Banks have given $10.6 billion in mortgage relief settlement

Washington - The nation's largest banks have provided nearly 140,000 homeowners with a total of $10.6 billion in relief under a $25 billion national settlement reached in February, the monitor for the agreement said Wednesday.

The largest category of relief was in short sales, in which the banks forgave about $8.7 billion in first- or second-mortgage debt to allow the borrower to sell a home for less than what is owed.

The report showed that Bank of America Corp. faltered in one key area of the settlement, completing no modifications of first mortgages from March 1 to June 30, the period covered in the first status report released by the Office of Mortgage Settlement Oversight.

The other four banks covered by the settlement - JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. - reported that they had completed 7,093 modifications of first-lien mortgages worth a total of $749 million.

JPMorgan Chase completed the most such modifications, with $367 million.

"More hard work remains as the banks work to meet their obligations," said Joseph A. Smith, the monitor of the settlement.

Overall, Bank of America had provided the most relief to homeowners for the period, with $4.9 billion. And spokesman Dan Frahm said the bank was doing much better on first-mortgage modifications, which must go through a three-month trial before being completed.

Through Aug. 21, Bank of America had completed $596 million in first-mortgage modifications, Frahm said.

He called Wednesday's report an "early snapshot" of progress in fulfilling the settlement's terms. And he said Bank of America was on target to provide all the relief required in the first year of the settlement, well ahead of the three-year deadline required.

The five largest mortgage servicers agreed to provide $25 billion in relief to struggling homeowners as part of an agreement with federal officials and attorneys general in 49 states to settle lengthy investigations into alleged robo-signing and other foreclosure abuses. Of that figure, about $20 billion is provided by the banks directly to consumers, with $5 billion distributed to the states.

The banks get credits for various types of homeowner relief, and the $10.6 billion provided so far will be adjusted into credits to fulfill the $20-billion obligation.