The deadline for the nation's largest mortgage servicers to reform their business practices came Tuesday, with the five firms offering varying levels of assurance about their progress.
Each of the companies has promised that it would meet the deadline, according to the office responsible for enforcing the multi-state mortgage settlement that was finalized in the spring. But some of the banks were more willing than others Tuesday to go public with those claims.
Citigroup and Wells Fargo both stated that they would meet the deadline established by the settlement, though they did not provide any details.
JPMorgan Chase & Co. provided greater specificity, saying that it met all of the standards outlined in the settlement. "This has been an enormous effort, as the standards cover all aspects of the servicing business, and cover such matters as single point of contact, customer service, loss mitigation, anti-blight and tenants rights," the bank said in a statement.
Bank of America and Ally Financial were more equivocal about their compliance timelines.
B of A's statement said: "The programs and servicing standards of the national mortgage settlement differ greatly from those the nation's largest servicers previously put in place, and each required changes in operations and supporting systems to comply. We have met all servicing standards requirements on time and will meet remaining requirements under the settlement."
Ally Financial, whose mortgage servicing arm is GMAC Mortgage, stated: "GMAC Mortgage is working closely with the Office of Mortgage Settlement Oversight to ensure compliance with all aspects of the settlement, subject to internal and external independent validation."
Mortgage servicers have weathered intense criticism over the last four years for losing their customers' paperwork, initiating foreclosures while loan modifications are being processed, robo-signing documents, and other problems.
Under the settlement with 49 states and the federal government, the top five servicers agreed to make major changes to how they interact with delinquent borrowers, although some of the new standards were supposed to have been in place already under the terms of the Obama administration's loan modification program.
In all, the settlement agreement includes 304 servicing standards. Among them are a ban on moving a home toward foreclosure during the modification process and the establishment of a single point of contact for borrowers.
Joseph Smith, the former North Carolina banking commissioner who heads the Office of Mortgage Settlement Oversight, made clear that his office will begin enforcing the new standards immediately.
"As of today, the five banks subject to the settlement are required to operate in full compliance with its servicing standards," Smith said in a statement. "I will conduct careful and thorough reviews of the banks' processes to assure and verify that they are compliant with the settlement's rules."
Smith also encouraged consumer advocates to contact his office when they see the new rules being broken. Lawyers, housing counselors and other consumer advocates can file those complaints using an online form.
Consumer advocates expressed deep skepticism regarding claims that the banks have implemented the required changes.
"We certainly aren't seeing yet major changes in how servicing is done," said Diane Thompson, a lawyer with the National Consumer Law Center. "I think we're still a long way from seeing the settlement provisions being enforced on the ground. Enforcement is always a weak link."
Ira Rheingold, executive director of the National Association of Consumer Advocates, said that the servicers have likely changed their policies, but in many cases those policies are still not being followed on the ground.
"I think what we've learned over the last four years is that this is an industry that complies with the law very slowly," Rheingold said. "They've certainly had enough time to get their act together, but I think we're still seeing a lot of the same problems."