Most of the $25 billion of “robo-signing” money slated for relief to troubled mortgagors will be doled out by next spring, according to federal and state officials who negotiated the historic settlement with five mega-servicers.
Housing and Urban Development secretary Shaun Donovan said the servicers are on track to fulfill much of their consumer relief commitments in the first year of the agreement. “That’s encouraging news—for families, for neighborhoods, for our housing market and for the country,” Donovan said during a Monday press briefing on the matter.
A progress report on the servicers’ relief efforts shows that JPMorgan Chase, Bank of America, Citigroup, Ally Financial and Wells Fargo have distributed $26.1 billion of assistance to 310,000 borrowers in the form of principal reduction modifications, short sales, refinancings, deficiency waivers and special relief for members of the armed services.
Not all forms of relief are credited on a dollar-for-dollar basis under the AG settlement. So far, none of the five have met their total obligations under the settlement. Dollars committed to principal reduction are credited dollar for dollar.
The five have provided $2.5 billion of principal reductions on first liens for 21,800 borrowers with an average benefit of $116,900. Bank of America and JPMorgan Chase have both completed nearly $900 billion of principal reductions on first mortgages.
The five servicers also completed $2.8 billion of principal reductions on second liens.
Iowa AG Tom Miller noted that the principal reductions are an important part of the settlement. He also stressed the importance of the servicers providing relief to borrowers now instead of stringing it out over two to three years. “Homeowners need to see relief now,” he said. “The housing market needs assistance now.”