Banks Provided $15.35 Billion in Mortgage Pact
Four large U.S. banks have provided the bulk of consumer relief required under a $25 billion settlement reached last
year over alleged mortgage abuses, the monitor overseeing the deal said Wednesday.
The results come as critics of the banks' performance under the settlement say they aren't doing enough to help
borrowers struggling to make their mortgage payments.
Joseph A. Smith Jr. said in his first audit of the banks' work under the settlement that the lenders had made progress
on reworking homeowners' mortgages by reducing interest rates, lowering monthly payments and taking other steps last
In total, Bank of America Corp. (BAC), J.P. Morgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and Citigroup Inc. (C)
received credit for providing $15.35 billion in relief in 2012, a report by Mr. Smith's office said. The amount is more
than three quarters of the total relief they were required to provide by early 2015.
While Mr. Smith has previously released progress reports based on amounts reported by the banks, Wednesday's report
includes the first figures that were tested and verified by the monitor.
The settlement requires the banks to take part in reviews to determine whether they are providing the assistance
mandated under the agreement.
"The report shows .. they have been pretty prompt about getting this stuff done," Mr. Smith said in an interview.
While the report looks at performance in 2012, the banks have said they have since fully met their obligations under
the settlement. Mr. Smith said he and his team are reviewing the banks' updated reports and expects to issue their
findings later this year or early next year.
The settlement, announced in February 2012, required five mortgage servicers to provide about $20 billion in relief
and pay $5 billion in fines. It also introduced more than 300 servicing standards aimed at improving how banks deal with
struggling homeowners, including providing customers with a single point of contact at each bank and responding to
borrowers' modification requests in a timely manner.
The banks didn't admit or deny wrongdoing as part of the settlement. Ally Financial Inc. (GMA.XX), which was also part
of the settlement, already fulfilled its obligations, the monitor said earlier this year.
Not everyone thinks the banks have made enough progress since early last year, however. Wednesday's report comes on
the heels of complaints by some homeowner groups that the banks haven't lived up to the settlement's requirements by
failing to handle borrowers' modification requests in a timely manner and proceeding with foreclosures even as
homeowners await word on whether their loans will be modified.
New York Attorney General Eric Schneiderman filed a complaint against Wells Fargo this month for alleged violations of
the settlement. Bank of America, which he had also threatened to sue, promised to take additional steps to help
A Wells Fargo executive at the time said the bank was disappointed that Mr. Schneiderman decided to pursue litigation.
In a court filing this week, the bank's attorneys indicated they would fight the action.
Mr. Smith also this month announced four new metrics for evaluating banks' performance under the settlement that
address some of the issues that critics have raised.
The amount the banks received credit for last year is significantly less than the gross amount of $38.72 billion in
relief that they reported providing last year because of the way they receive credits under the settlement.
Under the deal, each bank receives credits based on the types of relief they provide borrowers to determine if they
are meeting their obligations. For some activities, such as modifying certain first-lien mortgages, banks earn $1 of
credit for each dollar of relief they provide. Other activities earn banks pennies on the dollar.
The settlement gave banks three years to meet their obligations. The report broke down banks' performance last year in
two categories: consumer relief and refinancing. Consumer relief includes modifications to first- and second-lien
mortgages, short-sale assistance and other activities. Refinancing is focused on rate reductions provided to borrowers
who are current on their mortgages but are underwater, or have homes worth less than the value of their loans.
In some cases, the banks rescinded requests for credit on certain activities after errors were discovered in the
For example, J.P. Morgan Chase claimed more credit for modifications of second-lien government loans than was
justified based on a calculation error the monitor and his team discovered. The bank subsequently removed 478 loans
worth $5.7 million in credit from its consumer-relief report, according to the monitor's report.
The monitor also discovered errors with some loans submitted for credit by Bank of America, Wells Fargo and Citi, the
In total, J.P. Morgan received credit for $2.8 billion of consumer relief last year, or 76% of its obligated amount.
It also was credited for $606.1 million in refinancing, or 113% of its obligated amount.
Amy Bonitatibus, a spokeswoman for the New York bank, said in total it has provided $11 billion in mortgage relief
under the settlement, which is worth $4.2 billion in credits to satisfy its obligation.
Bank of America received credit for providing $7.4 billion of consumer relief, or 97% of its obligated amount, last
year, the report said. Separately, Bank of America received credit for $392.2 million of refinancing activity, or 41% of
its obligated amount.
Dan Frahm, a spokesman for the Charlotte, N.C.-based bank, said Bank of America was pleased that its performance under
the settlement was validated by the monitor.
Citi for 2012 completed 46% of its obligated consumer relief, worth $655.1 million in credited relief, and 137% of it
refinancing obligation, or $519.1 million in credit.
Mark Rodgers, a spokesman for Citi, said the bank is proud of its efforts to fulfill the settlement's terms and
helping distressed borrowers is a top priority.
Wells Fargo, the nation's largest home lender, met 55% of its consumer-relief obligations, worth $1.9 billion in
credited relief, and 122% of its refinancing obligation, worth $1.1 billion in credit in 2012.
Tom Goyda, a spokesman for Wells Fargo, said the report confirms the progress the company made last year, "but does
not reflect all of the consumer relief and refinance activity we now have completed."
Write to Andrew R. Johnson at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.