BofA Outpaces Other Banks in Mortgage Settlement Compliance

Bank of America Corp. moved faster than Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. in satisfying its obligations to assist troubled borrowers under last year's $25-billion national mortgage settlement, according to the agreement's monitor.

The latest fully audited results credited Bank of America with 97% of its required $7.6 billion in consumer relief as of the end of last year, monitor Joseph A. Smith Jr. said. A report containing the findings was expected to be filed this morning with the U.S. District Court in Washington, D.C.

Chase had delivered 76% of the $3.7 billion in aid it had promised, Wells Fargo 55% of its pledged $3.4 billion and Citigroup 46% of its $1.4 billion in aid, Smith said.

BofA, Wells Fargo, Chase and Citi were the four largest among five mortgage customer-service providers to sign the settlement in early 2012 with 49 states and several federal agencies.

The agreement with the servicers put an end to investigations into the alleged falsification of foreclosure documents and other abuses in the handling of homeowners delinquent on their mortgages.

The fifth and smallest servicers to settle were the so-called ResCap parties, including GMAC Mortgage and Ally Financial, which already have been credited with meeting their obligations to provide $185 million in consumer relief.

The eight categories of consumer aid included modifying first mortgages to lower payments, modifying or writing off second mortgages and allowing borrowers to satisfy their debts by selling their homes for less than what they owed.

The banks also had agreed to help certain borrowers by refinancing their mortgages to lower the interest rates. Smith said Citi had accomplished 131% of its obligation in that regard, Wells Fargo 122%, Chase 113% and BofA 41%.

Smith, a former North Carolina banking commissioner, said his auditors found that each of the four banks had improperly sought credit for assistance on dozens of loans.

In most cases these mistakes were inconsequential and simply corrected. But Chase and Citi were forced to withdraw numerous requests for credit on second-mortgage modifications after making errors in calculations, Smith said.

The settlement required servicers to provide $20 billion in relief to consumers. Because the servicers get less than a dollar's worth of credit for each dollar of relief, consumers have received more than $20 billion in relief. A separate $5 billion under the agreement went to states, primarily for foreclosure prevention programs.

Since the end of last year all four banks have claimed to have satisfied their consumer relief and refinancing obligations. Smith said he expects to complete his audits and make a final determination on that "in the coming months.”

He also is expected to report this fall on the banks’ compliance with more rigorous customer-service standards imposed by the settlement.