Bank of America and JPMorgan Chase report they have satisfied their obligations under last year’s national mortgage settlement with state and federal officials, while Wells Fargo indicated it has completed 90 percent of the terms, The Los Angeles Times reported May 22.
Citigroup has not yet reported its progress and the banks’ self-reporting officially will not be credited until the national monitor for the settlement, Joseph J. Smith Jr., reviews its data.
To date, Smith only has verified completion of settlement terms by Residential Capital, a subsidiary of Ally Financial.
The Times reported that as of the close of the first quarter, the banks had provided mortgage relief to 600,000 borrowers to the tune of $50.6 billion. The banks agreed to the settlement last year to put to rest allegations of illegal foreclosure practices following the collapse of the housing market.
California received more aid than any other state with 205,000 residents receiving around $24 billion in principal and interest-rate reductions, as well as in short sale relief as of the end of the first quarter.
The Times reported that short sales made up about two-thirds of the aid provided to California borrowers in the first months following the settlement. However, the latest data showed that more borrowers now are receiving principal and interest-rate reductions, thus allowing them to remain in their homes. Those benefits amounted to $29.2 billion for 387,420 borrowers since March 2012. Meanwhile, short sale assistance went to 175,000 borrowers with a total dollar cost of $20.1 billion.
Critics of the settlement have said it does not provide enough principal reduction relief, particularly in California, where short sales and the writing off of second liens made up the bulk of the aid.
Kevin Stein, associate director of the California Reinvestment Coalition, gave Bank of America high marks, noting how the bank offered substantial principal reduction assistance. He also noted that Wells Fargo made heavy use of short sales, that Chase had a good track record on second liens and noted that Citigroup provided significant aid through short sales and second-lien relief, the Times reported.
Under the terms of the national settlement, banks had to provide $25 billion in aid with $20 billion going directly to consumers and $5 billion going to the states, mainly in the form of foreclosure prevention programs.
Banks also have not reported their level of compliance with new mortgage standards designed to provide better service to customers in collecting bills, pursuing delinquencies and initiating a foreclosing. Counselors with the California Reinvestment Coalition told the Times they had received numerous complaints from borrowers. As a result, the New York attorney general has threatened to sue banks over consumer complaints.
Smith has said this obviously is an area where the banks still have work to do, the Times reported.