The nation's largest mortgage servicers have failed eight of the servicing standards in the National Mortgage Settlement according to a report released by Joseph A. Smith, Jr., Monitor of the National Mortgage Settlement. The Monitor's testing through the end of last year resulted in three testing fails, and there are five additional fails in 2013.
The following is a statement released today by HUD Secretary Shaun Donovan:
"The Independent Monitor's report is a landmark moment in our efforts to reform the servicing industry. For too long, banks have been operating behind closed doors. This report provides the public with a new and transparent look into how banks are treating homeowners. The good news is that gains have been made. The practice of robo-signing--where banks sign off on foreclosures with little or no review--has come to an end. We've also confirmed that the five banks have stopped charging distressed borrowers a fee just to process a loan modification request.
Unfortunately, other abuses shamefully endure. Most notably, these financial institutions consistently fail to send notices and communicate decisions to stakeholders in a timely manner. This is unacceptable. So the five financial institutions are officially on notice; they must correct these problems and pass the Monitor's tests or the Obama administration, along with the bipartisan group of 49 state attorneys general we partnered with on this effort, will fine them up to $5 million for each failure or haul them back into court."