Mortgage Aid Reaches Arizona
More than 22,000 Arizona consumers received some sort of aid during the first year of the nation’s biggest settlement with mortgage firms.
The U.S.’s five biggest lenders have provided $1.68 billion in relief to mortgage borrowers across the state, according to a progress report released Thursday by independent settlement monitor Joseph Smith of the Office of Mortgage Settlement Oversight.
More than a half-million consumers have received a total of almost $46 billion, nearly double the original settlement amount, in help from Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial. Last year, the lenders agreed to a $25 billion mortgage settlement to resolve complaints of over bad practices and poor treatment of borrowers.
U.S. Department of Housing Urban Development Secretary Shaun Donovan said the landmark mortgage settlement has already surpassed the government’s initial expectations and is helping the housing market recover.
“The job’s not done,” he said. “We will continue to watch the banks like hawks to ensure they live up to their obligations as they complete their consumer relief requirements.
The moortgage settlement requires the lenders to provide $20 billion to consumers. Different programs under the settlement give lenders different amounts of credit toward their part of the overall settlement. The banks get less than a dollar’s worth of credit for each dollar in relief, so consumers have received more in relief. A separate $5 billion went to the 49 state prosecutors involved in the settlement, primarily for foreclosure-prevention programs.
More than $1 billion of the Arizona total went toward helping homeowners complete short sales, so most of the money hasn’t helped borrowers keep their homes.
Another $348 million helped Arizona borrowers get out from under second mortgages. The third highest amount of relief for the state was $139 million to complete principal reductions on loan modifications.
Other housing aid
The federal government have a couple of programs to help homeowners avoid foreclosure and stabilize the housing market since the crash.
In 2009, the Housing Affordable Modification Program was launched. So far, 33,791 Arizona homeowners have received permanent loan modifications to lower their monthly mortgage payments, according to the Arizona Housing Department.
HAMP had a rocky start. Lenders were slow to implement the program, and many homeowners paid for several months on temporary loan modifications that were not made permanent. Most of those borrowers lost their homes to foreclosure.
To help more homeowners, the federal government launched the Hardest Hit Housing program in 2010. Arizona has been allotted $268 million from this program.
So far about $33 million of the state’s hardest hit funds have been spent to help more than 1,200 borrowers.
Now that the nation’s five biggest lenders have met most of their obligations from the mortgage settlement, Arizona housing advocates are hopeful banks and servicers will work more with the state to spend its federal foreclosure-prevention funds to help homeowners still struggling.
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