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Progress Made on Mortgage Servicer Settlement

Progress is being made by mortgage servicers in meeting the requirements of the mother of all mortgage settlements, and expectations are for servicers to fulfill most of their obligations during the first year of the settlement.

In February, five of the biggest U.S. mortgage servicers — Bank of America Corp, JPMorgan Chase & Co., Wells Fargo & Co., Citibank and Ally Financial — agreed to a $25 billion settlement with multiple states attorneys general and federal agencies.

A new report from the settlement’s watchdog indicates that the banks have disclosed more than $26.11 billion in gross relief to 309,385 borrowers from March 1 through Sept. 30. That worked out the around $84,000 per borrower.

The report, Continued Progress: A Report from the Monitor of the National Mortgage Settlement, was published by the Office of Mortgage Settlement Oversight.

Just after the settlement was originally reached, Mortgage Daily identified announcements from 21 states that claimed more than $35 billion in benefits from the settlement.

“The settlement is a bipartisan, state federal response to a serious problem that has the potential to change our country’s mortgage system for the better,” Joseph A. Smith Jr., monitor of the national mortgage settlement, said in the announcement.

The gross relief includes $21.92 billion in consumer relief and $4.19 billion for 30,967 borrowers who are in active trial modifications.

Consumer relief included $2.553 billion in principal forgiveness on first-lien modifications, $1.008 in forgiveness of forbearance and $2.778 in completed second lien modifications. It also included $13.133 billion in completed short sales, $1.442 billion in refinance consumer relief and $1.006 billion in other program activity.

In a statement, Department of Housing and Urban Development Secretary Shaun Donovan called “encouraging news” the likelihood of servicers fulfilling much of their consumer relief commitments in the first year of the settlement.

Ally’s portion of consumer relief obligations was $0.2 billion, while BofA was liable for $8.6 billion, Chase’s portion was $4.2 billion, Citi was required to cover $1.8 billion, and Wells Fargo’s share was $4.3 billion.

Smith noted that $6.339 billion of the overall relief was in the form of first and second mortgage principal write-downs.

“The report demonstrates significant progress on the broadest and most robust principal reduction program in the nation’s history,” HUD said.

A statement issued by BofA indicated that it had completed or approved $15.8 billion in consumer relief for approximately 164,000 borrowers.

Wells Fargo reported that 52 percent of its $4.3 billion consumer relief and refinance commitment has been fulfilled, and it is on track to complete its full commitment on time.

“Overall, we currently have more than 812,000 customers benefiting from modifications started since January 2009 and during that time also have completed more than 4.4 million refinances allowing borrowers to take advantage of lower interest rates,” Wells Fargo Home Mortgage default executive Michael DeVito said in a statement from the company.

Chase reported that it fulfilled its refinance commitment and satisfied separate but related agreements with California for $1.95 billion and Florida for $1.00 billion.

In addition to 350 submissions from professionals who either represent or assist borrowers, the report indicated that more than 3,000 submissions were received directly from borrowers in all states. Many were related to complaints about loan modifications, problems in the foreclosure process and dual tracking.

An increasing number of reports have been received concerning successor servicers or sub-servicers that take over the account administration from one of the servicers, Smith said.

“While it is still too soon to judge the extend of the effectiveness of the settlement, I believe the past eight months of our work have been well spent,” Smith concluded.

BofA noted in its announcement that it is in compliance with the more than 300 servicing standards established in the settlement.

Wells Fargo’s DeVito added, “Implementation of all of the national servicing standards is a significant step forward in our ongoing efforts to restore confidence in the mortgage servicing industry.”

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