Attorney General Tom Horne Announces Results of First Compliance Report from the National Mortgage Settlement

Report Details how $2 Billion in Relief for Arizona Consumers Continues to be Used to Help Struggling Homeowners

Phoenix, AZ – August 6, 2013 – (RealEstateRama) — This summer, the Office of Mortgage Settlement Oversight released its first report detailing results of their findings around the five largest servicers’ compliance with servicing standards established by the National Mortgage Settlement (NMS). Attorney General Tom Horne is today releasing some of the highlights gathered from the report, specific to Arizona. This report demonstrates the first public step in a monitoring process that will continue for the next several years, providing the public with a new and transparent look into how banks are treating homeowners.

The report shows that the Settlement, in addition to bringing $2 billion from the banks to Arizona residents, has had a profound and positive impact on mortgage servicing even in the early stages of such a large national effort. For example, after rigorous testing, the Monitor reports that the banks passed those tests that ensure they no longer engage in the practice of robo-signing – signing off on foreclosure documents with little or no review. The report also confirms that the five banks in the NMS (Bank of America, Chase, Citi, ResCap Parties, Wells), have stopped charging distressed borrowers a fee just to process a loan modification request and are adhering to proper customer payment processing procedures.

“The Independent Monitor’s report is a landmark moment in our efforts to reform the servicing industry. For too long, banks have been operating behind closed doors,” said Attorney General Tom Horne. “In addition to direct restitution to Arizona homeowners, improving the way banks work with their customers and holding them accountable is an important part of reforming home mortgage servicing and foreclosure practices.”

With regard to Arizona specifically, as of May 20, 2013, the banks have reported engaging in a gross total of $1.8 billion in consumer relief activities for borrowers. $627.8 million was in the form of first and second lien principal reduction with an additional $223 million in the pipeline for borrowers in trial payment plans. In addition, almost 65,000 Arizonans who had their primary residence foreclosed upon received payments totaling $96.5 million. The Attorney General’s (AG’s) Office is also administering a $57 million program to provide relief to Arizona homeowners using funds from the Settlement. As a result of a separate settlement with Bank of America, severely distressed borrowers from that bank received an additional $7.89 million in relief.

Combining these amounts, the AG’s Office fought for, and won, over $2 billion in homeowner relief for Arizona constituents. It is important to note that the Office has not yet concluded its work and further negotiations with banks will result in more efforts designed to help distressed Arizona borrowers.

There is still work to be done. Most notably, the banks continue consistently to fail to send notices and communicate decisions to borrowers in a timely manner, according to the Monitor. Because of this finding, the five financial institutions in the settlement are officially on notice; they must correct their problems and if a bank fails in either of the next two quarters penalties can include court orders, up to $1 million in civil penalties per each violation, and up to $5 million fine for repeated failures.

Since the mortgage settlements were announced in February of 2012, the Attorney General’s Office has answered more than 4,000 consumer phone calls, 2,560 emails, and received more than 1,900 written complaints from consumers related to the mortgage crisis. A significant number of these contacts resulted in homeowners avoiding foreclosure, obtaining reductions in interest rates or principal amounts, or receiving restitution from businesses that charged improper fees or failed to do promised work. In addition, the Office continues to aggressively prosecute foreclosure rescue companies, and those involved in mortgage fraud at both the civil and criminal levels.

To review the Monitor’s report, click here. People with questions regarding the mortgage settlements or who wish to file a consumer complaint can visit our website at www.azag.gov/foreclosure, contact us by email at mortgagefraud (at) azag (dot) gov, or by phone at 602-542-1797 or 1-855-256-2834 (outside Phoenix area).

An overview describing the AGO’s mortgage related activities since the mortgage settlements were announced last year is available at www.azag.gov.