U.S. District Court Judge for the District of Columbia Rosemary Collyer has signed documents and has approved the $25 billion mortgage servicing settlement with the nation's top mortgage servicers, Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial.
“The court approval of the historic $25 billion mortgage servicing settlement is a victory for American homeowners," said U.S. Department of Housing & Urban Development (HUD) Secretary Shaun Donovan. "We know that when we work together and put partisanship aside we can accomplish big things for the American people. And while we applaud yesterday's actions by the court, we know that now the real work begins to hold these servicers accountable and ensure that the nearly two million homeowners who are expected to receive help and relief actually get it."
After the ink was dry on the signing of the settlement, Joseph A. Smith Jr., the former top regulator of banking in North Carolina, officially assumed his position as the monitor of the mortgage servicing settlement. In this role, Smith will work to ensure that the banks follow the requirements outlined in the settlement agreement through the formal creation of the Office of Mortgage Settlement Oversight (OMSO), the body Smith has set up to facilitate his work.
Participants in the settlement unofficially named Smith as their choice in early February when news of the agreement became public, but both the settlement and Smith’s appointment became official when Judge Collyer made final consent judgments affecting each of the banks.
"The mortgage settlement is a bipartisan achievement that holds promise for millions of people," said Smith. "Our nation depends on its home financing system not only to function properly, but also to inspire confidence in the people who use it. By itself, this settlement will not remedy every problem that system faces. But trust in our mortgage system can move forward if we use this opportunity to show fairness, transparency and accountability. This is a responsibility I take seriously.”
Smith will receive periodic reports from the settlement participants and oversee bank compliance with the agreement. The Monitor will then report his findings, determinations and actions to the Court and a Monitoring Committee of state and federal government representatives. The Monitor is empowered to work with non-compliant institutions to establish corrective plans, or, if necessary, to recommend penalties or to seek injunctive relief to enforce the settlement.
“From day one, the settlement was about helping homeowners, and specifically, it was about helping those homeowners who suffered at the hands of the practices of these servicers," said Donovan. "Moreover, while we know that servicing did not cause the mortgage crises it made the problem worse. Moving forward, lenders now have servicing standards that will protect borrowers. Servicemembers who suffered will receive compensation and be protected moving forward. This settlement and other critical actions taken by the Administration are significant steps toward rebuilding our housing market and making an America built to last.”
