How The National Mortgage Settlement Is Playing Out

Joseph A. Smith Jr., the official monitor of the National Mortgage Settlement, has received an update on the consumer relief activities performed by the five banks that are parties to the settlement (reported through March 31). According to the data, 621,712 borrowers have now benefited from some type of consumer relief totaling $50.63 billion, which, on average, represents about $81,437 per borrower. This figure includes both completed consumer relief and active first lien trial modifications.

Three of the firms involved – Wells Fargo, Chase and Bank of America – have also released individual reports touting their latest efforts to provide consumer relief under the terms of the settlement, which was launched in February 2012. Citi and Ally have not yet released similar statements on their latest settlement numbers.

Chase says it has helped 126,000 homeowners and completed its consumer relief requirements under the National Mortgage Settlement two years ahead of time. In total, the company provided consumers $11 billion in total mortgage relief – earning $4.2 billion in credits – in 13 months.

The company's efforts from March 1, 2012, through April 15, 2013, included forgiving $2.9 billion in principal on first-lien mortgages, refinancing $3 billion of loans to underwater borrowers who were current on their mortgages, reducing customers' loans by an average of $121,000 in forgiving principal while modifying first mortgages, forgiving an average of $118,000 to facilitate a short sale for those who couldn't afford a modified payment or no longer want to stay in their homes, and implementing all 320 servicing standards as announced in October.

Bank of America, meanwhile, says it has completed and approved assistance to approximately 320,000 customers, totaling $29.2 billion in aggregate relief across all settlement programs through March 31. Nearly 46,500 additional homeowners who are making timely payments on loan balances that exceed the current value of the property have received offers of life-of-loan interest rate reductions to lower their monthly costs.

More than 46,000 Bank of America customers have been approved for offers of first-lien modifications or received forgiveness of previous principal forbearance, providing more than $7 billion in total principal reduction, the company adds. More than 144,000 customers have received extinguishment or modification of a home equity loan or line of credit, totaling more than $9.8 billion in reduced principal.

Wells Fargo reports that it has met nearly 90% of its requirements under the settlement, with approximately 93,000 customers assisted through a mortgage modification, refinance or other option. In all, between March 2012 and March 2013, the company completed nearly 131,000 first- and second-lien mortgage modifications and refinanced more than 2.4 million loans – including both settlement and non-settlement activity – over the same 13-month period.

Smith's office notes that most consumer relief information is self-reported by the banks and will not be credited under the settlement until each bank requests a review; to date, only ResCap (formerly GMAC) has received credit.

‘Since the settlement was announced, I have released three prior progress reports that detailed the banks' self-reported consumer relief data on a quarterly basis,’ Smith says. ‘I believe it is important to continue to share this data with the public, and, accordingly have done so on my website. However, I have not prepared a full report on this data because I am focusing my time testing the banks' year-end consumer relief claims and giving them appropriate credit as outlined in the settlement.’

In June, Smith also plans to submit his first required reports to the court concerning his review of the banks' compliance with the settlement's servicing standards. ‘Based on my conversations with consumer professionals, elected officials and distressed borrowers, I know there are areas in which the banks still have work to do, and I am using that insight to determine if there are gaps that require future testing,’ he says.

Additionally, Smith's office is developing one or more discretionary metrics intended to better measure the banks' performance on certain servicing standards. These new metrics are expected to be announced and implemented later this summer.


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