Aug. 29, 2012 at 9:48 AM ET
Bank of America Corp hasn't completed any first-mortgage modifications that reduce loan balances for borrowers so far under a $25 billion settlement reached this year, the official monitoring the agreement said Wednesday.
Five financial institutions that are part of the settlement have provided $10.6 billion in consumer relief from March 1 to June 30, with $8.7 billion in the form of short sales in which customers sell their homes for less than the mortgage's value. Bank of America produced $4.8 billion in short sales, the most of the five banks, according to the first report by settlement monitor Joseph Smith.
JPMorgan Chase & Co completed $367 million in first lien modifications in which borrowers had their loan balances reduced, about half of all modifications.
The other institutions in the settlement are Wells Fargo & Co, Citigroup Inc and Ally Financial Inc.
The five lenders reached the agreement in March with federal officials and state attorneys general to resolve allegations they mishandled foreclosures.
The settlement requires them to provide around $20 billion in consumer relief by reducing loan balances for struggling borrowers and refinancing loans for customers whose homes are worth less than the value of their mortgages.
While the banks have provided more than $10 billion in relief, they are not necessarily half-way to meeting their obligations, since the settlement only provides for partial credit for certain kinds of relief. The banks only receive credit for $0.45 of every dollar of a writedown through a short sale, for example.
The agreement required Bank of America, which bought subprime lender Countrywide Financial in 2008, to provide the most consumer relief. But in a securities filing this month it said a significant number of modifications had not yet been completed "due to the time required to underwrite the modified loans."
The bank so far has provided no relief through refinancings, according to the report. It has completed $54.2 million in second-mortgage modifications.
Bank of America has offered about $2 billion in trial offers and has $803 million in trial offers in process, according to the report.
Smith, the former North Carolina state banking commissioner, is charged with monitoring the progress of the banks under the settlement. The first report shows the banks' progress from March 1 to June 30.
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