A progress report by independent monitor Joseph A. Smith of the Office of Mortgage Settlement Oversight revealed that the nation’s largest mortgage servicers distributed $45.83 billion in direct relief to over 550,000 homeowners, or roughly $82,000 per homeowner as part of the National Mortgage Settlement. Almost one year ago, the Department of Justice, Department of Housing Urban Development (HUD) and 49 state attorney generals reached an agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.
“As we reach the one year anniversary, the latest report marks a major milestone in our efforts to assist struggling homeowners,” HUD Secretary Shaun Donovan said. “We have already surpassed our initial expectations and the settlement is testament to the fact that large scale principal reduction can be used as an important tool in our efforts to prevent foreclosures without incurring negative results.
“The Justice Department, with our federal and state partners, negotiated the settlement as part of our ongoing commitment to protect American homeowners and taxpayers from unlawful mortgage servicer conduct,” Acting Associate General Tony West said. “As we approach the first anniversary of the landmark settlement, we are pleased that so many homeowners have been helped. The Department will work vigilantly to ensure that the settlement’s terms continue to be implemented effectively.”
National Mortgage Settlement Demonstrates Progress
The report demonstrates significant progress on the broadest and most firm principal reduction program in the nation’s history. More than $22.48 billion of the overall completed consumer relief came in the form of debt forgiveness. Because of the National Mortgage Settlement, the principal reduction helps borrowers stay in their homes, lowering monthly payments on over 266,000 loans and actually reducing struggling homeowners’ loan balances by more than $84,000 on average.
This is in addition to the funds that states allocated for settlement-related purposes, including over $250 million for housing counseling and another $50 million to legal aid.
“Now we have clear signs that our housing market has gained momentum, and it is clear that this settlement is providing some of the critical tools for that momentum to continue,” Donovan said. “The job’s not done–and we will continue to watch the banks like hawks to ensure they live up to their obligations as they complete their consumer relief requirements and we measure their progress on implementing new and improved servicing standards.”