Banks Say $26 Billion in Aid Given Under Mortgage Settlement

According to the country’s largest mortgage servicers, they have provided $26.1 billion in relief to struggling homeowners through September as part of a national settlement of foreclosure problems.

The aid has gone to more than 300,000 borrowers from March 1 to Sept. 30, for an average of about $84,385 per person, according to the Office of Mortgage Settlement Oversight, which was set up to monitor the progress of the banks.

The servicers covered by the settlement — Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.– reported completing $21.9 billion in relief to homeowners through short sales, and reduced monthly payments on first and second mortgages.

In addition, the banks said they had $4.2 billion in assistance in trial programs, the report said.

But those figures have yet to be confirmed by the settlement’s monitor, former North Carolina banking commissioner Joseph A. Smith Jr.

The payments are part of a complex, $25-billion agreement reached in February to settle federal and state foreclosure abuse investigations.

But the amount of reported homeowner relief doesn’t mean banks have fulfilled their requirement. Banks get less than a dollar’s worth of credit for each dollar of relief.

The credits vary. For example, each dollar forgiven in a short sale is worth a 45-cent credit if the bank owns the loan and 20 cents if investors hold it. Under the settlement, 60% of relief must come through principal reductions that keep people in their homes.

So far, half of the aid nationally — 50.2% — has been in the form of forgiven mortgage balances through short sales.

The figure is higher in California. About 68% of the $8.4 billion in relief extended to the state’s homeowners has been through short sales, according to UC Irvine law professor Katherine Porter, who was appointed by the California attorney general’s office to monitor the deal.