NEW YORK ( TheStreet) -- The big four banks have made "significant progress" toward meeting their obligations under the $25 billion mortgage settlement reached in 2012 over foreclosure abuses, according to settlement monitor Joseph Smith.
In his interim report, the monitor credited Bank of America (BAC - Get Report), Citigroup (C - Get Report), JPMorgan Chase (JPM - Get Report) and Wells Fargo (WFC - Get Report) for providing $15.3 billion in refinancing and consumer relief as of Dec. 31, 2012.
Note that the amount credited by the monitor is much smaller than the actual relief in gross dollar terms. Under the national mortgage settlement, the banks do not receive a dollar-for-dollar credit for most of the relief provided. They receive only partial credit for relief measures such as short sales or for modifying loans owned by investors for instance.
The gross consumer relief provided by the four banks is actually in excess of $38 billion.In order to fulfill their obligations under the settlement, the four banks will have to show the monitor that they have provided nearly $19 billion in effective consumer relief in the form of refinancing, principal forgiveness, forbearance and other foreclosure prevention efforts such as short sales. The monitor determined last year that Ally Financial had already delivered its obligation. "The banks have made significant progress toward satisfaction of their total obligations, providing borrowers across the nation with much needed relief," Smith said in his report. He noted that banks have also said they have made further progress in providing relief in 2013, which he is still reviewing. Bank of America bears the lion's share of the settlement obligations. It is required to provide $8.5 billion in total consumer and refinancing relief. The bank has fulfilled 97% of its obligation toward consumer relief, but has more to do toward providing refinancing relief, having met only 41% of its commitment. Chase, Wells Fargo and Citi have on the other hand provided significantly more refinancing relief, in excess of their commitment but have more work left in other relief measures such as loan modifications and principal forgiveness. Chase has also been credited with providing $2.78 billion in consumer relief, representing the bulk of its obligation of $3.67 billion. Wells Fargo and Citi, however, lag further behind, having been credited with 55% and 46% of their obligations respectively. Critics of the mortgage settlement continue to argue that banks have not done enough to provide relief for borrowers, arguing that banks are receiving credit for loan modifications they would have made irrespective of the settlement. -- Written by Shanthi Bharatwaj New York. >Contact by Email. Follow @shavenk