Reuters: Regulatory News: RPT-Big banks give $22 bln in mortgage relief under deal

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RPT-Big banks give $22 bln in mortgage relief under deal Nov 19th 2012, 14:52 Mon Nov 19, 2012 9:52am EST * Five banks settled over foreclosures in February * Monitor says JPMorgan Chase gave $903.1 mln, BofA $889.2 mln By Rick Rothacker Nov 19 (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, which owes the most, improved in providing first-lien mortgage modifications to customers, trailing only JPMorgan Chase & Co through September. 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 total was $903.1 million in modifications, the most of the five banks. 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 provided about $22 billion in customer relief, up from $10.6 billion in August. 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. 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 ($2.5 billion in total relief), Citigroup Inc ($1.1 billion) and Ally Financial Inc ($587.8 million). "The relief the banks have reported is encouraging," Smith said in a statement, while noting that the banks' obligations still need to be 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. 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. [ID: nL1E8ME7DW] 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. Link this Share this Digg this Email Reprints

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