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California Real Estate March/April 2013 : Page 20

PROFILE | By Jill Hamilton Keeping Banks in Check STATS Katherine Porter Calfornia Monitor of the National Mortgage Settlement Age: 38 Strengths: Impatience Weakness: Impatience Very fi rst job: Teacher of 8th grade math Most recent purchase: Eggnog latte Can’t live without: My husband (Matt Hoffman, a stay at home dad). I don’t think he’s a thing but I really couldn’t live with-out him. I could not do this job without his help. Last book read: When Words Fail , a book about communicating ideas to the public No. 1 on my “bucket list”: Retire Career choice #2: Grocery store manager Best advice received: Be brave. Porter, now a professor at the University of California Irvine School of Law, is following in the steps of her mentor as the new California Monitor. In March 2012, Porter was appointed by California Attorney General Kamala Harris and put in charge of monitoring compliance in California with the National Mortgage Settle-ment. The Monitor oversees the fi ve banks in-volved in the settlement (Citibank, JP Morgan Chase/Washington Mutual, Bank of America/ Countrywide, Wells Fargo/Wachovia, and Ally Financial), provides outreach and education to borrowers and borrower advocates, and offers direct assistance to homeowners. It is a daunting task. The 38-year-old, full-time professor, also a mother of a six, four and one-year-old, is charged with fi xing the long-entrenched practices of fi ve gigantic and pow-erful fi nancial institutions, making sure that up to $18 billion of settlement funds ends up in the right places, and handling the mortgage is-sues of, basically, anyone who asks for help. “Sometimes I think ‘I should have been the Wyoming Monitor,’” jokes Porter, an energet-ic, cheerful woman who admits that after too many interviews in a row, she has been known to write “Rescue me!” on the backs of legal pads to fl ash to her secretary. But in truth, there’s nothing she’d rather be doing. “The fl ip side of it is that California is an im-portant place to be doing this work because I have the potential to make really big changes. It’s a crucial real estate market and it’s been a place of innovation, both positive and negative. K atherine Porter’s gestalt moment happened her fi rst day of bankruptcy class at Harvard Law School. Her professor was Elizabeth Warren, now U.S. Senator Warren. • “I was in her class for all of about an hour when I decided I wanted to grow up and be just like her,” says Porter. “She conveyed both the big economic issues and the human face of it, that real people are involved.” When you say to a fi nancial institution, ‘This is what we’re seeing in California and we’re a fi fth of the market,’ that creates momentum for a powerful conversation.” One of Porter’s trademark characteristics is the humanity she brings to her work. Like her mentor Warren, she is able to look at issues on the macro level—economic systems, fi nancial policies, legal issues—as well as the micro level— real people trying to do their jobs. It’s a view she developed growing up on an Iowa farm during the fi nancial crisis of the 1980s. “The bank in my town was closed by the FDIC. I watched people losing their farms, stores closing, suicides. It was a formative ex-perience for me seeing the pain people go through when there’s an economic downturn. My family was one of those families—my dad had to quit farming to work at a bank and my mom went to work in town and commuted 50 miles each way to her job. So I think I have an empathy for what it’s like to be worried about your fi nancial future.” Paying attention to the human side is appar-ent in her diplomatic skills with fi nancial insti-tutions. “I enjoy positive working relationships with the fi nancial institutions and I feel like I get good answers, but my job is to push them to think about the homeowner’s perspective,” says Porter. “I say, ‘That is a really good explanation you just gave me for why you do it that way, but more importantly, what are you telling families about why you’re doing this?’” Porter credits her background as an educa-Photographed by Dustin Snipes 20 CALIFORNIA REAL ESTAT E • M A R CH/APRI L 2013

