Mortgage Settlement states that all large banks must become compliant

By Sari R. Updated on 10/2/2012

The monitor of the National Mortgage Settlement, Joseph Smith, has publicly proclaimed that the grace period during which the U.S.’s biggest lenders needed to become compliant with the three hundred-and-four mortgage servicing standards has ended.  Banks that recently agreed to the new standards include:  JP Morgan Chase, Wells Fargo, Bank of America, Citigroup and Ally Financial.

On the 180^th day following the consent judgment entry, Smith released a statement saying that the five banks mentioned above would be required to operate in total compliance with the Settlement’s servicing standards.  The statement also went on to detail that there would be a careful review of the banks’ processes in order to verify their compliance with the Settlement’s rules. 

This agreement means that mortgage servicers will stop foreclosing on borrowers who are in consideration for a modification (dual tracking).  This settlement also mandates that servicers set up one point of contact for borrowers in trouble, and handle paperwork and document signing without reviewing the loan file.

In his statement, Smith publicly requested that if anyone heard of any Settlement rules being broken by mortgage servicers, it would be reported.