Bank of America (NYSE:BAC) certainly doesn't need any more bad press about its mortgage practices, but the much-anticipated report from National Mortgage Settlement monitor Joseph A. Smith is delivering some anyway. In his review of how the signatory banks have been handling the terms of the $25 billion agreement inked in February of 2012, he found B of A, Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) to have less than stellar records.
A black mark against all, of course, but a bit worse for B of A, with its ongoing legal morass centered around toxic mortgage loans written by Countrywide -- and, currently, a rather high-profile lawsuit playing out in Boston wherein former employees claim Bank of America rewarded workers who derailed the mortgage modification process, and fired those who refused to participate in the alleged deceit.
No more robo-signing, but problems remain
By far, the most common issues regarded the lack of responding in a timely fashion to borrowers' concerns, and providing a dedicated contact person in each case. Both Citi and JPMorgan said that they are working to fix these problems; B of A and Wells did not comment.
Smith noted that his office had logged nearly 60,000 complaints between October 2012 and this past March, many of them centering on the lack of a dedicated contact person, as well as "dual tracking" -- whereby the bank presses on with foreclosure even as a loan modification is in the pipeline.
Smith rated the banks on more than 12 servicing standards, of which Citi and Wells failed one apiece, while B of A and JPMorgan were each remiss on two. The homeowners' suit under way in Boston has heard much testimony on the practice of dual tracking at Bank of America, and this report is certainly supportive of the existence of that particular practice. It also bolsters New York Attorney General Eric Schneiderman's case against B of A and Wells, in which he claims that both banks have violated the terms of the agreement -- nearly 340 times, in fact.
"Deficit of trust"
Smith made no judgment on the banks, noting that each institution took this matter seriously, and have spent much time and money trying to get the situation rectified. Though he didn't dole out any praise, he didn't heap any blame, either.
In his comments, Smith did mention that the biggest problem with mortgage lenders and borrowers is a "deficit of trust." This is undoubtedly true, and with Bank of America in particular, this has been particularly burdensome. As the big bank struggles to polish its image, public criticisms -- no matter how tastefully done -- will continue to weigh on B of A, making a full recovery all the more difficult.