The largest U.S. mortgage servicers, including Citigroup Inc. (C:US) and Bank of America Corp. (BAC), (BAC:US) are almost finished paying $25 billion in relief to borrowers under a national legal settlement over botched foreclosures, the court-appointed monitor said.
The banks, also including Wells Fargo & Co. (WFC:US) and JPMorgan Chase & Co. (JPM:US), were required to provide $18.9 billion of the aid to consumers in the form of refinancing, loan forgiveness or short sales, in which lenders agree to allow homes to be sold for less than the mortgages against them.
Through the end of 2012, the banks provided $15.3 billion of that amount, Smith said in report issued today.
“In the first part of the settlement, the banks made substantial progress,” Smith said in a telephone interview after the report’s release. “They have told me, and I think there is good reason to believe, that they have in fact completed their consumer relief activities. We are now working on scoring those.”
A fifth lender participating in the settlement, Ally Financial Inc. (ALLY:US), has completed its obligations under the February 2012 agreement with the U.S. Justice Department and 49 state attorneys general.
“Even though we no longer submit activity for crediting toward the settlement, we do continue providing relief -- including principal forgiveness modifications -- to our eligible customers,” Dan Frahm, a Bank of America spokesman, wrote in an e-mailed statement.
Smith is also reviewing whether the lenders are complying with standards for servicing mortgages mandated under the settlement. He said in June that the banks hadn’t done enough to upgrade their treatment of borrowers in danger of foreclosure. Smith said he will submit an update later this year.
At least three state attorneys general have criticized bank practices in the wake of the settlement. New York Attorney General Eric Schneiderman sued Wells Fargo on Oct. 2, alleging that the bank violated settlement terms related to processing applications for loan modifications.
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