Year-old mortgage pact yields dollars, complaints
National mortgage settlement has provided more than $45 billion in relief, but there continue to be complaints about loan servicers
HUD Secretary Shaun Donovan leads a round table discussion with homeowners Janice Carroll (left) and Vanessa Fair (right) who have been helped by the National Foreclosure Settlement at Neighborhood Housing Services of Chicago, Wednesday, February 20, 2013. Illinois homeowners received $1.4 billion in assistance. Illinois Attorney General Lisa Madigan and Iowa Attorney General Tom Miller joined the meeting along with others. (Heather Charles, Tribune photo / February 21, 2013)
In a report issued Thursday on the progress of the $25 billion settlement announced in February 2012, Joseph Smith Jr., the settlement's independent monitor, said distressed borrowers continue to have the same complaints about their dealings with mortgage servicers as before the landmark agreement.
People remain confused by the loan modification process, and there are continued stories of dual tracking, the process of working with borrowers on loan modifications while also pursuing foreclosure judgments against them. Borrowers have to submit the same documents multiple times. Questionable fees are being added to the total sums due. Different employees are offering conflicting information to borrowers.
"I expected slow and steady improvement," Smith said in an interview Thursday while in Chicago. "These are large and complex enterprises, but that is not an excuse."
Since May, the Office of Mortgage Settlement Oversight's website has received more than 5,700 complaints from consumers, with more than half of them involving problems with loan modifications and customer service. Housing counselors, attorneys, state banking regulators and attorneys general have submitted an additional 600 complaints.
The five lenders involved in the settlement — Ally Financial, Bank of America, Citigroup, Chase and Wells Fargo — were supposed to be in compliance with 304 specific servicing standards in early October. Beginning Jan. 1, Smith's office began testing servicers on 29 metrics related to the loan modification process. The first report detailing the results of those tests will be released in the second quarter.
Shaun Donovan, secretary of the Department of Housing and Urban Development, echoed Smith's frustration Thursday in Chicago during a news conference on the settlement. "The fact is, there are still too many families that are getting the runaround," he said. "There are still too many families that are not getting the kind of help that they deserve."
In Illinois, of the 20,044 borrowers who have received assistance under the settlement, 3,794 received principal writedowns on first or second mortgages, while 5,928 borrowers saw their second lien obligations erased, according to the report.
An additional 5,831 Illinois homeowners sold their homes through short sales, and 2,629 completed mortgage refinancings.
Illinois Attorney General Lisa Madigan encouraged struggling homeowners to continue seeking help from nonprofit, HUD-certified housing counselors. "Avail yourself of that help," she said. "Be prepared to fight. But if you do fight, there is a good chance you can win a good resolution."
The settlement, announced in February 2012 by the Justice Department, state attorneys general and the five lenders, was designed to offer assistance to homeowners who might have been victimized by shoddy mortgage servicing and foreclosure practices or who found themselves with unaffordable mortgages. It also set new standards for how mortgage servicers interact with financially struggling homeowners.
The lenders are expected to provide a combined $20 billion in consumer relief over the agreement's three years. They are not credited dollar-for-dollar on the various forms of assistance provided.
Last week, Smith said that Ally Financial, which was required to provide $200 million of consumer relief, had satisfied its obligation and had substantially complied with the modification and refinance programs it had to establish as part of the settlement.