More than two years after five of the biggest U.S. banks agreed with state and federal officials to settle charges of servicing abuses, the terms of the settlement have been exceeded.
The national servicer settlement was reached in February 2012 for $25 billion with Bank of America Corp, JPMorgan Chase & Co., Wells Fargo & Co., Citibank, N.A., and Ally Financial Inc.
In addition to 49 state attorneys general, the Department of Housing and Urban Development and the U.S. Department of Justice participated in the agreement.
The settlement agreement spanned a three-year period.
The first to complete its obligations was Ally Financial, which — along with GMAC Mortgage LLC and Residential Capital LLC — was certified by the Office of Mortgage Settlement Oversight in February 2013.
On Tuesday, an announcement from settlement monitor Joseph A. Smith Jr. indicated that final crediting reports were filed in U.S. District Court for the District of Columbia certifying that BofA, Chase, Citi and Wells Fargo have satisfied their consumer relief and refinancing obligations under the settlement.
Smith noted that the banks provided more than $50 billion in gross relief on more than 600,000 loans. That worked out to a $20 billion credit towards that settlement.
“The settlement required that a majority of relief for which the banks received credit take the form of first and second lien modifications and refinances, and my results show that, in many cases, the banks exceeded these requirements,” the statement said.
First lien principal forgiveness accounted for 37 percent of the credit, while forgiveness on second liens represented 15 percent.
Another 17 percent came from refinancing assistance, while the rest was made up of short sales and deeds in lieu of foreclosure.
“My reports mark the end of the consumer relief portion of the settlement,” Smith said in the statement. “Because of the way this landmark agreement was designed, an unprecedented amount of relief has been provided to consumers quickly and efficiently. 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.”
