By the summer of 2010, the dust was finally beginning to clear in the aftermath of the financial crisis. As the industry and its regulators assessed the damage, they saw an economic landscape that looked as if it had been struck by a doomsday comet, leaving a blast crater of foreclosed homes nationwide. And the housing industry was still burning. With one mortgage in 10 somewhere in the default servicing process, too many Americans were complaining of being mistreated at the hands of a mortgage servicing industry ill equipped to deal with the destruction. * Politicians across the country, possibly smelling an easy opportunity to win voter favor, descended on the nation's largest servicers. Rumors of robo-signing and claims that the industry was fast-tracking hard-working (but non-paying) homeowners into foreclosure hit the mainstream press like gasoline on a barbecue. Investigations cropped up in the offices of attorneys general (AGs) all over the country, to great fanfare. In February 2012, the industry threw up its hands and went to the table with the Department of Housing and Urban Development (HUD), the HUD Office of the Inspector General, the Department of Justice and a small army of state attorneys general and state banking regulators. * What resulted, and was ultimately approved by a federal district court in April, was the largest federal-state civil settlement in history--a $25 billion understanding between the United States and the nation's five largest mortgage loan servicers.
Enter Joseph A. Smith, the man chosen to oversee a historic settlement that will initially impact Bank of America, Charlotte, North Carolina; Wells Fargo & Co., San Francisco; JPMorgan Chase, New York; CitiMortgage, O'Fallon, Missouri; and Ally Financial/GMAC Mortgage, Detroit--but could ultimately change the way every loan servicer in America operates.
Who is Smith and what are his plans for the mortgage servicing industry?
Meet Joseph A. Smith
Built into the settlement agreement was a provision for a monitor who would oversee servicers in order to ensure their full compliance. The man chosen for this job is 62-year-old former North Carolina Commissioner of Banks Joseph A. Smith Jr., a 27-year veteran with experience in corporate, securities and banking law. His office was dubbed the Office of Mortgage Settlement Oversight (OMSO).
If Smith is anything, he is an executive who knows how to build a team, having previously served as chairman of the Conference of State Bank Supervisors and as an organizer and member of the board of managers of the State Regulatory Registry LLC, Washington, D.C., the organization that launched the concept of a nationwide mortgage licensing system.
To help him monitor how the nation's largest servicers comply with the agreement, he has solicited the aid of two Raleigh, North Carolina-based law firms: Smith Moore Leatherwood LLP and his own firm, Poyner & Spruill LLP.
To help with communications and accounting, Smith hired Capstrat Inc., a Raleigh, North Carolina-based communications firm, and accounting firm Parkside Associates LLC, an Atlanta-based specialist in forensic accounting. OMSO has also retained Cherry, Bekaert & Holland LLP, a full-service accounting firm in Richmond, Virginia. And that's just his...