“They don’t get mentioned in a positive way too often,” said Miller, a key architect of the settlement, during a call with reporters this week to discuss the progress of the deal. Bank of America “had the broadest and most effective and most successful principal reduction program.”
The accolades were striking in light of New York Attorney General Eric Schneiderman’s allegations that Bank of America, as well as Wells Fargo, has failed to help struggling homeowners under the agreement. Schneiderman was one of 49 attorneys general to negotiate the $25 billion settlement with the nation’s five largest mortgage servicers, including JPMorgan Chase, Ally Financial and Citigroup, over foreclosure abuses last year.
Earlier this month, he threatened to sue Bank of America and Wells Fargo for violating the terms of the agreement. Schneiderman said he received 339 complaints that the banks were dragging their feet in processing requests from homeowners to have their loan payments lowered, a direct violation of the deal.
The attorney general sent a notice to the settlement monitoring committee about his intention to sue if the panel failed to rein in the banks. Since announcing the potential lawsuit, Schneiderman has received additional complaints from homeowners that will be included in an updated notice, his spokesman, Damien LaVera, said.
Once the new notice is submitted, the monitoring committee will have 21 days to respond.
“When we get [Schneiderman’s] data, we’ll look at it in the context of what we’re doing and decide what is best,” Miller said. “The whole idea is to make this system work. In some ways, it is working. In other ways, it’s not working.”
During the press call, North Carolina Attorney General Roy Cooper pointed out that some banks “have fallen short” of complying with the servicing standards set in the settlement, but declined to name names. A report on the banks’ compliance with those standards is due out next month.
New York’s top prosecutor did not mention his complaints against Bank of America and Wells Fargo in a statement on the progress of the settlement Tuesday, but acknowledged that his office is keeping an eye on all of the banks.
“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,” he said. “My office will continue to monitor the banks’ compliance with the settlement.”
Homeowners in New York have received almost $2 billion in assistance, far more than the state officials projected, according to a report released Tuesday by the settlement monitor Joseph Smith Jr. Bank of America has noted that it provided some 10,000 New Yorkers more than $1 billion in relief.
All told, 621,712 borrowers across the country have received $50.6 billion worth of loan modifications, short sales, refinancings and forbearance from March 2012 through March 31. On average, that represents about $81,437 per borrower.
The banks involved in the agreement provided the data. Smith has to review the self-reported information before any of the banks receive official credit. Officials at Bank of America and JPMorgan say they have met their obligations under the agreement.
“We’ve exceeded our expectations,” Miller said. “It’s been a strong effort to help homeowners.”
Short sales, in which borrowers can sell their homes for less than what they owe, made up $20 billion of the total amount of assistance. Around $14 billion has come in the form of second-lien forgiveness, while principal reduction on first liens totaled $10.1 billion. The balance of the relief was spread among various categories, including refinancings.
Under the settlement, the five banks were required to provide $20 billion in relief to consumers and an additional $5 billion to states for foreclosure-prevention programs.
The total aid to consumers exceeds the $25 billion settlement amount because banks were awarded partial credit for different forms of relief under the settlement. Every dollar forgiven in a short sale, for instance, earns a bank 45 cents of credit, whereas they get dollar-for-dollar credit for principal forgiveness.
Advocacy groups are pleased that homeowners are receiving help, but are urging the banks to focus on keeping people in their homes.
“More borrower relief is essential to prevent foreclosures and to help stabilize the housing market,” said John Taylor, president and chief executive of the National Community Reinvestment Coalition, a consumer group. “We look forward to more principal reductions and other meaningful relief for consumers.”
Banks have three years to complete principal write-downs, refinancings and other relief. The settlement provides incentives for actions taken within the first 12 months to speed the pace of disbursement.
To date, Citigroup has provided $3.2 billion in relief to 54,742 homeowners. Ally Financial has given 8,866 borrowers about $657 million in assistance. Wells Fargo said it has helped 90,907 consumers with $5.7 billion in relief, while JPMorgan said it has provided $11.1 billion in help to 126,032 borrowers.