Following the release of the first official report on the implementation of the National Mortgage Settlement Monday, Attorney General Eric T. Schneiderman indicated that he was encouraged by its progress on behalf of New York state homeowners.
The report, which was issued by the settlement's national monitor, Joseph Smith, showed that more than $625 million in consumer relief has been delivered to New York homeowners since March of this year. This figure is a conservative estimate that does not include thousands of additional trial loan modifications and refinance offers pending during the same period.
To date, 7,223 New York homeowners have received assistance as a result of the settlement, with each borrower receiving an average of $86,600 in the form of principal write-downs and other relief.
"The National Mortgage Settlement was a first step in aiding homeowners who were impacted by the foreclosure crisis that devastated communities across this state. While there are still too many homeowners who are at-risk of foreclosure, today's report is encouraging and reflects significant progress," Schneiderman said. "Thousands of New Yorkers are receiving relief from their mortgage servicers as a result of this settlement, but we must remain vigilant to ensure all eligible New Yorkers are getting the help they deserve and that the banks are being held accountable under the terms of the agreement."
As part of the settlement, the five largest mortgage servicers have agreed to a $25 billion penalty under a joint state-national settlement structure. A minimum of $17 billion goes directly to borrowers nationally through a series of homeowner relief efforts, including principal reduction. Servicers have also committed $3 billion to an underwater mortgage-refinancing program for homeowners whose mortgages are worth more than the value of their homes.
The National Mortgage Settlement is the largest joint state-federal settlement in history and it is the result of a massive civil law enforcement investigation and initiative by state attorneys general, state banking regulators, and nearly a dozen federal agencies. The agreement was with the nation's five largest servicers: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup, Inc., and Ally Financial, Inc. (formerly GMAC). Collectively, the five banks service nearly 60 percent of the nation's mortgages.
The below figures represent the total consumer relief to New York homeowners from March 1 to Sept. 30 of this year:
•Completed principal forgiveness on first mortgages: $113,867,048 (967 borrowers)
•Completed forgiveness on pre 3/1/12 forbearance: $41,401,562 (584 borrowers)
•Completed second lien modifications: $14,366,725 (252 borrowers)
•Completed second lien extinguishments: $212,561,123 (2,933 borrowers)
•Refinances completed: $27,587,216 (494 borrowers)
•Short sales/deeds in lieu: $197,915,365 (1,444 borrowers)
•Enhanced borrower transitional funds paid by servicer: $6,865,612 (394 borrowers)
•Servicers payments for release of second lien: $439,601 (45 borrowers)
•Deficiency waivers: $10,189,305 (107 borrowers)
•REO properties donated: $320,417 (3 borrowers)
•Total consumer relief: $625,513,974
•Total number of New York borrowers receiving relief: 7,223
•Average amount of relief per borrower: $86,600
Despite the progress illustrated by the report, the New York attorney general's office remains vigilant to ensure that mortgage servicers live up to their responsibilities under the settlement, including compliance with the servicing reforms contained in the agreement. Consumers should file a complaint with the office of the attorney general if servicing violations are encountered.
Last week, Schneiderman warned Wells Fargo to reverse a new policy that temporarily suspended review of mortgage relief applications from New York homeowners, many of whom are still struggling to recover in the aftermath of Hurricane Sandy. Schneiderman informed Wells Fargo that his office will not allow the bank to use the devastation inflicted by Sandy to evade their obligations under the settlement. The attorney general demanded the bank immediately rescind this policy and comply with its obligations without interruption.
Schneiderman has made it a top priority of his administration to hold accountable those whose misconduct led to the collapse of the housing market- and to provide significant relief to homeowners. In the state of New York, an average of 1 in 10 mortgages is at risk of foreclosure. The approximate number of individuals living in homes that are either in foreclosure or at risk of foreclosure (based on typical household size for each distressed mortgage) exceeds the populations of Buffalo, Rochester and Syracuse combined.
In addition to the hundreds of millions of dollars in relief from lenders reflected in Monday's report, Schneiderman secured more than $130 million in hard dollars for New Yorkers as part of the settlement. Of this amount, Schneiderman launched the Homeowner Protection Program, a $60 million commitment over three years to fund housing counseling and legal services for struggling New York homeowners. Throughout New York state, 34 legal services organizations and 59 housing counseling agencies will receive more than $16.1 million this year to provide free foreclosure prevention services. An additional $3.9 million has been allocated for training, technical assistance and other support services to assist homeowners in foreclosure.
In January, Schneiderman was appointed by President Obama to co-chair the residential mortgage-backed securities working group. This joint investigation brings together the Department of Justice, HUD, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, several state law enforcement officials, and other federal agencies to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. It builds upon ongoing state and federal investigations, while also launching new ones.