* Five banks settled over foreclosures in February
* Monitor says JPMorgan Chase gave $903.1 mln, BofA $889.2
* Watchdog group cites big gap in first-lien mortgages
By Rick Rothacker
Nov 19 Five U.S. banks have provided about $22
billion in mortgage relief to customers under a deal to settle
borrowers' accusations over foreclosures, a report by the
settlement's monitor said on Monday.
The report said that Bank of America Corp, which
owes the most, improved in delivering first-lien mortgage
modifications to customers, trailing only JPMorgan Chase & Co
Bank of America provided $889.2 million in first-lien
modifications that reduced loan balances for consumers, a
turnaround from August when the bank had completed none.
JPMorgan Chase & Co's total was $903.1 million in
modifications, the most of the five banks.
Monday's report by Joseph Smith, the former North Carolina
Banking Commissioner who is serving as the settlement's monitor,
said the five banks together have completed about $22 billion in
customer relief, up from $10.6 billion in August.
Smith said in an interview that he was "encouraged" and that
February's settlement between five banks and federal and state
officials had "made significant progress." But he cautioned that
no banks have met their obligations until their numbers are
reviewed and credited.
Counting $4.2 billion more in active trial modifications,
the five banks have provided $26.1 billion in relief through
September to 300,000 borrowers, according to the report.
A coalition of national and local consumer, housing and
financial reform groups, the Campaign for a Fair Settlement,
said it is disappointed that the banks did not show more
progress on first-lien mortgages modifications compared to
August. For example, it said about 31,000 borrowers were in
active trial first-lien modifications at the end of September,
a slight increase from 28,047 at the time of the last report.
"There is a big gap there," said campaign representative,
The settlement, to resolve allegations of faulty
foreclosures, requires banks to provide around $20 billion of
consumer relief by taking actions such as reducing loan balances
for struggling borrowers and refinancing loans for customers
whose homes are worth less than the value of their mortgages.
The banks, however, have not necessarily met their
obligations yet because the settlement only provides for partial
credit for certain kinds of relief. The banks only receive
credit for $0.45 of every dollar of a writedown through a short
sale, for example.
Short sales - in which borrowers sell their homes for less
than the value of the mortgage - accounted for the largest
portion of the total relief, about $13.1 billion.
The banks reduced consumers' first-lien mortgage and
home-equity debt by $6.3 billion through loan modifications and
other actions. They also completed $1.4 billion in refinancings.
Bank of America delivered $11.8 billion in total relief to
consumers, the most of any bank, with short sales accounting for
$7.4 billion of its total. JPMorgan provided the second most
relief - about $6 billion.
The other banks in the settlement are Wells Fargo & Co
($2.5 billion in total relief), Citigroup Inc
($1.1 billion) and Ally Financial Inc ($587.8 million).
Bank of America, which acquired troubled lender Countywide
Financial in 2008, owes about $11.8 billion in consumer relief
and other payments. The bank has said it will meet its
obligations within the first year. [ID: nL1E8ME7DW]
If a lender does not meet its required relief within three
years, it will be required to pay a penalty of no less than 125
percent of its unmet commitment, the report said. Smith said he
expects the banks will complete their requirements earlier than
Banks are required to meet at least 60 percent of their
obligations through modifying first and second loans, so short
sales are not expected to eventually be the bulk of the consumer
relief, on a credited basis.
Short sales comprise a lion's share of the relief because
they can be counted as soon as a sale is completed, Smith said.
Modifications aren't considered complete until after the
borrower has made three payments.
The coalition's Petegrosky said the group is concerned that
banks are not required to report the race and income level of
the borrowers receiving modifications. He said lower-income and
minority borrowers received the worst loans during the housing
"Our counselors and attorneys on the ground are scratching
their heads at these stats because their clients aren't getting"
modifications," he said.