Here’s How Banks Are Helping Distressed Borrowers
Questionable mortgage practices at the nation’s largest financial institutions received a lot of attention from federal regulators after the financial crisis, and as part of its efforts to corral and remedy banks’ foreclosure violations, the Justice Department pursued legal settlements with Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and Ally Financial (NYSE:GMA).
Last February, those institutions resolved the allegations of banking misconduct by agreeing to fund about $20 billion in consumer relief, with the majority of that amount reserved to help distressed borrowers stay in their homes. In the intervening year, the banks have made significant efforts to fulfill their obligations; a report issued by monitor Joseph A. Smith Jr., a former North Carolina Banking Commissioner, showed that all five were on track to meet the terms of their deal.
However, Smith did note that the banks still needed to improve their compliance with the loan servicing standards laid out in the settlement.
The terms laid out by the federal government required the five banks to furnish at least $10 billion in loan write-downs and $10 billion in other kinds of homeowner aid, including short sales, a practice by which banks accept less than the total amount owed on a mortgaged property to avoid foreclosure…