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Fewer homeowners than expected helped by mortgage settlement

NEW YORK — The $25 billion national mortgage settlement, intended to help homeowners affected by the housing crisis, appears to be running ahead of schedule, according to a report by its monitor.

But the number of households helped has fallen far short of predictions, and more people gave up homes in short sales than received debt reduction that would have allowed them to stay in their homes.

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Early last year, five banks signed on to the settlement over their use of faulty mass-produced documents to evict homeowners. On Dec. 31, they had provided $38.7 billion in relief in raw dollar terms, the report said. But because not every type of relief is counted the same way under the settlement, they had fulfilled only about 80 percent of their total obligation.

Before Wednesday, banks self-reported progress in raw dollar terms. The new report is the first in which the monitor has disclosed the amount of credit they have earned toward the settlement obligation. The report credited them $4.1 billion for principal reduction on primary mortgages, and $5.4 billion in short sales or deeds in lieu of foreclosure, when a homeowner sells the house for less than it is worth or simply hands it over to the bank. It also credited $2.6 billion for allowing people who owed more on their mortgage than the home was worth to refinance at lower interest rates.

Citigroup, Wells Fargo, Bank of America, JPMorgan Chase, and former mortgage branches of Ally were required to use debt reduction for 60 percent of their consumer relief. In this report, they were at 56 percent. All the banks said they have completed their financial obligations, helping almost 650,000 borrowers as of June 30, with an average benefit of $80,000. Federal officials had predicted 1 million borrowers would get relief.

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