The Office of Mortgage Settlement Oversight said Monday that it has hired five secondary consulting firms to assist BDO Consulting in overseeing compliance with the $25 billion national mortgage servicing settlement.
Joseph A. Smith, Jr., the former North Carolina banking commissioner who is now the settlement's monitor, chose BKD, Baker Tilly Virchow Krause, Crowe Horwath, Grant Thornton and McGladrey.
Smith has said he had a tough time finding consulting firms to help him review the self-monitoring work that will be done by the largest servicers because most accounting and advisory firms have a long-standing relationship with at least one of the top banks.
The five companies that are part of the settlement are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial.
The five secondary consulting firms "will help to ensure that the banks are reviewed thoroughly and effectively," Smith said in a press release. "I am confident that these six accounting firms make up the blend we need to fully implement the settlement."
Each of the firms will be responsible for conducting an evaluation of one servicer. Crowe Horwath will oversee Bank of America, BKD will be matched with Citigroup, Grant Thornton will supervise JPMorgan Chase, McGladrey will manage Wells Fargo and Baker Tilly Virchow Krause will oversee Ally, the former GMAC.
The firms will each be part of Smith's team for about three and a half years and will work with the servicers' internal review groups to oversee execution of the settlement.
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.