First Take: Progress Report from the Monitor of the National Mortgage Settlement


First Take: Progress Report from the Monitor of the National Mortgage Settlement

First Take: Progress Report from the Monitor of the National Mortgage Settlement


On April 5, 2012, the Settlement1 went into effect when the United States District Court for the District of Columbia entered five separate consent judgments (the “Consent Judgments”)2 that settled claims of alleged improper mortgage servicing practices against five major mortgage servicing organizations. Those claims had been brought by a number of independent agencies.

The governments and government agencies participating in the Settlement (the “government parties”) were:

• The U.S. Department of Housing and Urban Development
• The U.S. Department of Justice
• Attorneys general from 49 states and the District of Columbia
• Various state mortgage regulatory agencies
• Other releasing parties, including the Consumer Financial Protection Bureau and the U.S. Department of Treasury

These claims had been brought against five mortgage servicers as defendants (the “Servicers”):

• Bank of America, N.A. (“Bank of America”)
• CitiMortgage, Inc. (“Citi”)
• Ally Financial, Inc., Residential Capital LLC, and GMAC Mortgage, LLC (“Ally”)
• J.P. Morgan Chase Bank, N.A. (“Chase”)
• Wells Fargo & Company and Wells Fargo Bank, N.A. (“Wells”)3

In the Settlement, the government parties released claims against the Servicers in exchange for the Servicers’ agreement to:

• Make direct payments to governments of approximately
$5 billion.4
• Provide relief, including principal forgiveness, refinancing, and other forms of relief (“Consumer Relief”) to distressed borrowers.5
• Change the servicing practices that they follow in their dealings with borrowers by the adoption of more than 300 servicing standards (the “Servicing Standards”).6
• Implement various protections for military personnel.7

The Settlement also created the position of Monitor. Shortly after Judgmentsreaching agreement on the terms of the Settlement, the parties appointed me to serve in that role.8 My appointment as Monitor was confirmed when the U.S. District Court for the District of Columbia entered the Consent Judgments on April 5, 2012.

As the Monitor, I am responsible for reviewing and certifying the discharge of the Servicers’ Consumer Relief obligations and overseeing the implementation of the Servicing Standards.9 I do not have any authority or responsibilities that relate to the direct payments previously mentioned.

As Monitor, I am subject to oversight by a Monitoring Committee that comprises representatives of the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, and representatives of 15 states.10 My office operates under a budget I prepare annually in consultation with the Monitoring Committee and Servicers and is paid for by the Servicers out of their corporate funds. My budget for the fiscal year beginning July 1, 2012 was so prepared and is in effect. At the end of this fiscal year, I will make publicly available a report with audited financial statements covering my work.

Under the Settlement, I am to carry out my responsibilities by negotiating and then implementing Work Plans that describe in detail the performance to be measured and the procedures by which such measurement will be undertaken. The Servicers and I have agreed upon these Work Plans and have submitted them to the Monitoring Committee for review. They will take effect if the Monitoring Committee does not object to them.11 As we move forward through the Settlement process, the Servicers and I can jointly amend the Work Plans if the Monitoring Committee does not object.12


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