Local News
3:58 pm
Mon November 19, 2012

BofA Shines In Mortgage Settlement Status Update

Former NC Commissioner of Banks Joseph Smith was appointed to monitor the mortgage settlement.
Credit Office of Mortgage Settlement Oversight

The nation's five largest mortgage servicers – including Bank of America and Wells Fargo – have so far provided more than $20 billion in homeowner relief under a settlement with state attorneys general. Bank of America shows well in the latest report.

The last status report in August had a big zero for the number of mortgages modified or partially forgiven by Bank of America under the settlement. The Charlotte-based bank now leads the other four banks, in those categories with around $3.7 billion in homeowner debts written off.

"The headline numbers are encouraging," says Joseph Smith, the former North Carolina commissioner of banks who is now in charge of making sure Bank of America and the others follow through on the settlement.

They still have two more years to fulfill their obligations, but in the final analysis they will get extra credit for having moved quickly. They also get points for principal forgiveness – which means reducing the amount an underwater homeowner owes the bank.  Other types of assistance – including short sales where the bank allows a home to be sold for less than the mortgage on it – are considered less helpful to homeowners.  

But short sales so far make up the bulk of assistance the five banks have offered under the settlement to date, which is why Smith cautions, "it's important to separate the news from the noise. The banks will only receive credit from the settlement when I have determined that they have completed their work."

Before he signs off, Smith says the banks will need to offer a mix of meaningful aid to homeowners.

Remember, this settlement was borne of that "robo-signing" debacle where big mortgage servicers were found to be fraudulently foreclosing on people.

Bank of America agreed to provide nearly half of the total relief in the settlement, because it has the most troubled mortgages on its books.

Read status reports from the Office of Mortgage Settlement Oversight here.