5 big US banks have cut mortgage balances by $6.3B

Associated Press Modified: November 19, 2012 at 2:00 pm •  Published: November 19, 2012
Advertisement
;

LOS ANGELES (AP) — Five of the biggest U.S. banks have cut struggling homeowners' mortgage balances by $6.3 billion, part of a total $26.1 billion in home loan relief provided under a landmark settlement over foreclosure abuses.

More than 309,000 borrowers received some form of mortgage relief between March 1 and Sept. 30, according to a report issued Monday by Joseph Smith, monitor of the settlement.

That translates to roughly $84,385 per homeowner, according to the report, which is based on mortgage servicers' own account of their progress as they move to comply with the settlement terms.

"The relief the banks have reported is encouraging," Smith said in a statement. He added that the banks won't get credit under the settlement until he can confirm their figures.

Smith said that $13.1 billion of the $26.1 billion in relief was in the form of short sales, in which lenders agree to accept less than what the seller owes on the mortgage.

Another $1.4 billion in relief was provided by refinancing 37,396 home loans with an average principal balance of $210,398. As a result, each borrower will save about $409 in interest payments each month, according to the report.

Banks also had $4.2 billion worth of loans under trial modifications. That could lead to permanent reduction in loan balances of $135,223 per borrower.

While borrowers can benefit from having their monthly payments lowered, having a portion of their balance forgiven is especially helpful. That's particularly the case when their home is worth less than what they owe on their mortgage, so-called underwater mortgages.

All told, banks erased about $2.6 billion in first-lien loans and $2.8 billion in second-lien loans. That amounts to an average reduction of $116,929 for the 21,833 borrowers with first-lien loans. The 50,025 borrowers with second-lien loans saw their balances reduced by an average of $55,534.



Trending Now


AROUND THE WEB

  1. 1
    Bartender Returns $200 She Stole 15 Years Ago
  2. 2
    Study: Most US Teens Can't Read Their Own Pay Stubs
  3. 3
    It's official. It's true. Rosie's coming back.
  4. 4
    Slurp, munch freebies for a week at 7-Eleven
  5. 5
    Dwyane Wade is the biggest loser of the NBA offseason
+ show more