After all the pomp and circumstances a couple of months ago, we haven't heard much when it comes to the National Mortgage Settlement.
Hailed as a "landmark" and "unprecedented" agreement by the federal government and state attorneys general, the $25 billion deal was approved by the courts in early April, buoying hopes that relief could finally be on the way for some struggling homeowners.
But while there was much praise and hope following the February announcement, more work lies ahead when it comes to providing relief for homeowners and "fixing" the way banks treat borrowers in financial distress.
That's where Joseph Smith, Jr. comes in. Smith recently signed on as the Monitor in charge of overseeing the implementation of the National Mortgage Settlement, no small job even for a veteran of the banking industry like himself.
In an exclusive interview with U.S. News and World Report, Smith said he's confident the settlement is a step in the right direction.
"I don't pretend that what we're doing is a silver bullet," he says. "But I hope what we're doing will contribute to the health of the market in the future."
U.S. News talked to Smith to find out the latest on the national mortgage settlement. Excerpts:
How would you describe your role as monitor of the National Mortgage Settlement?
My role is to ensure that the banks subject to the settlement meet their obligations first to grant relief to borrowers through principal forgiveness and other kinds of restructuring, and secondly that the banks implement an extensive series of improvements of their servicing activities as they relate to distressed borrowers, borrowers in or approaching foreclosure, and borrowers who are in bankruptcy.
Do you think the settlement will help "fix" the housing market?
I think it will be helpful. It is a somewhat small but significant step. Over time, I'm hopeful that the servicing standards will help prevent some of the problems we've had in the past and ultimately help the market heal itself up.
What do you hope will be the end result of your efforts?
I hope that as a result of what we do there will be a restoration or a strengthening of public trust and confidence in the financial system.
When will we start seeing the results of the settlement?
The reports will be first from the states in the second half of the year about the consumer relief around the country. When the state reports begin, you'll begin to see some explicit evidence of how that piece of the agreement is being implemented, where it's being implemented, and how we're doing.
I think the settlement [as it relates to] the servicing standards are very extensive. We have a phase in implementation of those standards [to be completed] by early October. I have every indication that the banks are well along the way of doing most of them.
What progress has your office made so far?
I think we're pretty far along. I'm having continuous engagement with the government parties—the Attorneys General, HUD, and the Department of Justice—with weekly calls and conferences.
I've also had a meeting with all the banks together where we laid some basic groundwork and then I've had individual meetings with each of the banks to discuss in greater detail the individual nature of each of these servicing operations—what kind of portfolio they have, the way they're organized, and how they're planning to comply with the settlement agreement.
We're still discussing a number of things, but I think we've made progress. There's a small but really excellent staff of people who work with me and we're pulling together pretty well.
[Read: Rents Rise While Home Prices Fall.]
What are the next steps?
The big additional thing, which I expect [will happen] by the end of May, [is to retain] a firm to assist me in the setting the standards for performance by the banks under the agreement and setting standards for our review. The firm will set overall standards for the performance and measurement of the banks so they're all under the same rules.
The follow-up work will require a lot of person power, so we'll probably hire additional firms to help with that work. I hope [that will occur] by Memorial Day.
By [early July] we hope to have completed what are called work plans in the agreement, and those work plans detail steps the banks are going to take to monitor their own activities and the steps that I'm going to take to review what the banks present to me.
That's all moving pretty fast. I'm reasonably confident we can do it.
What obstacles stand in the way?
The number of moving parts we have to get going in the same direction and up and running is a little bit of a concern.
Other than that right now I'm hopeful. We've got a lot of things to work through in terms of our reporting formats and disclosure and we're working hard to find firms that have the right combination of independence and capacity to do the work.
Meg Handley is a business reporter for U.S. News & World Report. You can follow her on Twitter and reach her at firstname.lastname@example.org.