Mortgage Settlement Aid Hits $50.6B as State AGs Field Complaints

Mortgage Settlement Aid Hits $50.6B as State AGs Field Complaints
Monitor Joseph A. Smith, Jr.

The official overseeing the National Mortgage Settlement said today that assistance to more than 621,000 homeowners has reached $50.63 billion through March 2013 in the form of mortgage modifications, short sales, second-lien or other principal forgiveness, and refinancing help.
Monitor Joseph A. Smith, Jr. also said his office needs more time to determine if the five big lenders that are party to last year’s landmark agreement are adhering to more than 300 new mortgage servicing standards.
Smith said he will likely issue a report next month and won’t be rushed into a quick assessment, despite headline-grabbing complaints from consumer advocates and state attorneys general chronicling how the servicers continue to violate the rights of homeowners seeking to avoid foreclosure or reduce mortgage payments.
Delays in meeting required deadlines and wrongly pursuing foreclosure are among the most heard complaints.
(Meanwhile, $1.5 billion in payouts to mortgage settlement claimants — as many as 750,000 borrowers — are suppose to be mailed sometime in “mid-2013″ by the settlement’s paying agent, Rust Consulting. Previous official statements have put the average amount at $2,000. But the precise figure has either not been determined or not made public.)
“Based on my conversations with consumer professionals, elected officials and distressed borrowers, I know there are areas in which the banks still have work to do, and I am using that insight to determine if there are gaps that require future testing,” Smith said in a statement. “It is important to the integrity of this process that these compliance reports are thorough and accurate, and I will release them when I am confident they are complete.”
Smith also said he is developing “one or more of his discretionary metrics, or tests, to better measure the banks’ performance on certain servicing standards.” These new metrics are expected to be announced and implemented later this summer.
“We look forward to reviewing the Monitor’s compliance reports next month,” said Shaun Donovan, U.S. Secretary for Housing and Urban Development (HUD). “We will also continue to keep a close eye on the banks to ensure they live up to their end of the deal…”
Meanwhile, state AGs have provided a mixed response to the latest quarterly update on homeowner assistance by the lenders: Bank of America, CitiMortgage, JP Morgan Chase Bank, Residential Capitaland affiliates (formerly GMAC) and Wells Fargo Bank.
Illinois Attorney General Lisa Madigan said her office has found that mortgage servicers in 60 percent of the modification cases surveyed failed to comply with a requirement that they notify borrowers within five days of missing documents in their applications.
“The new servicing standards were supposed to eliminate headaches for homeowners,” Madigan said. “But unfortunately, it seems we’re hearing about the same frustrating experiences. Homeowners are getting the runaround, receiving multiple requests for the same information and experiencing continued delays that put them closer to foreclosure. It’s important that the independent monitor closely review the problematic patterns we’re seeing to ensure the banks are held accountable under the settlement.”
Earlier this month, New York Attorney General Eric Schneiderman announced plans to sue Bank of America and Wells Fargo for violating mortgage servicing terms that require the fair and prompt assistance to homeowners. Schneiderman today displayed a more milder tone.
“New York homeowners have received almost $2 billion in financial relief under the National Mortgage Settlement — far more than the federal government projected would flow to our state a year ago,”  Schneiderman said. “While we are pleased that the benefits to homeowners — including reduced debt, lower mortgage payments, and averted foreclosures — have been substantial, our work is not finished.  My office will continue to monitor the banks’ compliance with the settlement.”
Florida Attorney General Pam Bondi said that about 112,000 homeowners in her state have benefited from the settlement.
“Today’s report indicates that Floridians have benefited from $9 billion in relief, significantly more than the $8.4 billion that we expected when we entered the settlement,” Bondi said. “I will continue to hold the banks accountable by demanding full compliance with the settlement, including the requirements designed to ensure that banks treat homeowners fairly in the mortgage servicing process.”
The majority of aid in Florida — as in many other states — has come in the form of deficiency amounts forgiven through short sales — $3.3 billion — and the extinguishment of second mortgages — $3.1 billion. Those two categories of assistance — short sales and second-lien forgiveness — have been the subject of criticism from homeowner advocates who assert that more needs to be done to keep borrowers in their homes.
In March, HUD chief Donovan defended the use of short sales under the settlement.
“Short sales are helpful for borrowers who need to leave their underwater home or those who cannot make sustainable payments, even on a modified loan,” Donovan said. “When we negotiated this settlement, too many borrowers in those circumstances were forced into foreclosures and were left with a deficiency balance when a short sale would have been better for them, their neighborhood, and the loan’s investor.”
Here’s a breakdown of the assistance provided through the first quarter of 2013:

  • 621,712 borrowers received some type of relief totaling $50.63 billion, which, on average, represents about $81,437 per borrower.
  • 387,420 borrowers received a permanent or trial modification, an extinguishment, or refinancing to help them retain their homes, which amounts to $29,226 billion, averaging approximately $75,438 per borrower.
  •  92,599 borrowers successfully completed a first lien modification and received $10.132 billion in loan principal forgiveness, averaging approximately $109,418 per borrower.
  • 14,697 borrowers are in active first-lien trial modifications as of March 31, 2013, the total principal value of which is $1.966 billion. This represents potential relief of about $133,776 per borrower if the trials are completed.
  • Second-lien modifications and extinguishments were provided to 206,727 borrowers, representing about $14.193 billion in total relief. The average amount of relief for borrowers whose second liens were modified or extinguished was approximately $68,655.
  • Servicers refinanced 73,397 home loans with an average unpaid principal balance of $226,285, reducing the average annual interest rate by about 2.25 percent. The total estimated benefit to borrowers from refinancing over the average life of the loan is approximately $2.935 billion.1 On average, each borrower will save about $425 in interest payments each month.

