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  • edi_kh2000 edi_kh2000 Nov 19, 2012 4:26 PM Flag

    Banks Provided $22 Billion in Mortgage Relief: Report

    Each quarter, the banks must provide an update on their progress to the national settlement monitor and participating state attorneys general. When the monitor, Joseph Smith, issued his first report in August for the quarter that ended June 30, the banks as a group had made little progress. As a group, they had reduced only $750 million in first-mortgage principal.

    BofA, which has the largest obligation, had done zero principal reductions.

    The deadline for reporting data for the period ending Sept. 30 was Wednesday.

    Perhaps hoping to repair its image, BofA disclosed that it had provided a total of $15.8 billion in various forms of assistance to 164,000 customers.

    Chase disclosed late Wednesday that it had provided $7 billion in relief, but its obligations were about half of BofA's.

    The banks do not get full credit for those activities under the settlement.

    None of the other banks that are part of the agreement - Wells Fargo, Citibank and Ally/GMAC - has publicly disclosed its performance. Wells Fargo said it will provide details after the monitor releases its public report. "We anticipate that this report will be issued on Monday," Wells spokesman Tom Goyda says.

    BofA's details

    BofA provided the most detail. It said it has:

    -- Completed or approved first-lien modifications for about 30,000 borrowers under the program, resulting in $4.75 billion in principal reduction. It also forgave $230 million in principal that had been in temporary forbearance before the settlement.

    The average amount forgiven was $150,000, which reduced the borrower's payment by 35 percent, BofA Senior Vice President Eric Telljohann said in a news conference. He estimated that 40 percent of the principal reductions was on loans owned by BofA and 60 percent on loans it services for others.

    -- Modified or extinguished home-equity loans or lines of credit for nearly 45,000 customers, resulting in $2.5 billion in relief.

    -- Provided short sales or deeds in lieu of foreclosure for more than 62,000 customers, providing $7.4 billion in relief.

    -- Provided $617 million in relocation assistance and pre-settlement deficiency waivers.

    That adds up to about $15.5 billion, which far exceeds the $7.6 billion BofA is required to provide in these types of assistance.

    However, banks don't get $1 worth of credit toward their settlement obligations for every $1 in relief. Instead, there is a complex crediting formula depending on the type of help.

    For example, if the bank extinguishes a second lien that is more than 180 days delinquent (and thus unlikely to be paid off) it gets only 10 cents of credit for every $1 it forgives, Telljohann said.

    After the crediting process, BofA is almost halfway toward meeting its $7.6 billion obligation, he said.

    In addition, BofA must provide almost $1 billion in refinancing relief to homeowners who are current on their payments but have little or no equity in their homes. As of Sept. 30, it had refinanced about 1,000 loans representing about $250 million in unpaid balances.

    BofA said its first priority was reducing principal for at-risk borrowers and that it is now ramping up its refinancing program, which under the settlement is only for mortgages the participating banks both own and service.

    Chase performance

    Chase, on the other hand, said it has fulfilled its refinance requirement. It refinanced about 12,000 underwater loans totaling $3 billion. It needed to refinance only $537 million in loans.

    It said it has approved or completed $3 billion in first-lien modifications for nearly 30,000 homeowners through Sept. 30. The average principal reduction was $97,000.

    It provided few other details. Chase must provide about $3.7 billion in non-refinance relief to customers. A Chase spokeswoman could not say when it will reach that goal but said it will be "well in advance" of the three-year deadline.

    Both banks also said they were in compliance with about 300 new servicing requirements, such as providing borrowers seeking a modification with a single point of contact.

    Sentiment: Strong Buy

 
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