Fewer than 2,000 North Carolina homeowners have seen any relief on their mortgages from Bank of America, Wells Fargo and the three other big banks involved in February’s blockbuster mortgage settlement, according to the first progress report issued Wednesday.
Bank of America Corp. is also last among its peers in providing aid that keeps people in their homes, data provided by the mortgage monitor shows. The Charlotte bank had not reduced any principal or refinanced a mortgage anywhere in the country by the end of the period.
The four other banks had combined to erase about $750 million in primary mortgage principal, bringing more than 7,000 borrowers’ loan amounts down to the post-recession value of their homes.
Bank of America blames the slow start on the time it takes to get programs set up and says activity since June already shows a rise.
The $25 billion settlement with 49 state attorneys general and several federal agencies was approved in April, settling years-long investigations into allegations of shoddy servicing practices, including foreclosing homes using documents signed without reading them, a practice known as robosigning.
The five banks were required to make $5 billion in cash payments to state and federal government agencies. The remaining $20 billion was to be made in direct relief to struggling homeowners. The Charlotte bank has the largest burden of the five in the settlement, owing a collective $11.8 billion.
Wednesday’s report from the settlement’s monitor, former N.C. banking commissioner Joseph Smith, offers the first comprehensive details on what relief the banks have offered to satisfy their requirements.
In North Carolina, between March 1 and June 30, the five banks reported:
• 85 principal reductions for homeowners owing more on their mortgages than the home is worth, totaling $3.5 million or about $41,000 per person.
• 815 short sales completed, offering $59 million in relief.
• 541 loans refinanced, saving homeowners about $3,500 on average per year.
North Carolina homeowners are slated to receive about $180 million in total over the three years of the settlement. An additional $158 million is going to state government agencies, the bulk of which state officials say will be used to help homeowners find out if they qualify for aid.
The attorney general’s office has estimated that 28,000 people in North Carolina will qualify for help.
Though the report says Bank of America was the only one involved in the settlement not to have completed any principal forgiveness or refinancing, bank executives point to more progress between June 30 and late August.
As of Aug. 21, the bank had forgiven principal on nearly 4,000 loans, totaling $596 million, spokesman Dan Frahm said. Bank of America is finishing this month sending letters to 200,000 homeowners who qualify for a reduction, including 4,000 in North Carolina.
The bank has also completed 1,000 refinancings and has 16,000 more in the pipeline.
“We believe we’ve made a lot of progress to date,” Frahm said. “Within the first year, we believe we will reach or exceed all program targets.”
Meanwhile, some homeowners in North Carolina are still waiting for help on their mortgages.
One homeowner, who asked not to be named to avoid jeopardizing any future help, said he’s been applying for loan modifications from Bank of America for months after losing a job. He said he was asked to file scores of pages of paperwork, and the only offers he got from the bank were unfeasible.
“They’re not doing what the government plans for them to do. They’re never going to get through these things if they’re going to use this process,” the homeowner said. “They’re dragging their feet.”
Bank of America’s mortgage problems largely originated with its acquisition of major subprime lender Countrywide Financial Corp. in 2008. In the past year, they’ve resulted in billions in legal settlements, been a continued drag on the company’s stock price and made the bank a target of public ire.
Updated data were not available for the other banks in the settlement: Wells Fargo, JPMorgan Chase & Co., Citigroup Inc. and Ally Financial.
As of June 30, Wells Fargo had forgiven $217 million in principal on more than 2,100 loans and refinanced nearly 8,600 loans. Chase had forgiven the most principal, with $367 million on nearly 3,000 loans.
More than 1 million homeowners nationwide are expected to ultimately get help. As of June 30, the five banks reported:
• Giving relief to 137,846 homeowners totaling nearly $10.6 billion, or $76,615 per borrower.
• Refinancing 22,073 home loans, totaling $4.9 billion in principal and knocking off an average 2.1 percent from the interest rate.
• Short-selling 74,614 homes, worth nearly $8.7 billion. The total amount cannot be compared to the $20 billion required in the settlement. Many forms of relief are discounted in the final tally. For example, $1 cut off a person’s second-lien mortgage does not count as $1 toward the settlement.
The figures provided by the banks also still need to be vetted by the monitor’s office, which has hired consulting and accounting firms to help.
Similar reports will be issued periodically through the three years of the settlement period.
N.C. in context
With fewer than 2,000 people helped so far, North Carolina is decidedly in a second tier of states, along with Ohio, Maryland, New York, Oregon and Pennsylvania.
California, by far, has had the most people helped with 43,000. Florida is second with 23,000, and Arizona, Georgia, Illinois and Nevada round out the top tier.
About 1,300 people in South Carolina have gotten some aid. Fifty-seven received primary mortgage principal relief, and 340 had loans refinanced at lower interest rates.
Homeowner advocates in North Carolina expect the number of people helped to increase in the next few months as the state finalizes programs to help people figure out if they qualify for aid. The N.C. Housing Finance Agency is using money it received through the settlement to hire housing counselors and legal representatives.
“It hasn’t really even kicked off yet in earnest,” said Bridgette Raspberry, vice president of the N.C. Association of Community Development Corps, said. “I would think that those numbers are going to greatly be enhanced once this program kicks off.”