Friday, November 23, 2012


"In February, when five big banks settled with government officials over evidence of foreclosure fraud, the deal was greeted with skepticism. The banks agreed to provide $25 billion in mortgage relief to hard-pressed borrowers, $17 billion of it from reducing the principal on troubled loans. The government considered that a victory, because banks resist principal reductions, but banks have a reputation for promising amends that never seem to get made.

A new report this week by the Office of Mortgage Settlement Oversight does little to erase the concern. The report shows that from March through September, more than 300,000 borrowers received $26.11 billion in “consumer relief.” 

But there is a real problem with that number, which is what the banks say is the total value of all forms of aid they provided in those seven months. It has not yet been audited by the monitor, and, when it is, only a fraction will count under the settlement. Some forms of relief, like principal reduction, count for more than other types of aid, like loan forbearance, while some arrangements that the banks consider aid, like certain trial loan modifications, will not count at all toward the settlement."

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