The nation’s five largest mortgage servicers are exceeding the requirements of an agreement to provide aid to struggling homeowners, providing billions of dollars more in mandated loan-related relief to borrowers.
The relief comes from the national mortgage foreclosure settlement forged last year among the U.S. Justice Department, 49 states and the nation’s five largest banks: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.
The settlement was intended to compensate borrowers harmed by the mortgage industry’s robo-signing scandal, in which many people allegedly were foreclosed on improperly through bad paperwork and other abuses.
The settlement originally had an estimated value of $25 billion, with at least $20 billion in loan related relief required to go to homeowners struggling to make payments and/or to borrowers who owed much more than their homes are worth. Under the settlement, the five banks agreed to
reduce balances on the mortgages where the borrower owes more than their home is worth and to refinance some loans. The banks also are required to make foreclosure their last resort, and they cannot foreclose on a homeowner who is being considered for a loan modification.
As of December 31, 2012, more than a half-million U.S. consumers have received a total of almost $46 billion. Nearly double the original settlement amount.
In Arizona, more than 22,000 Arizona consumers received some sort of aid during the first year of the settlement. The nation’s five biggest lenders have provided $1.68 billion in relief to mortgage borrowers across the state, according to a recent progress report released by independent settlement monitor Joseph Smith of the Office of Mortgage Settlement Oversight. More than $1 billion of the Arizona total went towards helping homeowners complete short sales. Another $348 million helped Arizona borrowers get out from under second mortgages. The third-highest amount of relief for the state was $139 million to complete principal reductions on loan modifications.