With the agreement Tuesday, the banks will give homeowners 30 more days to
respond to requests for additional documents before the borrowers' homes may be
referred for foreclosure or sale. The banks will also increase oversight of
their representatives who communicate with borrowers about the status of their
loan modification applications.
The improvements aim to resolve complaints from distressed borrowers, legal
aid groups and housing counselors that banks have failed to meet new servicing
standards, set forth in the 2012 settlement, that were designed to ensure
distressed borrowers are given a fair chance to save their homes.
"The bank servicing standards established in the national settlement were
supposed to eliminate headaches for borrowers, but homeowners continue to report
problems," Madigan said. "The changes the banks have agreed to make must ensure
a fair and more efficient process. My office will continue to assess the
effectiveness of these improvements."
Bank of America and Wells Fargo also have agreed
to additional process improvements, including:
Refining and enhancing
customer communication regarding missing information, specifically providing
greater clarity around why certain documents are needed.
Conducting an early
underwriting review for customers with potentially complex transactions.
Providing an escalation
process for customers experiencing multiple documentation or clarification
Establishing a direct contact
for housing counseling agencies that work on behalf of homeowners to manage
questions and concerns and providing a pipeline for those homeowners.
Adopting the use of an electronic online portal to
submit documents to the bank, in order to streamline communication and
increase transparency for servicers, advocates and homeowners.
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In May, Madigan noted a pattern of potential violations of mortgage servicing
standards required under the settlement. Madigan said that in 60 percent of the
loan modification files reviewed by her office, servicers failed to comply with
a requirement that they notify borrowers within five days of missing documents
in their applications. Additionally, in 45 percent of the files, borrowers were
forced to respond to multiple requests for documents by the servicers. Madigan's
office heard similar concerns from local legal aid groups and housing counselors
regarding the banks' efforts to meet certain deadlines.
The $25 billion national settlement was announced last year by Madigan, 48
states and the U.S. Department of Justice with the nation's five largest bank
mortgage servicers -- Bank of America, JPMorgan Chase, Wells Fargo, Citibank and
Ally Bank, formerly GMAC -- to address allegations of widespread "robo-signing"
of foreclosure documents and other fraudulent practices banks employed while
servicing mortgages of struggling homeowners.
Illinois homeowners and assistance organizations have received more than $2
billion in total relief under the national mortgage settlement.
Homeowners with questions about the national settlement should contact
Madigan's Homeowner's Helpline at 866-544-7151, or visit
consumers/bankforeclosuresettlement.html. For information, borrowers also
[Text from file received from the office
Illinois Attorney General Lisa