The National Mortgage Settlement Monitor released its latest servicing compliance report Wednesday, showing three of the nation's top servicers failed to comply with key servicing metrics.
You can read more about the failed tests here. What is lost from much of the coverage is the fact that out dozens of metrics evaluated, servicers pass a majority of them during each period. State Attorney General Pam Bondi is not mincing words about what she feels the finding encapsulates.
"It is clear that, overall, the banks must substantially improve their efforts to better serve distressed borrowers and to comply with the servicing terms of the settlement agreement," Bondi said. "My office will continue to work diligently on behalf of Florida’s homeowners to ensure that they promptly receive the relief they are entitled to under the settlement. The banks will be held accountable to the obligations they made under the settlement."
However, the real sticking point for the market is the realization that the recent mistakes are repetitive and involve troubled borrowers. This realization prompted Department of Housing and Urban Development Secretary Shaun Donovan to lambast the impacted servicers with an advisory saying future failures on the same tests could result in penalties.
And it didn't take long. Soon after Donovan’s statement, housing advocates jumped into the controversy.
Activists tied to Occupy Wall Street (yes, it's still around) announced plans to deliver 30,000 petitions gathered by Occupy Homes and the Home Defenders League. The petitions ask JPMorgan Chase (JPM) to halt all foreclosures until it ensures all homeowner relief promised under the bank's $13 billion settlement with the government is delivered.
The Occupy Wall Street Banking Group and the New Day New York coalition organized the public delivery, which is scheduled for mid-day in Manhattan on Park Avenue.
"The big banks continue to abuse struggling homeowners with impunity. Despite billions in settlements, the tide of foreclosures hasn’t ceased, and homeowners are still being tossed out of their homes through needless and illegal foreclosures," said Kevin Whelan, campaign director for the Home Defenders League. "Chase Bank, for example, was cited for failing to give a timely loan modification almost 20% of the time—nearly double the threshold for failure they agreed to in the settlement. It’s egregious, and it has to stop."
Two of the servicers – the ResCap parties and Wells Fargo (WFC) – managed to get a clean report with no failed tests across the benchmarks measured. (It’s important to note not all 29 metrics are evaluated during every testing period). The others, Bank of America (BAC), Chase and Citi (C), had problems with what Donovan calls failures to send notices and communicate with struggling homeowners in test periods three and four.
JPMorgan, in particular, which just entered into a $13 billion settlement to end legacy mortgage issues with government regulators, failed to deal with the pre-foreclosure initiation process appropriately in the fourth test period. And in the third-test period, JPM had a failure rate of 19.31% in relation to its compliance with timelines for loan modification decisions.