Changes in mortgage servicing to take effect Although the new standards haven't received as much attention, they are crucial for fixing a broken mortgage system, government officials said. The standards forbid the pervasive practice of "robo-signing" - essentially filing forged and shoddy legal paperwork to speed the foreclosure process - that caused national outrage in late 2010. In addition, mortgage servicers no longer can foreclose on a borrower while simultaneously negotiating a loan modification, a practice known as "dual tracking." They must provide customers with a single point of contact, rather than shuffling them around between different employees with each call. And they must treat foreclosure as a last resort, only after considering a range of other options to keep borrowers in their homes. Collectively, the new standards are intended to eradicate the sloppy industry practices that proliferated in the wake of the housing bust, leading to frustration for homeowners and untold numbers of foreclosures that might otherwise have been avoided. The obvious question: Will banks live up to their end of the bargain? Officials from the five banks involved in the settlement - Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup - said their firms have spent months making the necessary changes and expect to be in compliance come Tuesday. Bank of America spokesman Dan Frahm said in a statement Monday that adhering to the new standards required significant changes in operations and support systems. "We have met all servicing standards requirements on time and will meet remaining requirements under the settlement," he said. Wells Fargo said that while it had put in place only about a third of the new servicing standards as of June, it expected to meet all the requirements in time for Oct. 2. "We believe that implementing the servicing standards has been a productive process that enables Wells Fargo and the servicers that are party to the settlement to operate under a common set of rules and expectations,"Michael DeVito, executive vice president for Default Mortgage Servicing at Wells Fargo Home Lending, said in an update earlier this summer. Joe Smith, the former North Carolina banking commissioner who was hired by government officials to ensure that banks abide by the settlement, said he's optimistic that the firms are making a good-faith effort. I have assurances from them that they will be compliant and ready to go. I have no reason to believe they aren't ready," Smith said in an interview Monday. Smith acknowledged that it will take time to know whether the banks actually have changed their ways given the sheer number of requirements and the massive size of the firms involved. He said he plans to rely in part on independent review groups at each bank to keep an eye out for any lapses. But Smith also said he will rely heavily on complaints from homeowners and others in the industry who interact directly with the banks. "Long term, it's the most important part of the settlement," he said. In a recent C-Span interview, Housing and Urban Development Secretary Shaun Donovan said he was encouraged by the response of financial companies. "We've already started to see some changes in the servicing industry, but I think we're going to see significantly more as a result of these changes," he said.