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Joseph Smith, who is responsible for monitoring the 49-state mortgage servicing settlement, plans to spread the work among multiple consulting firms.
June 5 -
Joseph Smith, who is responsible for monitoring compliance with the $25 billion multi-state mortgage settlement talks potential fines, consumer complaints about servicers and how he plans to move forward on hiring help for the massive undertaking.
April 9 -
The $25 billion national mortgage settlement essentially allows the five largest servicers to police themselves - which has made many consumer advocates surprisingly happy.
March 15
WASHINGTON — Speaking to a group of housing counselors Tuesday, mortgage settlement monitor Joseph Smith made a plea for help, saying that he can't do his job properly without feedback on how banks are implementing the $25 billion agreement.
Smith, in his first public speech since taking the job in February, said that housing counselors, lawyers and others who provide assistance to homeowners will need to provide the information necessary to make the settlement's new servicing standards stick.
"The settlement cannot be effective without all of us working together to make it effective," Smith told the audience at the National Consumer Law Center's summer mortgage conference.
The state-federal settlement, which resolves allegations of robo-signing and other servicing abuses, requires JPMorgan Chase & Co. (JPM), Bank of America (BAC), Citigroup (NYSE: C), Wells Fargo (WFC) and Ally Financial to overhaul their mortgage servicing units by Oct. 4.
Among the changes the servicers are required to make are providing a single point of contact to borrowers and, for many loans, ending the practice of dual tracking, where borrowers are put into the modification process and the foreclosure pipeline simultaneously.
In total, the five servicers are required to implement 290 changes to their servicing businesses, Smith said. The changes impact areas such as oversight of third-party contractors, protections for members of the military and rules regarding force-placed insurance.
Under the complex terms of the settlement, the Office of Mortgage Settlement Oversight, headed by Smith, can use 29 different metrics to measure the banks' compliance with the new servicing rules. Smith can also add new metrics under certain circumstances.
"But to add more, I need your help," he told the audience. "The settlement authorizes me to add metrics if I become aware of facts or information that make them necessary. I can't do that in a vacuum."
Smith asked audience members, many of whom work for legal aid groups across the country, to visit his office's website —
The website also allows individual consumers to report their problems directly, and so far 950 homeowners have done so, according to Smith.
Smith, who resigned as North Carolina's banking commissioner to become the settlement's monitor, struck an optimistic tone about the deal's potential, saying that it can contribute to a restructuring of the nation's mortgage finance system in a way that balances fairness and efficiency.
"It is far-reaching and bipartisan. A lot of people have skin in this game, and if we see the process through, we will have turned rancor into recovery," he said.
In addition to the new servicing standards, Smith is also responsible for overseeing the five banks' agreement to provide roughly $20 billion of relief to homeowners, often in the form of principal reductions.
Housing counselors are already voicing frustrations with aspects of the process, and Smith noted that unlike other high-profile settlements, such as the BP oil spill fund, the mortgage settlement does not allow homeowners to file a claim.
"I don't mention this as a criticism of the settlement. It is designed to work that way," Smith said.
Smith is responsible for ensuring that the five banks provide the aggregate amounts and types of relief to homeowners that they agreed to make. "If the banks fail to meet their relief requirements, they will incur substantial penalties," he said.
The first reports on the settlement, which will look at whether the five banks are meeting their customer relief obligations, are expected in the second half of this year.
