Banks not improving at foreclosure practices, settlement monitor says

June 19, 2013 11:00AM

A court-appointed monitor said CitiGroup, Bank of America and other big mortgage servicers in the U.S. have not improved how they treat customers approaching foreclosure, Bloomberg News reported.

The banks’ shortcomings pertain to how they handle requests for loan modifications and collect customer records, the monitor, Joseph Smith Jr., said in a report released today. He is empowered to take the banks back to court for additional sanctions if they continually fail in the same area after an improvement plan is implemented, Bloomberg News said.

As a result of a 2012 five-bank settlement that also involved Wells Fargo, Ally Financial and JPMorgan Chase, the banks were ordered to follow new servicing rules. The servicers were also required to provide $25 billion to consumers in the form of loan forgiveness or short sales, as previously reported.

Some attorneys general have spoken out against banks’ post-settlement practices as well. New York AG Eric Schneiderman, who is suing HSBC Holdings Plc for allegedly breaking foreclosure law, said he planned to sue Bank of America and Wells Fargo for violating settlement terms related to processing applications for loan modifications.

Earlier this month, Florida Attorney General Pam Bondi claimed Bank of America was responsible for “possible failure to comply fully” with settlement terms, as previously reported. [Bloomberg]Mark Maurer