From March 1 to June 30 of this year, mortgage servicers have provided a total of $10.56 billion in relief to 137,846 borrowers under the $25 billion deal to settle foreclosure-processing abuses by the nation’s top lenders.
However, most of the relief has come in the form of short sales or “deeds in lieu of foreclosure.”
Only 7,093 borrowers have successfully completed a first-lien modification and received $749.4 million in loan principal forgiveness, averaging approximately $105,650 per borrower.
The servicers are required to eliminate up to $17 billion in principal reduction and other forms of loan modification relief nationwide under the settlement approved in April.
Former North Carolina Commissioner of Banks Joseph Smith, who is the independent monitor overseeing relief provided to borrowers, has provided an update on the $20 billion that mortgage servicers are required to provide to approximately 2 million consumers.
The vast majority of the $10.56 billion already provided amounted to a short sale, in which the servicer agreed to a sale of a home for an amount less than the principal balance on the mortgage – or the lender agreed to accept a deed in lieu of foreclosure.
The total amount of this type of relief amounted to $8.67 billion, affecting 74,614 borrowers.
Under the mortgage settlement, lenders and affiliated mortgage servicers are also required to implement new policies and standards to prevent foreclosure abuses of the past, such as “robo-signing,” improper documentation and lost paperwork.
Those eligible should receive letters. Due to its scope and complexity, the settlement will be executed over the next three years.
Here’s the breakdown on relief provided through June 30:
• 7,093 borrowers completed a first lien modification and received $749.4 million in loan principal forgiveness, averaging approximately $105,650 per borrower.
• An additional 5,500 borrowers received forgiveness of pre-March 1, 2012 forbearance of approximately $348.9 million, representing an average of about $63,445 in forgiveness per borrower.
• Second lien modifications and extinguishments were provided to 4,213 borrowers, representing about $231.4 million in total relief. The average amount of relief for borrowers whose second liens were modified or extinguished was approximately $54,930.
• Servicers refinanced 22,073 home loans with a total value (unpaid principal balance) of $4.9 billion. The estimated annual relief provided to borrowers is about $102.8 million resulting from an average annual interest rate reduction of about 2.1 percent. On average, the estimated annual interest savings to each borrower will be about $4,655, or $388 monthly.
• In addition, 74,614 borrowers had either a short sale completed during this period, in which the Servicer agreed to a sale of a home for an amount less than the principal balance on the mortgage, or the lender agreed to accept a deed in lieu of foreclosure, waiving any unpaid principal balance in either case. The total amount of this type of relief approximated $8.67 billion, averaging about $116,200 per borrower.