Mortgage servicers complete payouts in landmark settlement

The nation's five largest mortgage servicers have fulfilled their obligations under a landmark government settlement designed to punish companies for shoddy mortgage practices.

Altogether, the five servicers -- Bank of America, JPMorgan Chase, CitiMortgage, Wells Fargo and the former Ally/GMAC -- provided $50.5 billion of relief to about 631,000 consumers, according to a report filed with the U.S. District Court in Washington, D.C., Tuesday.For that $50.5 billion in consumer relief, the companies received $20 billion in credited relief, including approximately $7.6 billion of primary mortgage principal forgiveness, $3.1 billion of second-lien writedowns, $3.6 billion in mortgage refinancing and $6.4 billion in short sales and deeds in lieu of foreclosure.

Nationally, Bank of America, which also had to deal with mortgage abuses at Countrywide Financial, which it acquired in 2008, was the largest participant in the settlement.

In Illinois, more than 26,000 consumers participated in the settlement and another 10,000 have been offered or are participating in trial loan modifications, according to the monitor's final report. Total consumer relief in Illinois totaled almost $1.9 billion.

'I believe the rigorous testing process should justify public confidence that the banks have fulfilled their relief commitments and that the settlement has played a part in helping keep struggling borrowers in their homes,' Joseph A. Smith, Jr., the settlement's monitor, said in a statement.However, Smith reiterated that his office will continue to monitor how well servicers are working with distressed borrowers, and future reports will be issued to measure their compliance with servicing standard put in place as part of the settlement. The $25 billion national mortgage settlement was announced by the companies, the federal government and 49 state attorneys general in February 2012. In addition to assistance provided to homeowners, it also included payments to states with the intention that those funds be used for homeowner education and foreclosure prevention efforts.In July, Illinois Attorney General Lisa Madigan announced the nonprofit recipients of the remaining $70 million of the state's approximate $100 million allocation from the national settlement.Some states, however, diverted the funds to help pay their bills. Last week, three nonprofit housing counseling groups sued California, demanding that $369 million of diverted funds be recouped.

mepodmolik@tribune.com

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