Mortgage aid under foreclosure settlement tops $26 billion
WASHINGTON — The country’s largest mortgage servicers said they had provided $26.1 billion in relief to struggling homeowners, half through short sales, as part of a national settlement of foreclosure problems, the deal’s monitor reported Monday.
The aid went to more than 300,000 borrowers from March 1 to Sept. 30, averaging about $84,385 per person, according to the Office of Mortgage Settlement Oversight, which was set up to monitor the banks’ progress.
The servicers covered by the settlement — Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. — reported completing $21.9 billion in relief to homeowners through short sales and reduced monthly payments on first and second mortgages.
In addition, the banks said they had $4.2 billion in assistance in trial mortgage modifications, the report said.
But those figures have yet to be confirmed by the settlement’s monitor, former North Carolina banking commissioner Joseph A. Smith Jr.
“The relief the banks have reported is encouraging,” he said. “But it is important to remember that no obligations will be met until I have reviewed, confirmed and credited them.”
The payments are part of a complex $25-billion agreement reached in February to settle federal and state foreclosure abuse investigations. But the amount of reported relief doesn’t mean banks have fulfilled their requirement. Banks get less than a dollar’s worth of credit for each dollar of relief.
The credits vary. For example, each dollar forgiven in a short sale is worth a 45-cent credit if the bank owns the loan and 20 cents if investors hold it. The national monitor has not yet calculated the credits for the banks’ reported relief.
Under the settlement, 60% of relief must come through principal reductions that keep people in their homes. But so far, half of the aid nationally — 50.2% — has been given through short sales, in which banks allow homeowners to sell their homes for less than they owe.
The figure is higher in California. The national report listed $8.9 billion in relief for California homeowners, with about 66% of that in short sales.
