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North Carolina mortgage relief reaches $410 million under settlement

The number of new North Carolinians receiving help on their mortgages through a massive state and federal settlement slowed in the first quarter as the banks participating near the end of their commitments.

More than 9,000 homeowners had gotten some form of relief through the end of March, according to updated figures released Tuesday. They’ve received about $410 million in total, more than half of which has come from second-lien extinguishment and short sales.

About 1,000 people in the state have received roughly $52 million in primary mortgage principal forgiveness, the top priority for the settlement’s architects.

About 6,000 South Carolina homeowners have received $303 million in aid. Across the country, 621,712 homeowners have received about $50.6 billion in relief, Tuesday’s report states.

“This report shows that thousands of individual homeowners are getting thousands of dollars in direct help. That is what we wanted to accomplish,” North Carolina Attorney General Roy Cooper, who helped craft the settlement, said on a conference call with reporters. “This report is positive and, in fact, has exceeded our expectations.”

Both the state and federal numbers do not reflect total progress toward the $25 billion settlement. Not every form of relief gets dollar-for-dollar credit toward each bank’s requirement. Principal reduction, in general, receives the most credit. Some actions, like short sales, can receive 20 percent credit or less.

Tuesday’s report gives a look at banks’ actions through the first year of the settlement.

In an annual securities filing this month, Bank of America reported that it had “ substantially fulfilled” its requirements under the settlement. The Charlotte bank and three others involved in the settlement have asked the office overseeing the settlement for a confirmation of its progress through the end of 2012. Those numbers are expected to be released “in the coming weeks,” the office said.

The Office of Mortgage Settlement Oversight is headed by Joseph Smith, formerly North Carolina’s banking commissioner.

Smith’s last report, released in February, disclosed that banks provided $350 million in relief to about 7,600 borrowers in North Carolina through the end of 2012. About 10 percent came from principal reduction. An activist group demonstrated in front of Bank of America’s headquarters last week, calling for more principal forgiveness from the nation’s banks.

Tuesday’s report did not delve into banks’ compliance with the more than 300 new servicing rules mandated by the settlement. They’ve gotten increased attention in recent weeks after New York Attorney General Eric Schneiderman announced he would sue Bank of America and Wells Fargo over alleged violations his office had collected.

Cooper and Iowa Attorney General Tom Miller acknowledged they have seen some violations of the servicing standards, but they declined to elaborate. Smith is due to put out a report on servicing compliance next month.

Miller said he and Cooper would wait and allow Smith’s office to follow the process outlined in the settlement to address violations. It entails a series of warnings and, if issues aren’t addressed, fines.

“We expect the banks to comply with the servicing standards,” Cooper said. “Some of them have fallen short. If they don’t correct it, we will take action.”

Dunn: 704-358-5235 Twitter: @andrew_dunn
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