A company that has bought hundreds of thousands of mortgages from banks like Bank of America hasn’t lived up to servicing standards required of it as part of a national legal settlement, according to a new report from the settlement’s watchdog.
Green Tree failed tests to see whether it provided accurate information to homeowners going through foreclosure or if borrowers were told about missing documents during a loan modification, among others, said the Wednesday report from Joseph Smith, the former North Carolina banking commissioner who now oversees a $25 billion accord between state and federal agencies and five large banks.
St. Paul, Minnesota-based Green Tree wasn’t an original party to the settlement, struck in 2011 with Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial. But the specialty servicer bought a package of loans from Ally in a bankruptcy proceeding, bringing the company under Smith’s purview.
Green Tree, through its parent company Walter Investment Management Corp., also bought $93 billion worth of loans from Bank of America in early 2013. The company later took on MetLife’s mortgage platform.
Only the loans bought from Ally fall under the purview of the settlement. Green Tree failed eight tests in total.
Green Tree representatives were not immediately available for comment.
Another specialty servicer that has bought billions in loans from banks, Ocwen Financial Corp., was found to have passed all the servicing tests.
The report is Smith’s third related to the 300-plus servicing standards required as part of the settlement, which ended numerous investigations into shoddy servicing practices such as robo-signing, or signing thousands of pages of foreclosure paperwork without reading them. The banks were also required to provide billions in consumer relief through principal forgiveness and short sales.
In June, Smith found that Bank of America had failed two tests and Wells Fargo had failed one. In Wednesday’s report, both banks were re-tested to see if they’d fixed the problems. Smith determined they had.