, were talking today about consumer relief instead of more court filings.
The banks were given three years to provide more than $20 billion in direct aid to homeowners, though some forms of relief deemed less desirable are not given dollar-for-dollar credit toward the banks total. Principal reduction is intended to make up the majority. The other $5 billion is primarily cash payments to states.
In Smiths first report, released in early August, banks reported a total of $10.6 billion in aid. More than 80 percent of that, however, was in short sales.
Smith downplayed the significance of that in a message to the public and press. He said it was too early to get the full picture.
Bank of America has said it has already made much more progress on principal forgiveness and loan modifications.
But Smith said that perhaps more important than the dollar figures put forth are the mortgage servicing standards that banks are required to comply with as of Tuesday.
The 304 rules range from a single point of contact system that pairs each struggling homeowner with a specific bank employee, to automatic loan modification denial reviews.
Smith asked the credit counselors to help him determine whether banks were following the rules by reporting any violations through his website, MortgageOversight.com.
Well be able to bring about the long-term change in servicing practices that can be the most enduring legacy of this settlement, he said. But it can only become a reality if you let me know what youre seeing in the marketplace.