Relief to Iowans nearing $40 million in national mortgage settlement

DES MOINES – Iowa homeowners have recouped nearly $40 million in direct relief as part of a national mortgage settlement hammered out last year.

A progress report issued Thursday by an independent monitor in the Office of Mortgage Settlement Oversight indicated that the nation's five largest mortgage servicers have provided $39,580,069 in relief to 1,192 Iowa homeowners, and another 169 borrowers are currently in trial modifications worth at least $5.7 million from March 1, 2012, through last June 30.

The average relief in Iowa was slightly more than $33,205 per borrower, according to Iowa Attorney General Tom Miller's office. A total of 600 Iowa borrowers received more than $17 million in principal reductions, and 243 Iowa borrowers obtained and completed mortgage refinances through the settlement. The average rate reduction was nearly 3.5 percent.

In addition to the direct relief to homeowners, the state of Iowa received a direct payment of $17,051,922 last year that largely was being used for mortgage assistance programs, such as Iowa Mortgage Help, according to Miller's office.

Nationally, the report released by independent settlement monitor Joseph A. Smith, Jr. found that more than a 640,000 borrowers benefited from some type of settlement-related relief, which topped $51 billion. On average, the relief averaged just under $80,000 per borrower.

The servicers included JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial (formerly GMAC).

“The National Mortgage Settlement continues help homeowners in Iowa and across the country beyond what we had ever expected,” Miller said in a statement.

“The servicers' self-reported data shows that they met their homeowner relief targets for this three-year agreement in roughly one year. That's significant, because homeowners needed help sooner rather than later,” added Miller, who was the lead state attorney general in the joint state-federal investigation and landmark settlement into mortgage servicing practices by the nation's five biggest mortgage servicers.

Miller noted that consumer relief has exceeded expectations in all three major categories: first-lien principal reduction, second-lien principal reduction, and short sales.

The direct relief generally is provided through an array of loan modifications, including principal reductions and refinancing, according to Miller's office. Other forms of relief include short sales and transitional assistance, forbearance of principal for unemployed borrowers, benefits for service members who are forced to sell their home at a loss as a result of a permanent change in station order, and other programs.

The investigation began in October 2010 in response to widespread reports of “robo-signing” of foreclosure documents, and later broadened into other troubling mortgage servicing practices, according to the Iowa Attorney General's Office.

In addition to providing the direct borrower relief, the settlement also required servicers to adopt more than 300 new servicing standards designed to address the issues that led to the settlement, including the fraudulent robo-signing of foreclosure documents. The new standards already have improved how servicers treat borrowers, according to Miller.

More information on the agreement can be found at www.IowaAttorneyGeneral.gov or www.NationalMortgageSettlement.com.

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