5 big US banks have cut mortgage debt by $19B

Published on NewsOK Modified: February 21, 2013 at 12:26 pm •  Published: February 21, 2013
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Ally, the former financial arm of General Motors Co., now has fulfilled its obligation for the relief it is required to provide under the settlement, Smith said.

The banks provided another $2.2 billion in relief by refinancing 56,400 home loans with an average principal balance of $211,834. As a result, borrowers will save an average of about $417 in interest payments each month, the report says.

The banks also had $3.5 billion worth of loans under trial modifications as of Dec. 31. That could lead to permanent reduction in loan balances of $138,802 if the trials are completed.

"I believe we have made progress, particularly as it relates to (mortgage) relief, but I know from my regular conversations with advocates across the nation that the banks and I have much more work to do on behalf of borrowers," Smith said in a statement.

In separate settlements announced last month, 13 banks agreed to pay a combined $9.3 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes. The settlements ended a review of loan files required under a 2011 action by federal agencies.

They could compensate borrowers whose homes were seized because of abuses such as "robo-signing," when banks automatically signed off on foreclosures without properly reviewing documents. The settlements also will help eliminate huge potential liabilities for the banks: Aurora, Bank of America, Citigroup, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC Financial Services, Sovereign, SunTrust, U.S. Bank and Wells Fargo.