Principal Reductions Jump Significantly in Second Report on National Mortgage Settlement
Banks Report $266 Million in Relief to Massachusetts Borrowers; $22 Billion Nationwide Through September
BOSTON — Principal reductions and loan modifications for Massachusetts homeowners have jumped up significantly according to the second report on the national mortgage settlement, rising more than six times compared to the first report. The latest report shows that Massachusetts homeowners have received more than $266 million in total relief through the end of September according to numbers provided by the five major banks.
With funds from the national settlement, Attorney General Martha Coakley formed the HomeCorps program to assist Massachusetts homeowners and ensure that borrowers receive the maximum possible benefit under terms of the national settlement, including principal reductions.
“Struggling homeowners in Massachusetts are beginning to receive concrete benefits from the national settlement and we intend to keep pushing for more progress,” Attorney General Martha Coakley said. “Our HomeCorps program is working to ensure that Massachusetts’ borrowers get all the relief they are entitled to under this agreement. We believe this ongoing effort to prevent unnecessary foreclosures will help stabilize the housing market and turn our economy around for everybody.”
The five major banks reported more than $21.9 billion in completed consumer relief nationwide between March and September of this year. The full report can be found here as well as at the Office of Mortgage Settlement Oversight.
This most recent report shows a significant increase in Massachusetts homeowners receiving principal reductions, loan modifications, second lien forgiveness and refinances of underwater mortgages within the past three months. This type of relief jumped from a reported 359 Massachusetts borrowers in the first three months, to 2,205 borrowers through September 30. A homeowner must make three on-time monthly payments before a modification becomes permanent and is counted under the settlement agreement.
The second report by the settlement monitor shows that a total of 3,949 homeowners in Massachusetts were provided relief of all kinds for an average of $67,457 per homeowner, which continues to lead all New England states.
The numbers were self-reported by the banks and contain raw or aggregate numbers that cannot yet be used to assess the banks progress toward meeting its $20 billion dollar obligation under the terms of the court ordered settlement agreement. Because the servicers do not receive dollar-for-dollar credit for most forms of homeowner relief, they will actually provide much more relief than the $20 billion required by the settlement. Under terms of the national settlement with Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and GMAC/Ally, the banks were ordered to provide an estimated $257 million worth of mortgage relief across the Commonwealth and an estimated $14.6 million in cash payments to Bay State borrowers in post-foreclosure relief.
AG Coakley also obtained $44.5 million in funds for Massachusetts as part of the national settlement. A significant portion of these funds is being used to support the AG’s first-in-the nation foreclosure prevention and borrower support initiative called HomeCorps. The goal of the Attorney General’s HomeCorps is to mitigate future impacts of the foreclosure crisis by providing advocacy to distressed borrowers in Massachusetts facing foreclosure and includes a comprehensive three-part borrower support and referral initiative. Those homeowners facing foreclosure or with questions about the settlement can contact the HomeCorps hotline at (617) 573-5333.