Recent mortgage servicing compliance tests resulted in five test fails among the nation's top mortgage servicers, including Bank of America, JP Morgan Chase, Citi and Wells Fargo, according to a new report from Joseph Smith, monitor of the National Mortgage Settlement.
Smith is overseeing the testing and compliance provisions of the $25 billion national mortgage servicing settlement outlined by attorneys general, regulators and the nation's five big servicers in 2012.
The latest results show servicers still struggling in meeting timelines for loan modifications and in deploying single-point-of-contact requirements.
By the end of 2012, Smith had identified three test fails after analyzing the servicing practices of the five participating servicers.
This year, he identified another 5 test fails with several key areas of concern: loan modification processing, compliance with single-point-of-contact guidelines along with billing and statement inaccuracies, Smith said.
"These findings, combined with the complaints I have heard from attorneys general, counselors and distressed borrowers, tell me there is still work to be done," Smith said in a statement. "While I believe distressed servicing is better this year than it was last, it is not yet where it needs to be. My team and I will continue our efforts to improve it."
Smith is currently trying to roll out more stringent tests for servicing compliance.
The news of more tests fails comes at a time when Bank of America (BAC) is facing two separate lawsuits in which court-documented statements from former employees allege the servicer unnecessarily delayed HAMP loan applications and quietly steered borrowers away from modifications on a routine basis.
Bank of America responded saying it would address those allegations in its court response.
However, the week has been rough for BofA, and Smith’s report only adds more fuel to the fire.
The settlement monitor's report on Bank of America says the servicer failed to comply when handling pre-foreclosure initiations and when complying with loan modification collection timeline requirements.
Chase also failed when tested on its loan modification documentation collection timelines.
Citi failed on three metrics - loan mod documentation collection timelines, pre-foreclosure initiations and short-sale documentation timeline compliance.
Wells Fargo received a failing score when evaluated on its timelines in collecting documentation for loan modifications.
ResCap was the only servicer without a failed test within its latest compliance report.