From the NYT:
Three of the nation’s largest mortgage lenders are still failing to comply with key requirements of a national settlement over mortgage abuses, according to a new report that suggests that some borrowers are still trapped in a tangle of red tape and errors as they try to save their homes from foreclosure.
Citibank, Bank of America and JPMorgan Chase failed seven tests of the settlement’s requirements, according to a report from Joseph A. Smith Jr., the court-appointed monitor of the settlement terms. The rules say mortgage servicers must eliminate mistakes, misinformation and lengthy delays from the process of granting loan modifications.
Wells Fargo passed all the tests in the first half of this year, as did Ocwen, which now services the bulk of the mortgages once held by Ally Financial.
This report does not include new tests that were developed in response to complaints that homeowners are still bounced from representative to representative, or that foreclosure proceedings begin while a loan modification request is still pending. Those tests take effect next year.
The mortgage settlement, which resolved complaints about improper and fraudulent loan documents, was agreed to by 49 states and five mortgage lenders. It provided two major remedies: one, the lenders would make financial reparations to states and homeowners valued at $25 billion, and two, they would improve their labyrinthine customer service for frustrated homeowners seeking help.
The banks have fulfilled the bulk of the financial obligations ahead of schedule. But the new report says that in the first half of this year, there were failures in areas like ensuring that a loan was actually delinquent at the time that a foreclosure was initiated, and that the homeowner had been given accurate information in writing, and notifying homeowners of missing documents in their file in a timely manner.
Banks are subject to fines of up to $5 million if they do not improve their performance on a failed test. The banks report their own performance on 29 loan servicing tests and their findings are then reviewed in a random sampling by outside consultants overseen by the monitor. A certain number of errors are permitted, normally 5 percent, before the bank is deemed to have failed.