(Reuters) - 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
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
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.
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.
The banks reached the settlement in February with state and federal officials to resolve allegations of faulty foreclosures. The pact 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
"I'm encouraged," Smith said in an interview. "I think we have made significant progress."
But he cautioned that no banks have met their obligations until their numbers are reviewed and credited.
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 three years, although no bank has yet asked him to certify completion.
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.
Bank of America, which acquired troubled lender Countywide Financial in 2008, owes the most out of five banks, about $11.8 billion in consumer relief and other payments. The bank has said it will meet its obligations within the first year.
(Reporting By Rick Rothacker in Charlotte, N.C.; Editing by Grant McCool)
Source: http://news.yahoo.com/big-banks-22-billion-mortgage-relief-under-deal-144353045--sector.html
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