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The headlines, press conferences and presidential praise that accompanied the February announcement of a $25 billion legal settlement over egregious foreclosure practices have long since subsided.
But for one veteran banking regulator in a newly leased, 18th-floor office in downtown Raleigh, N.C., the work is only beginning. He recently resigned as North Carolina’s banking commissioner to become the “monitor” overseeing the landmark agreement between government officials and five of the nation’s largest banks.
“I thought there was some potential good that could come out of it, for the mortgage industry and the economy,” Joseph Smith Jr., 62, said in a recent interview.
Smith’s primary role over the next several years will be to ensure that banks — Wells Fargo, Citigroup, JPMorgan Chase, Bank of America and Ally Financial — live up to their end of the deal by overhauling their troubled mortgage servicing operations and following through with the billions in aid they agreed to give struggling homeowners.
A 16-page section of the court-approved settlement outlines Smith’s legal powers, his responsibilities and the information banks must provide to him on a regular basis. But the document leaves him plenty of discretion in deciding how to actually police the mortgage-related activities of the banks.
“I have no reason to believe right now that I won’t have enough resources,” Smith said. “The big challenge is to do this work in a way that justifies public confidence in the whole process.”
Smith spent many years as a corporate and banking lawyer in New York, Connecticut and North Carolina, including nearly a decade as general counsel for Centura Bank. He was appointed North Carolina banking commissioner in 2002, overseeing state-chartered banks and other lenders.
In that role, he helped strengthen the state’s anti-predatory lending law, in part by ordering North Carolina’s largest payday lender to cease operating in the state after finding it had broken the law by charging exorbitant interest rates on its short-term loans.
The following year, he hired the president of the nonprofit Center for Responsible Lending, which had been highly critical of some financial industry practices, as his deputy commissioner and point man on mortgage issues and consumer finance. In early 2008, Smith teamed with the state attorney general to promote a toll-free help line for troubled homeowners and committed hundreds of thousands of dollars into funding foreclosure prevention counselors.
President Obama nominated Smith in November 2010 to lead the Federal Housing Finance Agency, which oversees government-backed mortgage giants Fannie Mae and Freddie Mac. But after Senate Republicans held up his confirmation, Smith withdrew his name and was reappointed to another term as bank commissioner last year.
It wasn’t long until North Carolina Attorney General Roy Cooper, who was part of the team of attorneys general and federal officials negotiating the foreclosure settlement, came calling about the monitor job.
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