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Servicers Work Toward Fulfilling National Settlement Terms

Five months after the nation's top five servicers settled with the states attorneys general and several federal agencies to address iniquities in foreclosure processes, Joseph A. Smith, Jr., the settlement monitor, released a preliminary ""report"":https://www.mortgageoversight.com/wp-content/uploads/2012/08/ProgressReport08292012.pdf to inform the public of the servicers' progress so far.

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Thus far, the five servicers ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô offered $10.56 billion in relief to borrowers and have implemented between 35 and 72 percent of the 304 servicing standards detailed in the national settlement.

The preliminary report ""is not required by the settlement and contains information given voluntarily to me by the banks,"" Smith said. ""It is intended to be the basis of a national conversation about the servicers' efforts to meet their obligations under the settlement.""

Additionally, Smith stressed the dollar amounts throughout the report are unconfirmed, gross amounts that cannot be used as estimations of the servicers' progress toward the total $20 billion in obligated consumer relief.

Regardless, between March and the end of June, the servicers extended about $10.56 billion in aid and loss mitigation to struggling borrowers in a variety of ways.

The servicers aided 7,093 borrowers through first lien modifications with principal forgiveness in the amount of $749.4 million. The amount of principal forgiveness per borrower amounts to about $105,650.

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About $348.9 million in pre-March forbearance has been forgiven for 5,500 borrowers, amounting to an average of $63,445 per borrower.

The servicers also modified or forgave second liens for 4,213 borrowers, totaling $231.4 million. This translates to about $54,930 per borrower.

Short sales and deeds in lieu were a popular loss mitigation technique among the five servicers from March through June, with about 74,614 completed, totaling about $8.67 billion in debt forgiveness for borrowers.

Refinances were also popular. The servicers refinanced about 22,073 loans, reducing interest rates to an average of about 2.1 percent, saving borrowers about $4,655 per year on their mortgages.

Additionally, as of July 5, four of the five servicers had implemented more than half of the 309 servicing standards required in the national settlement.

Standards already addressed by all five servicers include, document integrity in foreclosure proceedings, single point of contact for delinquent borrowers, servicemember protection, and improved loss mitigation practices.

The servicers will continue to implement the remaining standards and will work toward providing borrower relief in the amount of $20 billion over the next three years.

Any servicer that has not met its monetary borrower relief requirements at the end of three years must pay 125 percent of the remaining about in penalties.

Smith's report also announced the decision to employ BBDO consulting as the ""primary professional firm"" to oversee and enforce settlement requirements. Smith's ""goal was to find a firm that not only had the organizational capacity and subject matter expertise to do the work well, but also was independent of all five Servicers.""

BBDO will be ""responsible for ensuring quality control and making sure that the review of the Servicers is done in a consistent way,"" Smith stated.

In 2013, Smith will release an official report evaluating the servicers' performance over the last two quarters of 2012.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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