WASHINGTON -- Five large banks said they have given $51.3 billion in relief to consumers under a landmark settlement of foreclosure-abuse complaints that is almost finished providing assistance to homeowners, the official monitor of the deal said Thursday.
The aid, including lower monthly payments, forgiven mortgage principal and short sales, has gone to 643,726 people from March 1, 2012, through June 30, according to a report from the Office of Mortgage Settlement Oversight.
The average borrower received $79,742 in relief, the report said. The aid includes completed modifications and other assistance as well as efforts still in trial phases.
Joseph A. Smith Jr., the official monitor of the settlement, said the banks' self-reported information had not yet been confirmed. But based on the data, he said, the banks have either met their obligations under the settlement or will do so soon
California residents have received the most relief, with 186,777 borrowers getting a total of $20.3 billion in assistance.
"Over the past year, we have seen the amount of relief and number of borrowers it helped steadily increase," Smith said.
"As the banks begin to reach their total consumer relief obligations, I am encouraged to see how the settlement has had a measurable impact on hundreds of thousands of borrowers and communities across the nation," he said.
Five large mortgage servicers, including Bank of America Corp., JPMorgan Chase & Co., and Wells Fargo & Co., entered into the $25-billion agreement last year to settle federal and state allegations of illegal foreclosure practices. Among the practices was the so-called robo-signing of documents.
The settlement, which involved attorneys general from California and 48 other states, required the banks to provide about $20 billion in relief to homeowners and give $5 billion directly to the states, primarily to fund foreclosure-abuse relief and prevention programs.
The banks also agreed to change their mortgage-servicing practices, including eliminating robo-signing and providing a single point of contact for borrowers seeking modifications.
The banks get credits for various types of homeowner relief, which is why the total relief provided adds up to more than double the $20 billion. For example, each dollar forgiven in a short sale results in a credit of 45 cents if the bank owns the loan and 20 cents if it is held by investors.
Much of the relief is not being provided with the banks’ own money.
In many cases, the banks are simply servicing mortgages that have been made by other lenders and securitized, so any lower income stream because of reduced monthly payments and other modifications would affect just the investors.
The credit formula reflects that. Banks get 100-cents-on-the-dollar credit for modifying first mortgages in their portfolios, but just 49 cents credit for each dollar of modification in loans the banks don't own.
So far, Smith has only certified that Residential Capital, a mortgage subsidiary of Ally Financial Inc., has fulfilled its obligation under the settlement.
Bank of America and JPMorgan said in May that they had fulfilled their settlement obligations, but Smith said his office still is working to confirm that. In the report released Thursday, Bank of America said it had provided $27.9 billion in total relief as of June 30, and Chase said it had provided $11.2 billion.
Residential Capital reported $658 million in total relief, Wells Fargo $8 billion and Citigroup Inc. $3.5 billion.
Separately, Wells Fargo said Thursday that it had settlement credits totaling $4.4 billion, which is more than the $4.3 billion the bank had committed to provide. Wells Fargo said the 123,000 modifications, refinancings and other assistance provided under the settlement were slightly less than 2% of all the bank's consumer relief efforts during that period.