$26 billion in aid given under mortgage settlement, banks say
WASHINGTON -- The country’s largest mortgage servicers said they had provided $26.1 billion in relief to struggling homeowners through September, half through short sales, as part of a national settlement of foreclosure problems, the deal’s monitor reported Monday.
The aid has gone to more than 300,000 borrowers from March 1 to Sept. 30, for an average of about $84,385 per person, according to the Office of Mortgage Settlement Oversight, which was set up to monitor the progress of the banks.
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 programs, 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 homeowner 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. Under the settlement, 60% of relief must come through principal reductions that keep people in their homes.
The national monitor has not yet calculated the credits for the banks’ reported relief.
But so far, half of the aid nationally -- 50.2% -- has been in the form of forgiven mortgage balances through short sales.
The figure is higher in California. About 68% of the $8.4 billion in relief extended to the state’s homeowners has been through short sales, according to UC Irvine law professor Katherine Porter, who was appointed by the California attorney general’s office to monitor the deal.
The national report had somewhat different figures. It reported $8.9 billion in relief for California homeowners, with about 66% of that in short sales. It could not immediately be determined why the figures were different.
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