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The Latest SERVICING T he monitor overseeing servicers' fulfillment of the National Mortgage Settlement issued a report on the five servicers' progress satisfying the consumer relief obligations outlined in the agreement. "[E]ach servicer [has] made substantial progress toward its required consumer relief and refinancing commitments," said Joseph A. Smith, settlement monitor. Smith's report covers servicer activities through December 31, 2012, which have been vetted and verified by the Office of Mortgage Settlement Oversight. Each servicer's internal review group provided Smith with information on the servicers' crediting progress in February of this year. Since then, Smith and his team have devoted more than 12,000 hours thoroughly reviewing, testing, and retesting the internal groups' reports to ensure compliance and ascertain how much of the required relief credit has been completed, the settlement monitor explained. "Bank of America, Citi, Chase, and Wells Fargo have subsequently asserted to me that they have completed their respective obligations," Smith said. "I have started my review process and will submit final crediting reports to the court when and if I determine the credited relief meets the settlement's obligations." Smith added that he "hopes and expects" to report on each servicer's final satisfaction of the settlement consumer relief obligations in the coming months. Ally Financial reported back in February that it completed all of its required consumer relief actions under the settlement. Smith confirmed Ally's assessment on providing more than $257 million in relief to customers in the form of loan modifications, short sales, principal forgiveness, and other forms of mortgage help. Ally was only required under the settlement to provide $200 million in consumer relief. The M Report se c on da r y m a r k e t officials are relishing the victory. "Bank of America chose to defend Countrywide's conduct with all its might and money, claiming there was no case here. The jury disagreed," said Preet Bharara, Manhattan U.S. attorney and the prosecutor in the case. Bharara says the Hustle program treated quality control and underwriting "as a joke," and he faulted BofA and Mairone for "making disastrously bad loans and systematically removing quality checks in favor of its own balance." He added, "In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow. That profit, however, was built on fraud." The case was decided nearly a year to the day after the U.S. Department of Justice filed its complaint, alleging Countrywide used the Hustle program to unload poorly underwritten Settlement Monitor released new data on servicers' performance. a na ly t ic s A 10-person panel of jurors is holding Bank of America (BofA) and a mid-level manager liable for high-risk mortgages originated by Countrywide through a program known as "Hustle" and then sold off to Fannie Mae and Freddie Mac. After hearing arguments for four weeks in a Manhattan federal court, the jury returned a decision finding BofA liable on one charge of fraud in the civil case and finding Rebecca Mairone, who worked for Countrywide from 2006 to 2008 as COO of one of its lending divisions, liable on the civil fraud charge she faced. It's among only a handful of cases stemming from the subprime and foreclosure crisis to go to trial and the first time an individual has been singled out as being responsible for personally contributing to the housing market's implosion—and government Servicer Update s e r v ic i ng "Hustle" mortgages originated at Countrywide but sold to the GSEs considered fraudulent. Or ig i nat ion BofA Found Liable in Fraud Case mortgages to Fannie Mae and Freddie Mac, to the tune of $848.2 million in gross losses for the GSEs, according to court documents. Mairone was added as a co-defendant in January because in her position, she was responsible for managing the High Speed Swim Lane program, or Hustle. For five years, though, state and federal officials have neglected to go after subprime kingpin and Countrywide CEO Angelo Mozilo, who despite his track record has escaped any and all repercussions related to his mortgage dealings and been subject only to a fine for insider trading—of which he only had to pay two-thirds. Instead, U.S. attorney Preet Bharara zeroed in on a mortgage exec who's still visible in the marketplace and whose tenure with Countrywide was short-lived and low-profile. Mairone, who is now a home lending executive with JPMorgan Chase, became part of the Bank of America team when it acquired Countrywide in 2008, and she's spent the better part of her career laboring to keep financially distressed borrowers in their homes. For nearly two years, she was BofA's national default servicing executive, overseeing loss mitigation and foreclosure prevention efforts for hundreds of thousands of distressed homeowners. In 2011, Mairone was named Bank of America's national mortgage outreach executive. Under her supervision, the company doubled its outreach staff, opened dozens of regional customer assistance centers in hard-hit markets, and hosted and participated in hundreds of local home preservation workshops, with Mairone herself traveling from city to city to ensure homeowners attending the events got the assistance they needed. A court date of December 5 has been set to begin the penalty phase of the case. Ultimately, the decision of how much BofA and Mairone will be fined is in the hands of U.S. District Judge Jed S. Rakoff, a court official well-known for his tough stance against banks and the financial services industry. | 45