A map with state relief totals can be viewed here.

13 thoughts on “Mortgage Settlement Aid Hits $50.6B as State AGs Field Complaints

  • May 22, 2013 at 5:17 am
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    Our wonderful Mr. Smith offers no explanation as to why he has allowed Rust to bully us and keep our NMS checks, yet he makes a point to say HE won’t be bullied by certain AG’s offices who have TRIED to tell this man that the big 5 are still breaking the law!! Guess we can all see where this is going…next news release: “OVERSEER OF THE NMS ACCEPTS CEO POSITION AT CHASE”…..

  • May 22, 2013 at 8:37 am
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    “Meanwhile, $1.5 billion in payouts to mortgage settlement claimants — as many as 750,000 borrowers — are suppose to be mailed sometime in “mid-2013″ by the settlement’s paying agent, Rust Consulting. Previous official statements have put the average amount at $2,000. But the precise figure has either not been determined or not made public.”
    Why are no elected officials asking Mr. Smith about this payout? Why have there been delays? Why can’t they determine an exact amount? What does “Mid 2013” mean?…there is no month of the year called “mid-2013”. Vague answers on matters that require specifics. It’s a sad, sad joke.

  • May 22, 2013 at 8:53 am
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    To the above two posts:
    Because under the law setting up his office, he has NO authority over the cash settlement portion, nor any oversight of it. This is frustrating, but just the way his office was set up.
    He has not refused or neglected this part of the settlement. It’s just not his mandate- he has responsibility for the non-cash portion.
    A lot of frustration can be avoided by understanding this fact. It is widely assumed (and was by me till I contacted his office directly) by many that he is in charge of the WHOLE NMS settlement. He is not.

  • May 22, 2013 at 9:01 am
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    Marty, the question is WHO has the authority over the cash portion of the settlement. Rust? The OCC? Even our elected officials can’t get the answers to their questions. Rust is a 3rd party payer. They aren’t providing the actual funds of the settlement. The banks agreed to this settlement last February. There really should be no delay regarding disbursement of the funds, especially considering Oklahoma has already paid out funds to settlement victims of that state last fall. We are in May 2013, and we still don’t have a definitive payment date or amount! Inexcusable.

  • May 22, 2013 at 9:27 am
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    HIS office told you he’s not responsible for the payout portion…hmmmm…unless I saw that in an article by Ecredit or Huffington I’m afraid I would have my doubts that HIS office staff was being – um – honest??

  • May 22, 2013 at 1:01 pm
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    Well all I know I hope us borrowers who were foreclosed upon get 2000.00 plus acouple zeros added to it. I would like to buy a house outright so I won’t NEVER have to deal with the a lender or bank again. And I am assured I will NEVER go through losing my home again and my excellent credit.

  • May 22, 2013 at 1:17 pm
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    @Kimberly…couple extra zeros would be nice but my gut tells me our NMS check will be between $900 – $1200. tops…

  • May 22, 2013 at 1:30 pm
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    “HIS office told you he’s not responsible for the payout portion…hmmmm…unless I saw that in an article by Ecredit or Huffington I’m afraid I would have my doubts that HIS office staff was being – um – honest??”
    Yes, his office told me that but the woman I spoke to seemed to be not all abusive, evasive, or deceptive.
    Also, I cannot post them now, but I believe that on the Monitor’s website or in other places, the statutes, etc that establish his office and duties as well as what he is responsible for are readily available.
    I fully agree that WHO is responsible for Rust paying out the cash part of the settlement (the checks we are expecting) is the real question. See the “First payments in Mortgage Settlement pushed back” thread for a lot more on that issue – I am just saying that Mr. Smith’s office is not the place to look for those answers. You’ll only frustrate yourself.

  • May 22, 2013 at 7:14 pm
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    I read on RippedOff website Rust Consulting had several complaints before the Foreclosure settlements . And no one seemed to care … Hmmm sounds like there is more to this whole fiasco then we all think?? Like to see where some of this money is really going… Mr RUST ..

  • May 22, 2013 at 10:31 pm
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    When I called Rust after NMS changed their website information from saying end of May to Mid 2013 they told me that the delay had to do with the forms that had been sent out to us. I guess some of the people who were foreclosed on have since passed away and they are trying to be sure the next if kin is notified so they have an apportunity to claim the monies as well. The guy I spoke with was trying to be brief and didn’t give me a lot if details. However that is the most information I have heard so far.

  • May 23, 2013 at 8:14 am
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    Why is it that Joseph Smith is not able to over see the distribution of cash payments? That is part of the settlement, and Rust was hired by the banks to send out the checks. That should be part of the deal, don’t you think???
    Down with the Banks, Down with Rust, and Down with the AG’s for not doing something for us since they went to bat for this settlement, received their money for their states and left the people who actually got hurt fighting for our homes, while all others get the help we should have gotten back then. Nothing new for the government, get what you want and leave the job unfinished!!!!!!!!!!
    Ok I am done venting

  • May 24, 2013 at 10:54 pm
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    The DOJ knew my loan was fraudulent back in 2005 and did nothing to stop the processing of the fraudulent loans with Countrywide. They waited till they got their jobs with the SEC and when Angelo Mozillo sold Countrywide to Bank of America to charge him with fraud. Angelo Mozillo must had bribed them to keep him out of prison. It was a setup for us homeowners to lose our homes so they could make money and lower the housing market. I know I was drugged and raped by two of them. And several of the SEC men were around me back in 2005.

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