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Only half of the $15.8 billion of promised consumer aid has been delivered in the wake of fraudulent mortgage services scandal.
As part of the sweeping national mortgage servicing settlement that went into effect in March, officials at Bank of America said they are halfway to fulfilling their mandate of providing $7.6 billion worth of consumer relief.
The bank, which took on the burden of Countrywide Financial’s mortgage ills when it bought the company, has completed or approved a total of $15.8 billion in consumer relief for about 164,000 homeowners as of Sept. 30 and is on track, according to officials, to meet its total financial obligations within the first year of the three-year agreement.
The settlement, which was supposed to right the wrongs of so-called “robo-signing” and other fraudulent mortgage servicing activities, credits banks for principal reduction, short sales and other consumer relief, but the credits are not dollar for dollar. That’s why Bank of America’s $15.8 billion in relief so far is only half-way to its required $7.6 billion under the settlement.
According to officials on a conference call with reporters, Bank of America has approved or completed first-lien modifications for 30,000 customers, providing $4.75 billion in principal reduction.
In addition, 45,000 customers got home equity loan relief, totaling $2.5 billion. Finally, more than 62,000 customers completed qualifying short sales or deeds-in-lieu of foreclosure, which adds up to $7.4 billion in relief from unpaid principal balances on the loans.
Borrowers received an average $150,000 reduction in their first lien loan balances, resulting in a 35 percent reduction in monthly mortgage payments, according to bank officials. On second liens, the average relief through loan extinguishment to about 43,000 customers is more than $56,000 per borrower.
While officials would not give an exact amount, they estimated that 60 percent of the loans that received principal reduction were owned by investors and serviced by Bank of America, while 40 percent were held on the banks own books.
As for other aspects of the settlement, like providing customers with a single point of contact for mortgage assistance, officials said each bank representative is primary contact for between 70 and 75 customers.
All of the five banks that signed the National Mortgage Settlement are required to submit quarterly progress reports to the participating state attorneys general and the federal program monitor.
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