Daily Archives: August 30, 2012

Wells Fargo completes 35% of AG settlement relief

Wells Fargo ($33.83 -0.24%) said it provided 35% of its homeowner relief required under the robo-signing settlement struck in March.

The San Francisco bank agreed to provide $4.3 billion in total relief and expects to complete the entire commitment within one year of the settlement. Bank of America ($7.85 -0.15%) made the same claim this week after the monitor released its first report Wednesday.

Through June 30, Wells completed or started relief totaling a gross dollar amount of nearly $1.5 billion. The gross amount will be credited differently toward the $4.3 billion based on the type of relief given. But based on Wells’ own calculation, it’s more than one-third of the way there.

Read on.

Can mortgage lenders hold your insurance money hostage?

If your home has been seriously damaged or destroyed, your insurance company will release a check made out to both you and your mortgage lender to pay for the necessary repairs.

“Lenders have a substantial investment in the property, sometimes more than the homeowner, especially if the homeowner has made a small down payment,” says Michael Barry, vice president of media relations for the Insurance Information Institute in New York City. Mortgage lenders have an equal right to the insurance check to ensure repairs are made, says Barry.

Yet, while Michael Northagen, vice president with Wells Fargo Home Mortgage in Minneapolis, Minn., agrees, saying “the desire of the [mortgage] lender is always to have repairs made to a property,” a consumer advocacy group has come out and said otherwise.

A small number of homeowners who lost their homes last year to the wildfires in Bastrop, Texas , reported that their mortgage lenders made them pay down or pay off their mortgage balance with insurance money, instead of applying the funds towards rebuilding.

Insurance money used to pay down mortgages

According to United Policyholders, a consumer advocacy group for insurance customers based in San Francisco, approximately one-third of the homeowners who responded to the group’s post-disaster survey said their lender wanted some or all of their insurance money to be used to reduce their mortgage balance before releasing funds for rebuilding.

“We’re continuing to monitor these complaints and are working with the Texas Attorney General’s investigation,” says Amy Bach, executive director of United Policyholders. “Three homeowners gave us additional information and all three said they were up-to-date on their mortgage payments.”

Bach says one of the homeowners received the remaining balance of the insurance proceeds after her loan balance was paid down, but the other two had their entire insurance check applied to their mortgage. The homes of all three were completely destroyed.

Rest here…

Principal reductions under AG settlement remain in the dark

Mortgage servicers already wrote down principal on loans bundled into private bonds in order to satisfy the robo-signing settlement, but not even the monitor will know how many for some time, according to those familiar with the agreement.
A total of 7,093 borrowers received principal forgiveness through a completed modification from four of the five largest servicers JPMorgan Chase ($37.30 0.17%), Wells Fargo ($34.07 -0.03%), Citigroup ($29.91 0.57%) and Ally Financial, according to an initial report from the monitor Joseph Smith.
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BofA says it will complete AG settlement relief within first year

Bank of America ($8.00 0.04%) claims it will provide all $8.5 billion in robo-signing settlement relief within one year of signing it.
“The agreement term is 36 months, yet within the first year, we believe we will reach or exceed all program targets under the agreement,” a bank spokesman said.
BofA committed to providing $7.6 billion in relief through modifications, short sales, forbearance and other options. The bank must refinance another $948 million in mortgages for eligible borrowers.
Read on.