Report: Mortgage servicers making strides with customers facing foreclosure

Several of the nation’s largest banks made improvements in dealing with customers facing foreclosure under requirements of a federal mortgage settlement, a new report showed on Wednesday.

Five mortgage servicers — Wells Fargo, Bank of America, JPMorgan Chase, Ocwen and Citigroup — passed their tests on 29 servicing standards in the final six months of last year as part of a $25 billion 2012 legal agreement, the independent monitor reported Wednesday.

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"I believe that these results, when compared to my previous reports, show that, under the settlement, servicers are addressing problems quickly and effectively through focused corrective action plans,” said Joseph Smith Jr., who oversees the National Mortgage Settlement, which was inked more than two years ago with 49 state attorneys general.

“While these results are encouraging, work still remains to ensure that the servicers treat their customers fairly.”

Smith said that the tests will continue for the servicers and that they will be measured on four new metrics issued designed to provide more stringent review on the loan modification process, single point of contact and billing accuracy.

Those results are expected in the next compliance report.

Department of Housing and Urban Development Secretary Shaun DonovanShaun L. S. DonovanHouse Dems call on OMB to analyze Senate budget plan Overnight Finance: Dems turn up heat on Wells Fargo | New rules for prepaid cards | Justices dig into insider trading law GOP reps warn Obama against quickly finalizing tax rules MORE said the settlement has "reformed the servicing industry so that it is more accountable to consumers."

The report also shows that in the final three months of last year, Green Tree, which acquired loans subject to the settlement from Ally Financial, failed eight metrics tests.

“These results show that Green Tree must make significant changes to improve its practices and comply with the settlement,” Smith said.

Complaints about the bank's shoddy foreclosure practices ranged from failing to make a determination on the borrower’s loan modification within 30 days to failure to notify a customer about any missing documents in the initial submission.

Overall, the settlement provided more than $50 billion in assistance, $20.7 billion in credited relief, which helped more than 631,000 families, according to the March report.

The banks were required to offer $19.1 billion in help under the deal and only received partial credit for some assistance.