Byline: Kevin Wack
WASHINGTON a The job of determining whether the nation's five largest mortgage servicers are complying with the landmark 49-state settlement will be divided between several private-sector consulting firms, the settlement's monitor said Tuesday.
Joseph A. Smith Jr., the former North Carolina banking commissioner who is now the settlement's monitor, said it does not make sense for a single consulting firm to be responsible for assisting him in the oversight of all five banks, in part because of conflicts of interest.
"We didn't think that any single firm had the capacity and the independence to handle all of them at the same time," Smith said in an interview.
Those comments came one day after Smith announced that he had selected BDO Consulting, a division of BDO USA, as the primary professional firm that will assist him.
The settlement documents envision only a role for a primary professional firm, but Smith said that he has decided to hire secondary firms as well. Each of those secondary firms (he did not specify how many will be hired) will be responsible for reviewing work plans submitted by the five servicers.
The five companies that are part of the estimated $25 billion settlement are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial.
Part of BDO Consulting's role will be to help develop uniform standards for determining whether the five banks are in compliance with the settlement agreement, which requires them to reduce principal on mortgages, among other provisions. The consulting firm will also help Smith as he selects the secondary firms, and later it will help oversee the work of the secondary firms.
Smith, who heads the Office of Mortgage Settlement Oversight, said that BDO Consulting was chosen from a list of dozens of interested firms in part because it has a track record on large public projects.
Most recently, the firm was hired by federal and state officials to conduct an independent analysis of the Gulf Coast Claims Facility, which was established to provide compensation to victims of the BP oil spill. …