Massachusetts has so far received $103 million in debt relief, or about $75,000 per troubled borrower, under the terms of a $25 billion legal settlement with five major US banks over abusive foreclosure practices, according to a report released Wednesday by a court-appointed monitor.
From March 1 until the end of June, banks provided about $10.6 billion in relief to US mortgage holders affected by abusive lending practices, with the most aid going to states that were hit hardest by the housing crisis. Florida, for example, has so far received a total of $1.7 billion, although the average relief per borrower in that state — $74,240 — was less than in Massachusetts.
Massachusetts borrowers will receive an estimated total of $257 million worth of mortgage relief and $14.6 million in cash payments under the terms of the settlement. In addition, the state has received $44.5 million, which is largely being used to fund a foreclosure prevention program called HomeCorps.
“We have seen significant relief beginning to flow to Massachusetts borrowers as part of the national settlement, and we must continue that progress,” Attorney General Martha Coakley said in a statement. “With this comprehensive effort to prevent unnecessary foreclosures, we believe Massachusetts will be in a strong position to rebound from the foreclosure crisis.”
Through the end of June, 1,374 Massachusetts borrowers had received some kind of relief. More than 700 mortgage holders were able to hold short sales, in which a homeowner sells a property threatened with foreclosure for less than what is owed to the bank, with the bank absorbing the loss. In the next largest relief category, banks reduced the principal owed on mortgages held by 290 of the state’s borrowers, lowering homeowner debt and monthly payments. In addition, nearly 70 Massachusetts borrowers have been able to refinance their mortgages without principal reductions.
Another $63.5 million in relief has been approved for 619 Massachusetts borrowers in loan modification programs, for an average of more than $102,000 per case.
The settlement relief amounts received by Massachusetts homeowners are slightly less than the national averages: $76,616 for homeowner relief, and $120,698 for borrowers currently in relief programs.
Steve Meacham, an organizer at grass-roots community organization City Life/Vida Urbana in Jamaica Plain, which has been advocating on behalf of people who are living in foreclosed buildings, said the program “is a start, but not enough.”
Meacham said his organization is advocating for more aggressive principal reduction. “The amount of principal reduction needed nationwide is much more than $25 billion,” he said. “It is closer to $700 billion.”
Nationwide, $8.7 billion of the relief distributed so far came in the form of short sales, according to the report, which was issued by the Office of Mortgage Settlement Oversight, the organization that is monitoring the $25 billion settlement. Another $749 million in mortgage debt was forgiven.
Some of the biggest banks in the country are among the lenders funding the settlement, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial Inc., previously known as GMAC Inc.
“The $103 million that Massachusetts homeowners have gotten is real relief, but it’s just the beginning,” said Joseph A. Smith Jr., the settlement monitor. “I’m not declaring victory, but I do think we’ve made a solid start.”
The report, a preliminary estimate of bank efforts, is not a formal assessment of the progress the lenders have made toward meeting the settlement obligations. The settlement calls for the banks to provide a total of $20 billion in borrower relief and $5 billion in payments to states and the federal government.
The agreement, filed in federal court in Washington in February, was reached after attorneys general from 49 states and the District of Columbia announced an investigation into foreclosure practices after disclosures that banks were using faulty documents to seize homes.