Profile: Katherine Porter

Jill Hamilton

Keeping Banks in Check<br /> <br /> Katherine Porter’s gestalt moment happened her first day of bankruptcy class at Harvard Law School. Her professor was Elizabeth Warren, now U.S. Senator Warren. • “I was in her class for all of about an hour when I decided I wanted to grow up and be just like her,” says Porter. “She conveyed both the big economic issues and the human face of it, that real people are involved.”<br /> <br /> Porter, now a professor at the University of California Irvine School of Law, is following in the steps of her mentor as the new California Monitor. In March 2012, Porter was appointed by California Attorney General Kamala Harris and put in charge of monitoring compliance in California with the National Mortgage Settlement. The Monitor oversees the five banks involved in the settlement (Citibank, JP Morgan Chase/Washington Mutual, Bank of America/ Countrywide, Wells Fargo/Wachovia, and Ally Financial), provides outreach and education to borrowers and borrower advocates, and offers direct assistance to homeowners.<br /> <br /> It is a daunting task. The 38-year-old, fulltime professor, also a mother of a six, four and one-year-old, is charged with fixing the longentrenched practices of five gigantic and powerful financial institutions, making sure that up to $18 billion of settlement funds ends up in the right places, and handling the mortgage issues of, basically, anyone who asks for help.<br /> <br /> “Sometimes I think ‘I should have been the Wyoming Monitor,’” jokes Porter, an energetic, cheerful woman who admits that after too many interviews in a row, she has been known to write “Rescue me!” on the backs of legal pads to fl ash to her secretary.<br /> <br /> But in truth, there’s nothing she’d rather be doing.<br /> <br /> “The fl ip side of it is that California is an important place to be doing this work because I have the potential to make really big changes. It’s a crucial real estate market and it’s been a place of innovation, both positive and negative.<br /> <br /> When you say to a financial institution, ‘This is what we’re seeing in California and we’re a fifth of the market,’ that creates momentum for a powerful conversation.”<br /> <br /> One of Porter’s trademark characteristics is the humanity she brings to her work. Like her mentor Warren, she is able to look at issues on the macro level—economic systems, financial policies, legal issues—as well as the micro level— real people trying to do their jobs.<br /> <br /> It’s a view she developed growing up on an Iowa farm during the financial crisis of the 1980s.<br /> <br /> “The bank in my town was closed by the FDIC. I watched people losing their farms, stores closing, suicides. It was a formative experience for me seeing the pain people go through when there’s an economic downturn. My family was one of those families—my dad had to quit farming to work at a bank and my mom went to work in town and commuted 50 miles each way to her job. So I think I have an empathy for what it’s like to be worried about your financial future.” <br /> <br /> Paying attention to the human side is apparent in her diplomatic skills with financial institutions. “I enjoy positive working relationships with the financial institutions and I feel like I get good answers, but my job is to push them to think about the homeowner’s perspective,” says Porter. “I say, ‘That is a really good explanation you just gave me for why you do it that way, but more importantly, what are you telling families about why you’re doing this?’” <br /> <br /> Porter credits her background as an educator for the non-adversarial approach she takes to her job.<br /> <br /> “My first job was teaching eighth grade. If you can control a classroom of eighth graders, you have nothing to fear in life. I think a lot of what I do as being in that educational role, and that mindset can be a really productive one to approach a conversation with.” <br /> <br /> Clarity, another hallmark of Porter’s work, also comes from her background in education. All the communications from the Monitor’s office are notably easy to understand. On the Monitor website, for example, a homeowner can take a short online quiz and, within about a minute, know whether or not they are affected by the settlement.<br /> <br /> “I constantly say to my staff, ‘How do we explain this hard issue in a way that everybody can understand and take part in it?’” says Porter. Making sure people understand is why—despite her “Rescue me!” signs—Porter spends so much time doing media and outreach.<br /> <br /> “I want Americans to understand how this settlement works and what their role may be in it. These issues are hard,” she says. “People try to find help, but some of those ‘helpers’ have been scams. Other helpers have been well intentioned, but, for some, have been impenetrable. A lot of what we try to do is educate advocates.” <br /> <br /> Porter calls REALTORS® an important part of her “feedback loop” and wants to hear back on how the reforms are working, particularly regarding the short sale process.<br /> <br /> “We want to make sure people are pursuing short sales because it’s right for their family, not because they’re frustrated with the loan modification process and not being given accurate information about their choices,” she says, giving her email address (CAMonitor@doj.ca.gov). “We want to hear back from REALTORS® if their borrowers aren’t able to get information from the banks or are unable to figure out what their options are.” Porter also wants to hear from REALTORS® on whether short sales are being made within the 30-day time frame and whether the single pointof- contact requirement is being met. Are REALTORS® seeing their clients be given quality, accurate information from a designated representative? Is this representative clearly explaining loss mitigation options?<br /> <br /> As the terms of the National Mortgage Settlement continue to take effect, the job of the Monitor is changing.<br /> <br /> “We’re at a point of transition. The settlement relief began March 1, 2012, and by and large, the banks have made rapid progress and are on target on loan modifications, the short sales, the second liens, and forgivenesses.” <br /> <br /> An area of continued concern is dual tracking, the practice by which banks pursue a foreclosure and a loan modification on the same property simultaneously. Porter’s first official report, released in October 2012, revealed that dual tracking still affects hundreds of homeowners. Porter considers dual tracking one of the most harmful servicing practices because it can lead to home loss when a loan mitigation option was feasible. Her team has intervened in hundreds of situations to halt foreclosure sales and stop dual tracking. In such situations, the families have time to pursue loan modification options, consult housing counselors, or make plans for selling or surrendering their homes.<br /> <br /> And now, with over 300 new rules that became effective early October 2012, there is even more compliance-checking required. “That also means a whole new round of education and a whole new round of outreach,” says Porter. “The servicing standards are going to be in effect for three years and the goal is that these standards reshape the industry. If the banks make these changes and they’re effective, we’re going to see a mortgage servicing industry that is more hands-on when a homeowner is in trouble, provides better customer service to homeowners, and has more transparent rules and processes that homeowners can understand. We hope those changes will spread throughout the industry and become industry processes that endure well beyond the three years.”<br /> <br /> As for what the Settlement’s effect will be on the housing market as a whole, even Porter, with her macro view, is not sure.<br /> <br /> “I think we’re never going to be able to fully untangle what effect this had because it’s so many moving parts at the same time— federal programs, the economy, the job market,” says Porter. “But taking an industry that’s been all about low cost/high volume processes and turning it into an industry that re-thinks who their customer is and puts the consumer back into the process— I think that’s the ultimate goal.”

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