Bank of America, Wells Fargo to improve mortgage servicing plans
WASHINGTON (Reuters) - Bank of America and Wells Fargo once again agreed to improve their mortgage servicing processes, after state and federal authorities said the banks were still not properly handling requests from struggling borrowers.
In commitments made public on Wednesday, the two banks pledged to improve communications with borrowers seeking to modify their loans, after authorities found that last year's $25 billion deal did not correct certain problems.
One state - New York - said Wells Fargo did not go far enough in its commitments, and accused the bank in federal court on Wednesday of breaching the terms of the earlier deal.
That earlier deal - between the U.S. Justice Department, the Department of Housing and Urban Development, and 49 states - was designed to end mortgage servicing abuses.
But authorities found that problems have continued. Banks were required to provide homeowners with a single representative who would review their loan files and manage the process of seeking a modification, for example.
Instead, those representatives often changed and sometimes did not have the competence or capacity to solve problems, the monitor of the settlement, Joe Smith, said in an interview on Wednesday.
Borrowers also continued to face problems with not knowing if an application to modify a loan was complete - a crucial characterization that would stop a foreclosure proceeding, Smith said.
In the wake of the 2007-2009 financial crisis, millions of homeowners, many of whom owed more than their house were worth after home prices plummeted, struggled to avoid foreclosure through receiving a modification of their loan.
But many of those efforts stalled as homeowners complained of servicers repeatedly losing paperwork, providing confusing requirements, and generally being unresponsive.
To address lingering concerns, the two largest mortgage servicers agreed on Wednesday to improve communications with customers about missing information, provide an escalation process for customers who were repeatedly asked for information, and establish a direct contact for housing counselors advocating for the borrowers, among other changes.
"As part of our commitment to assist borrowers struggling to meet their mortgage payments, Bank of America is continuing to invest resources to refine its loss mitigation practices and procedures," the bank said in a letter outlining its changes.
In court documents, New York's attorney general outlined problems faced by 97 New Yorkers whose loans were serviced by Wells Fargo that the state said showed the bank had not complied with last year's settlement.
In a statement, Wells Fargo spokeswoman Vickee Adams said the bank had taken voluntary steps to put in place the customer service changes that would have been in a formal agreement with New York.
Also on Wednesday, monitor Joe Smith announced four new benchmarks that all of the banks from the settlement - Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, and ResCap - are required to meet.
One requires the banks to evaluate and remediate the performance of the representatives who serve as the contacts for struggling borrowers. Another tests whether monthly statements sent to borrowers accurately reflect what a borrower has paid and owes.
(Reporting by Aruna Viswanatha; Editing by Karey Van Hall, Bernard Orr)
- Search planes scour sea for missing Malaysian jetliner |
- Timeline: Malaysia Airlines flight to Beijing missing in Asia
- Missing Malaysian jet may have disintegrated in mid-air: source |
- Exclusive: Malaysia plane probe narrows on mid-air disintegration - source
- Malaysian plane presumed crashed; questions over false IDs |