“I’m encouraged,” Smith said in an interview Monday morning. “There’s pretty good evidence that they’re on track to complete their obligations sooner rather than later. . . . I think it does show that the relief is going to be significant.”
The aid undertaken by the five banks involved in the settlement — Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup — has taken various forms, from lowering loan balances to completing growing numbers of short sales to helping refinance many homeowners into mortgages with much lower interest rates.
Each bank is responsible for providing a set amount of aid under the terms of the settlement, but different kinds of relief receive different amounts of credit. In general, banks received more credit for providing aid during the first year of the settlement and for activities such as reducing principal on loans and refinancing mortgages. Short sales, in which a bank agrees to sell the property for less than the borrower owes and forgive any remaining debt, are not credited dollar for dollar.
Given those incentives, banks have been eager to complete their relief obligations well before the three-year requirement in the settlement. Bank of America said last week, for instance, that it had either “completed or approved” nearly $16 billion in consumer relief for about 164,000 homeowners and expected to meet its obligations within the first year of the deal.
Still, some consumer advocates have argued that there has been too little relief and that what aid has come is not reaching reaching those homeowners most in need.
“Today’s report shows that the mortgage settlement is still not helping those hardest hit by the foreclosure crisis,” Brian Kettenring, executive director of the advocacy group Campaign for a Fair Settlement, said in statement. “There are some encouraging signs, but the most vulnerable communities are reporting very few principal reduction modifications. We need to ensure that these funds have a real impact on hardest hit communities, and that banks aren’t just cleaning up their balance sheets.”
Monday numbers were self-reported and submitted by the banks to Smith last week. He said that he has yet to confirm their accuracy but that in the coming months he will verify the banks’ claims alongside an outside auditing firm he has hired.
The report shows that banks have completed a total of $552.7 million worth of relief in Maryland, $401.9 million in Virginia and $26.2 million of relief in the District. By contrast, large foreclosure-battered states, such as California and Florida, have received $8.9 billion and $3.6 billion in relief, respectively.