Magazine article American Banker

Mortgage Relief Surpassing Estimates, Iowa AG Says

Magazine article American Banker

Mortgage Relief Surpassing Estimates, Iowa AG Says

Article excerpt

Byline: Kevin Wack

The five banks that are part of the national mortgage settlement have now provided more than $50 billion in benefits to consumers, the agreement's watchdog announced Tuesday.

Of that total, $20 billion has come in the form of short sales, according to a report by settlement monitor Joseph Smith. Second-lien forgiveness accounted for around $14 billion. And principal reduction on first liens totaled $10.1 billion. The remainder of the relief fell into a variety of other categories, including refinancing and donations of foreclosed properties.

Iowa Attorney General Tom Miller, who played a lead role in the multi-state settlement, told reporters that the $50.6 billion total far exceeds his office's original estimate of $36 billion in consumer benefits.

"We really didn't anticipate this. It's very welcome," Miller said.

The banks that have obligations under the settlement include Bank of America (BAC), Citigroup (NYSE: C), JPMorgan Chase (JPM) and Wells Fargo (WFC). Ally Financial also signed onto the agreement, but some of its obligations have shifted to other parties as it has unwound its mortgage portfolio.

The quarterly report gave Miller and other Democratic architects of the settlement, including the U.S. Department of Housing and Urban Development, a chance to tout their achievements at a time when the banks' compliance with the deal is coming under close scrutiny.

New York Attorney General Eric Schneiderman, who signed onto the 49-state settlement last year, is now threatening to sue Wells Fargo and Bank of America for alleged violations of the agreement's mortgage servicing standards.

Schneiderman, a Democrat, is currently revising those allegations. Once he submits them to the settlement's monitoring panel, which includes representatives from various states, the panel will have 21 days to decide whether to join Schneiderman. …

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