5 U.S. banks cut mortgage balances by $6.3B
Five of the biggest U.S. banks have cut struggling homeowners' mortgage balances by $6.3 billion, part of a total $26.1 billion in home loan relief provided under a landmark settlement over foreclosure abuses.
More than 309,000 borrowers received some form of mortgage relief between March 1 and Sept. 30, according to a report issued Monday by Joseph Smith, monitor of the settlement.
That translates to an average of roughly $84,385 per homeowner, according to the report, which is based on mortgage servicers' own account of their progress as they move to comply with the settlement terms.
New York's share of the mortgage relief was more than $625 million, state Attorney General Eric T. Schneiderman said Monday. Some 7,223 New York homeowners have gotten assistance from the settlement, each getting $86,600 in relief on average, according to Schneiderman. The attorney general's office did not release county-by-county data.
Nationally, Smith said $13.1 billion of the $26.1 billion in relief was in the form of short sales, in which lenders agree to accept less than what the seller owes on the mortgage.
Another $1.4 billion in relief was provided by refinancing 37,396 home loans with an average principal balance of $210,398. As a result, each borrower will save about $409 in interest payments each month, according to the report.
Banks also had $4.2 billion worth of loans under trial modifications. That could lead to permanent reduction in loan balances of $135,223 per borrower. Lenders also completed permanent reductions of about $1 billion before March 1, according to the report.
The federal government and state attorneys general for 49 states forged the $25-billion settlement in February with five banks: Ally Financial Inc., Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co.
The pact ended a painful chapter of the financial crisis when home values sank and millions edged toward foreclosure. Many companies had processed foreclosures without verifying documents.
The agreement will reduce mortgage loans for only about a million of the 11 million Americans who owe more than their homes are worth.
With Maura McDermott