Monitor: Progress Being Made on Settlement

It has been over a year since the National Mortgage Settlement was finalized to end the crisis over robo-signing, dual tracking and other illicit foreclosure practices, and the person in charge of overseeing the Settlement reported significant progress late last month, although plenty of complaints are flowing in to his office at the same time.

The latest report from Joseph A. Smith, Jr., shows that for the first 10 months since the ink was dried on the settlement in February 2012, consumers have been receiving relief in many forms, and the nation’s five biggest lenders — Ally Financial, Bank of America, J.P. Morgan Chase, Citibank and Wells Fargo — have been keeping to their obligations under the terms of the Settlement.

Iowa Attorney General Tom Miller — who led the charge against the banks resulting in the Settlement between them, 49 attorneys general and federal agencies — is so charged by the results that he wrote today the progress being made is proving doubters wrong.

One of the biggest news items to come out of the Office of Mortgage Settlement Oversight so far is that Ally Financial has been determined to be in substantial compliance with its $200 million consumer relief commitment. Of the five banks (referred to as Servicers in the report), only Ally has met its commitment so far, but that comes as no surprise since it is the smallest of the bunch. The other four have commitments totaling in the billions of dollars.

Through the first 10 months, Smith reports that:

  • 554,389 borrowers received some type of consumer relief, totaling almost $46 billion (cumulative between completed consumer relief and first lien trial modifications so far)

  • 70,810 borrowers successfully completed a first lien modification

  • 25,114 borrowers were in active first lien trial modifications

  • Second lien modifications and extinguishments were provided to 170,339 borrowers

  • There were 56,400 refinanced home loans with an average unpaid balance of $211,834

  • 169,081 borrowers who either completed a short sale or had their lender accept a deed in lieu of foreclosure

The report breaks down the numbers for the fourth quarter of the year as well.

Not all is rosy, however. Smith has received numerous complaints from consumers and real estate professionals. A lot of those complaints are addressing process issues, while others are questioning things like questionable and undocumented fees being added, some regarding the continued practice of dual tracking which is specifically prohibited by the agreement, as well as issues regarding the settlement’s mandatory directive to provide single points of contact for borrowers.

Between May 2012 (when he first posted the complaint form on the office’s website) and Feb. 1, 2013, he has received 5,700 consumer complaints from all 50 states and the District of Columbia. In the beginning he was receiving 550 complaints a month. Since Nov. 1, 2012, however, that number has increased to roughly 830 complaints a month.

Those complaints are outlined in the report, and the compliance data is broken down for each Servicer in the Appendices on a national basis as well as for the 10 states that have the most at stake with the Settlement.

For more details, read the report. Whether you believe that the lenders got off easy with the national foreclosure settlement or not, at least borrowers are obtaining some sort of relief as promised.

Is it enough? Should the banks be doing more than is required under the Settlement? We would like to know what you think.

Related stories:
Better to Buy Bank Owned or Short Sale?
Backed by Big Banks, MERS Gains Momentum in the Courts
Are We About to See a Massive Set-Back in the Housing Sector?

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