Homeowner relief under the terms of last year’s national mortgage servicing settlement is all but over, according to a report released Thursday by Joseph Smith, the settlement monitor and a former North Carolina banking commissioner.
Both Bank of America and Wells Fargo say, however, that they are continuing to extend help to borrowers facing trouble.
The five big banks involved in the settlement reported that mortgage relief given under the settlement’s terms slowed down to a trickle in the second quarter as several banks report they have completed their requirements.
Bank of America reported giving no assistance to borrowers under the terms of the settlement in those three months, but the bank says it is still offering help to homeowners and has committed to extending relief programs through 2015. For example, Bank of America said it forgave about $2 billion in principal in the second quarter.
Spokesman Dan Frahm said the bank is no longer reporting assistance to the monitor’s office because it has completed its requirements. The Charlotte bank had the largest responsibility under the settlement and has provided the most total aid.
Wells Fargo reported about $2.2 billion in total assistance. JPMorgan Chase and Ally Financial reported no mortgage relief, either. Citigroup reported about $237 million.
The aid primarily comes in the form of short sales, extinguishment of second liens and principal reduction on primary mortgages. Since the start of the program, the five banks say they’ve given a total of $51 billion in mortgage relief.
Not every form of relief will receive full dollar-for-dollar credit under the settlement, which seeks to incentivize forms of assistance that provide more help. Some forms, such as short sales, will receive just pennies on the dollar.
Bank of America said in May that it had completed its requirements under the settlement, as did JPMorgan Chase. So far, however, Smith has certified only one bank involved – Ally Financial – as actually finished.
In a statement, Wells Fargo said the numbers reported Thursday “represent only a fraction” of the total work the bank has done with troubled borrowers. Wells says it has done 876,000 permanent or trial modifications, and 5.4 million refinances. The bank says it’s asking for credit for only 2 percent of its total activity.
“Over the past year, we have seen the amount of relief and number of borrowers it helped steadily increase,” Smith said in a statement. “As the banks begin to reach their total consumer relief obligations, I am encouraged to see that the settlement has had a measurable impact on hundreds of thousands of borrowers and their communities across the nation.”
Professional firms hired by the monitor are reviewing the numbers provided by the banks.
Next month, Smith’s office will release a report with audited numbers of relief provided through the end of 2012. Determining whether the banks have finished their requirements would come sometime later.
Earlier this summer, Smith released the first look at how the banks have complied with the new mortgage servicing standards that accompanied the relief requirements. That report found both Bank of America and Wells Fargo had failed tests to make sure they were following all the new rules.
Banks: We’ve fixed problems
Smith found Bank of America failed two tests, each in the first quarter of this year. One requires banks to provide correct information in letters sent to homeowners before sending them into foreclosure. The other requires banks to tell borrowers working on a loan modification whether they have sent in all the correct documents within five days.
Wells Fargo failed one test in the fourth quarter last year. It also involved telling people about missing documents within five days.
Both banks said they had addressed the problems.
Dunn: 704-358-5235 Twitter: @andrew_dunn
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