Wells Fargo 2011 Annual Report Download - page 79

o development of electronic loan portals for status of first
lien loan modifications; and
o establishment of loan modification decision review
process
enhanced protections for service members;
restrictions on certain default, foreclosure, and bankruptcy-
related service fees; and
restrictions on the imposition of force-placed insurance
Monitoring and Other Settlement Matters
The settlement will be overseen by a third party monitor who
will receive quarterly reports from servicers capturing progress
towards implementing the servicing standards and satisfaction
of the commitments of the Consumer Relief Program and the
Refinance Program. These reports will be based on an agreed
upon set of metrics and other information relevant to our
compliance obligations. The enforcement provisions of the
settlement include the parties’ right to seek penalties for non-
compliance, the monitor’s right to seek additional measurement
metrics, and the right to enforce the Consent Order in federal
court.
As part of the settlement, servicers will be released by the
participating states and federal agencies from a number of
servicing and origination claims. The releases given by the states
and the federal agencies generally apply to “covered servicing
conduct” and “covered origination conduct.” The state release
and the federal release extend to “covered servicing conduct”
prior to the effective date of the settlement. The federal release
for “covered origination conduct” depends on which agency and
which law is involved. The Department of Justice and the
Treasury are releasing claims under federal consumer credit laws
governing loan origination. The FTC is releasing claims relating
to origination conduct. HUD’s release of claims relating to
origination conduct is limited to claims based exclusively on
false annual certifications of compliance that are submitted to
HUD, and retains the right to pursue individual loan-level
violations of the Federal Housing Administration origination
rules and regulations. The Department of Justice’s release from
claims under the Financial Institutions Reform, Recovery, and
Enforcement Act (claims involving harm to financial institutions
or federal agencies based on intentional fraud or
misrepresentation by a bank or its affiliates) is also limited.
A number of subject areas are carved out from the releases:
criminal law violations, claims by natural persons, unpaid taxes,
fair lending claims (the state release applies this exception only
to loan origination conduct, while the federal release extends the
exception to origination and servicing conduct), securitization
claims (includes claims that the government could bring as an
investor in mortgage-related securities and for the benefit of
investors or for conduct directed at investors), claims against
MERS or MERSCORP, Inc., although we are released from
claims relating to our use of MERS (but still retain an obligation
as a MERS shareholder to indemnify MERS against third-party
claims), claims of county recorders, and certain existing
litigation and other obligations. Under the sub-commitment
agreement with California, there is a limited expansion of its
ability to pursue certain origination claims involving individual
claims for actual fraud against consumers for origination
conduct occurring on or after July 1, 2009
. There are also side
agreements with New York, Delaware and Massachusetts
whereby these states retain the right to pursue their existing
MERS litigation, subject to certain limitations.
Other aspects of the federal release include a carve out under
federal consumer credit laws for violations of RESPA related to
private mortgage insurance and the retention of all rights by
FHFA, Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Home
Loan Bank, the SEC, the CFPB (after July 21, 2011) and the
federal banking agencies.
Additional information on risks and litigation relating to
servicing activities is included in Note 15 (Legal Actions) to
Financial Statements in this Report.
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