WASHINGTON — Joseph A. Smith, the monitor of the 49-state mortgage servicing settlement, spoke at length in an interview this week about how he will work with the five banks participating in the agreement, the limits on his ability to work with bank regulators and what information will be made public.
Following are some of the highlights:
• Four times a year, the five banks are required to issue self-monitoring reports to Smith, starting in the third quarter of 2012, he said. But the monitoring process will involve much more back-and-forth than the quarterly reporting process might suggest.
"I'm going to be engaged with them a lot between now and then — and we will obey the agreement, but we may augment it by additional what I would call supervisory activity, to be sure I'm fully informed, so we don't wait 'til the last minute," Smith said.
"They don't want to present me with something that I have to say is terrible when I could have told them that I have problems with it six months ago, right? So I think the intention so far in my discussions with the banks is to have an early understanding about what's expected, and how things are going to be done, and to move forward in a way that removes friction, but also removes surprises," he said.
• Smith said that he does not know yet whether he will be able to review information gathered by the Office of the Comptroller of the Currency and the Federal Reserve Board in their separate review of mortgage servicing practices.
"I am on good terms, I hope, with my … former fellow bank regulators," Smith said. "They have some concerns about confidentiality, which are legal, which may or may not allow them to" share the information they gather.
"I have not talked to them yet. But I certainly intend to and hope to," he added.
Smith said that he has already met with the Consumer Financial Protection Bureau, and the bureau has expressed interest in working with the settlement monitor's office, but information-sharing issues still need to be ironed out.
• The five banks' quarterly self-monitoring reports will not be made public, Smith said. But the Office of Mortgage Settlement Oversight, which Smith runs, will make public its reports on the banks' compliance with the settlement's terms.
The first of those reports will be filed in federal court in the first half of 2013, according to Smith.
• California Attorney General Kamala Harris, who drove a hard bargain before agreeing to sign on to the 49-state settlement, announced on March 16 that she was appointing UC Irvine law professor Katherine Porter to monitor compliance with the settlement in California.
Smith said Monday that he has spoken to Porter, and the two have begun a productive conversation.
"She's essentially deputized by General Harris to act on the General's behalf to do a number of things to help consumers in California," Smith said. "I have every intention of working with her in a way that will allow her to do what she's been asked to do by General Harris."
"Professor Porter will have the bona fides and the funding apparently," Smith added. "She's going to do a lot of work to help California consumers, so I'm keen to try to do what I can to make sure that this is successful."