from five firms were recently selected to oversee accounting compliance
in a federal settlement with five banks and mortgage servicers whose robosigning practices for mortgage foreclosure documentation got them into hot water, Accounting Today
Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo will be overseen by five secondary professional firms—BKD LLP, Baker Tilly Virchow Krause LLP, Crowe Horwath LLP, Grant Thornton LLP and McGladrey LLP—to ensure they are adequately following the agreed-upon terms. The agreement, reached in February and formalized in April, was made between the financial institutions and the federal government, the attorneys general of every state but Oklahoma, plus the District of Columbia. The banks agreed to put new servicing standards in place, provide funding for state and federal governments and offer loan modification relief to homeowners, the news source explains.Servicers to put $25 billion toward consumer relief
Specifically, the entities will provide at least $25 billion in consumer relief, $17 billion or more of which will be put toward principal reduction and loan modification for homeowners looking to avoid foreclosure. An additional $3 billion will go to refinancing for homeowners with underwater mortgages—meaning they owe more than the current market value of the property. A further $1.5 billion is set to be paid to homeowners who were foreclosed upon between the beginning of 2008 and the end of last year.
The firms' main role will be to assist the primary professional firm, BDO Consulting, by evaluating one servicer each to ensure the accounting legislation
is being appropriately followed. The effort is expected to last up to 3 1/2 years.
"Each secondary professional firm has a high level of expertise that will bring the detailed, independent attention we need to monitor this settlement," said National Mortgage Settlement Monitor Joseph A. Smith in a recent statement.
According to the news source, secondary professional firms will contribute to the effort by conducting periodic on-site or remote reviews of their designated mortgage loan servicers, leveraging a variety of compliance metrics that include loss mitigation offers, proper documentation of foreclosures, detailed analysis and evaluation of loan modification applications.