TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/74422
TAKE 5 "Compliance and non- compliance with the metrics, and reporting formats—this is all a big step forward. This was done in a way that will achieve the ends that the parties seek." Joseph A. Smith Jr. on Servicer Compliance Under the Settlement The onetime Federal Housing Finance Agency director-nominee now serves as monitor of servicer compliance under the terms of the historic $25 billion settlement. We take a stroll with Joe Smith to catch up on recent changes at the Office of Mortgage Settlement Oversight. M // You recently selected BDO USA, LLP, to serve as your primary professional firm (PPF). What was the process like in selecting BDO? SMITH // It was fairly expensive and exhaustive. I set out requests for indications of interest to 40 and other accounting firms. We got back a similar number of responses. We got around 20 quality responses being the primary professional firm—we being another group of colleagues, law firms, and accounting firms. We reviewed each of the applications, then selected a group of finalists to come to Raleigh to interview in person. After the process was completed, we sought to know if they could meet my needs as monitor. We selected them and they're working right now—like a house is on fire. 16 | THE M REPORT M // How will BDO change the way your office operates? SMITH // The next thing we're going to do is hire the secondary firms. We're going to do that at the same time that we approve work plans. It doesn't change in my mind the nature of my organization in Raleigh very much. Again, as we go forward, we may hire people full-time to meet needs as supervision continues. I feel really great in selecting a PPF because that gives me what I need to complete this work in a timely and effective way. M // How can servicers under the settlement expect to interact with BDO auditors? SMITH // We have weekly calls with the servicers just to deal with a variety of matters. BDO will be on the call for the first time this week. BDO and colleagues from our office will meet with these servicers next week to do a variety of work, including work plans under the settlement agreement. We'll also select secondary firms to report to me under the terms of the settlement. I think they can expect to continue to be engaged with me on a weekly basis. The same will be true of BDO. M // Your office went live with a website for consumer and professional concerns about the settlement. How has reception been so far? SMITH // We've gotten a significant number [of reports] so far. Two portals: One is for consumers directly to tell me about their concerns—that they need help. The portal does what is the best thing for people in that situation, which is to help them get to people who can help them. We have a second portal for attorneys who can help consumers and advocate for them. The professional side is a bit more detailed than the consumer side and will give me a way to assess the external effects of what the banks are doing internally. It can be confirming as well as concerning. M // Have there been any changes to the reporting process for servicers? SMITH // There's no progress. We're not there yet. We are moving at a pretty good clip. The fact that I now have a PPF in place to help discuss with the banks . . . sampling sizes, compliance and non- compliance with the metrics, and reporting formats—this is all a big step forward. This was done in a way that will achieve the ends that the parties seek. M // Everything going smoothly with servicer compliance so far? SMITH // I believe so, yeah. Period, yes. We have what is fair to say—it's not a picnic when we meet—but it's headed in the same direction and we're ironing out any disagreements. We're moving forward along in a good way. M // What do you anticipate going forward? SMITH // We have a lot to do in the next month. The main issue affecting us is the basic foundation work—getting work plans completed. Once it's done, I'm hoping we can get it done in a relatively smooth way. M // Are you reading any interesting books in your role as monitor? SMITH // Winter King—about Henry VII. It is fascinating to read about the guy who was the founder of the Tudor dynasty. Everyone thinks of Henry VIII and Elizabeth I, but it all starts with grandpa.