The $25 billion national mortgage foreclosure settlement is getting tweaked following numerous complaints that mortgage servicers are falling short on the promises made to struggling borrowers. When the settlement was originally announced in February 2012, its goal was to compensate borrowers for the wrongs they experienced in the foreclosure process. It also put into place new servicing requirements that applied to the nation’s five largest servicers: Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally/GMAC.
However, recent complaints from homeowners, housing counselors and state attorneys contend that banks are not complying with the set standards agreed to as part of their pact with the Justice Department, attorney generals and the banks.
The new procedures put into place include:
• All five banks will give homeowners 60 days, instead of 30, to submit additional documents that might help them secure a loan modification before their home moves into foreclosure.
• Banks have promised to do a better job of overseeing employees who work with borrowers.
• Bank of America and Wells Fargo have agreed to be more specific about what missing information they need from homeowners.
• Bank of America and Wells Fargo have agreed to escalate loan modification applications when a customer is being asked repeatedly for more documents.
• Bank of America and Wells Fargo will now use an online portal to submit documents and create a direct contact for the housing counseling agencies working with struggling homeowners.