Four large banks have completed the billions of dollars’ worth of homeowner relief they were required to provide, as part of a blockbuster 2012 legal settlement over allegations of shoddy mortgage servicing practices, a new report from the settlement’s watchdog shows.
Settlement monitor Joseph Smith, the former North Carolina banking commissioner, reported Tuesday that Bank of America was credited with $9.6 billion in relief. That includes principal forgiveness, refinancing and short sales.
Wells Fargo was credited with $4.6 billion in relief. JPMorgan Chase and Citigroup combined for another $6.3 billion. Ally Financial was determined to have completed its $200 million in required relief early last year.
About 600,000 families received some form of relief, the report states.
“The settlement accomplished what it set out to accomplish,” Smith said, in an interview with the Charlotte Observer.
Bank of America said in a statement that it is pleased to have its relief credited by the settlement monitor, adding that more than 300,000 customers were helped. “We worked hard to deliver relief quickly to our customers and met these obligations within the first year,” the statement reads. “We continue to provide assistance to customers under these beneficial programs.”
Wells Fargo said it made more than 123,000 mortgage modifications under the settlement, a small percentage of the total help they’ve given customers in the past few years. “We remain committed to helping customers who face payment challenges find options wherever possible,” Michael DeVito, executive vice president for servicing, said in a statement.
The five mortgage servicers entered into the $25 billion settlement with state attorneys general and federal agencies in early 2012. It resolved numerous investigations into banks’ servicing practices during the mortgage meltdown, including allegations that bank employees rapidly signed thousands of foreclosure documents without reading them, a practice known as robo-signing. The banks did not admit or deny wrongdoing in the settlement.
The gross amount of relief reported by all five banks exceeded $50 billion. The totals in Tuesday’s report are lower, because not all forms of relief are given equal weight. Principal forgiveness was typically credited dollar-for-dollar, while short sales received far less credit.
As the relief progressed, some consumer advocates were concerned that banks were relying too heavily on short sales, and other forms of relief that did not keep borrowers in their homes. Because of the way the relief was credited, those forms were not predominant in the final tally.
About 37 percent of the final, credited relief came through first-lien principal forgiveness. Another 17 percent came through mortgage refinancing.
Smith and a team of consultants reported spending more than 36,000 hours reviewing the banks’ submissions.
“Because of the way this landmark agreement was designed, an unprecedented amount of relief has been provided to consumers quickly and efficiently,” Smith said in a statement. “Furthermore, I believe the rigorous testing process should justify public confidence that the banks have fulfilled their relief commitments and that the settlement has played a part in helping keep struggling borrowers in their homes.”
Tuesday’s report brings to an end the $20 billion consumer-relief portion of the settlement. Another $5 billion came through cash payments to federal and state governments.
The banks will continue to be subject to a slate of more than 300 mortgage servicing rules that aimed to fix the most prevalent problems in the foreclosure process. Previous reports from Smith’s office have found the servicers were not living up to all of their obligations.
Smith said a new report in the coming months will measure the banks’ compliance on those rules through the end of 2013. Bank of America is also subject to a report, measuring whether it reached out to all of the customers it was required to. The monitor will also prepare reports gauging the bank’s performance, in separate agreements reached with the states of California, Florida and Nevada.