Sections Total Consumer Relief Overview Executive Summary Introduction Structure of Relief under the Settlement Assertion and Testing of Relief Determination of Performance Bank of America Results Chase Results Citi Results ResCap Results Wells Results Conclusion Report Resources

Final Crediting Report

March 18, 2014

Joseph A. Smith Jr., Monitor of the National Mortgage Settlement, has filed final crediting reports to confirm that the banks have satisfied their consumer relief and refinancing obligations under the Settlement.

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Total Consumer Relief Overview

How much consumer and refinancing relief has been credited in total?

$20.7 Billion

37%
First Lien Principal Forgiveness

$7,589,277,740

17%
Refinancing Assistance

$3,587,672,814

15%
Second Lien Principal Forgiveness

$3,105,152,359

31%
Other Relief*

$6,410,554,173

*Primarily assistance for Short Sales and Deeds in Lieu of Foreclosure

$9.6 Billion

35%
First Lien Modifications

$3,365,196,272

23%
Second Lien Portfolio Modifications

$2,210,934,257

11%
Refinancing Program

$1,013,769,682

31%
Other Creditable Items*

$3,020,518,281

*Includes Enhanced Borrower Transitional Funds ($68,349,672) and Short Sales/Deeds-in-Lieu ($2,952,168,609)

$4.5 Billion

41%
First Lien Mortgage Modifications

$1,851,496,721

7%
Second Lien Portfolio Modifications

$308,672,792

14%
Refinancing Program

$623,424,705

38%
Other Creditable Items*

$1,679,929,992

*Includes Enhanced Borrower Transitional Funds ($136,957,159), Payment to an Unrelated 2nd Lien Holder ($9,780,918), Short Sales/Deeds-in-Lieu ($1,495,692,789), and REO Properties Donated ($37,499,126)

$1.8 Billion

29%
First Lien Mortgage Modifications

$524,062,757

19%
Second Lien Portfolio Modifications

$348,564,573

29%
Refinancing Program

$519,098,690

22%
Other Creditable Items*

$401,241,685

*Includes Enhanced Borrower Transitional Funds ($842,377), Payment to an Unrelated 2nd Lien Holder ($1,614,481), Short Sales/Deeds-in-Lieu ($316,159,020), and Forgiveness in Lieu of Foreclosure ($82,625,807)

$257 Million

51%
First Lien Mortgage Modifications

$130,324,492

9%
Second Lien Portfolio Modifications

$22,589,924

19%
Refinancing Program

$48,349,699

22%
Other Creditable Items*

$56,147,670

*Includes Short Sales/Deeds-in-Lieu ($39,425,927), Deficiency Waivers ($15,121,743), and Contribution to Borrower HOPE Loan Portal ($1,600,000).

$4.6 Billion

38%
First Lien Mortgage Modifications

$1,718,197,498

5%
Second Lien Portfolio Modifications

$214,390,813

30%
Refinancing Program

$1,383,030,038

27%
Other Creditable Items*

$1,252,716,545

*Includes Enhanced Borrower Transitional Funds ($12,675,400), Short Sales/Deeds-in-Lieu ($1,186,566,813), Payments to Unrelated 2nd Lien Holders ($9,133,711), Payments of Cash for Demolition of Property ($82,463), REO Properties Donated ($4,860,998), and Deficiency Waivers ($39,397,160).

Executive Summary

On March 18, 2014, I filed reports with the United States District Court for the District of Columbia confirming that Bank of America, CitiMortgage, JPMorgan Chase and Wells Fargo have all satisfied their consumer relief and refinancing relief obligations under the National Mortgage Settlement. The ResCap Parties, the fifth servicer subject to the Settlement, had already satisfied their consumer relief and refinancing obligations.

In total, the servicers have provided more than $50 billion of gross dollar relief, which translates into more than $20 billion in credited relief under the Settlement’s scoring system. More than 600,000 families received some form of relief under the Settlement. Aggregate credited relief includes:

$7,589,277,740, or 37 percent of total credited relief, of first lien principal forgiveness.
$3,105,152,359, or 15 percent of total credited relief, of second lien forgiveness.
$3,587,672,814, or 17 percent of total credited relief, of refinancing assistance.
$6,410,554,173, or 31 percent of total credited relief, of other forms of relief, including, but not limited to, assistance related to short sales and deeds in lieu of foreclosure.

Seventy-six percent of such relief is related to loans owned by the servicers rather than serviced for other investors. In addition to a more detailed presentation of the relief summarized above, this report to the public includes:

A discussion of the servicers’ relief obligations under the Settlement.
An overview of the process through which my colleagues and I reviewed and confirmed the servicers’ relief activities.

A report of my conclusions regarding the servicers’ satisfaction of their consumer relief and refinancing assistance obligations.

My team and I have thoroughly reviewed and tested the consumer relief and refinancing assistance activities discussed in this report. As a result, I am confident in concluding that the servicers have satisfied their obligations with regard to such activities. I will continue monitoring and reporting on the servicers’ performance in meeting their commitments regarding the servicing standards, or business practice reforms, required by the Settlement.

JAS-signature

Sincerely, Joseph A. Smith, Jr.

Introduction

As Monitor of the National Mortgage Settlement (NMS or Settlement), I have filed reports with the United States District Court for the District of Columbia (the Court) certifying that each servicer party to the NMS has fulfilled its consumer relief and refinancing obligations.¹ These reports provide the results of my review of the asserted consumer relief and refinancing activities (collectively, relief) for the final periods during which Bank of America, CitiMortgage (Citi), JPMorgan Chase (Chase) and Wells Fargo (Wells) completed their relief obligations. The ResCap Parties (ResCap) completed their relief obligations previously; my reports with respect to ResCap may be found here.

I previously filed interim reports with the Court detailing my review of the servicers’ relief activities through December 31, 2012. In addition, per the servicer’s request, I previously filed an interim report detailing my review of Wells’ relief activities through March 31, 2013. To provide a comprehensive overview of all the relief activity under the NMS, this summary discusses the total amount of relief provided by the servicers.

Structure of Relief under the Settlement

Under the Settlement, the servicers were required to provide relief to distressed borrowers within a three-year period, commencing March 1, 2012. The servicers’ relief obligations comprise the following:

Consumer relief – such as principal forgiveness, loan modifications and short sale assistance – for distressed borrowers who meet the Settlement’s eligibility criteria.
Refinancing assistance for certain borrowers who are current on their payments but who would not qualify for traditional refinancing because their loan-to-value ratios are too high.

Outline of the types of relief:

First and second lien modifications

Loan modifications, including principal reduction, for borrowers who are in default or at risk of default

Enhanced borrower transitional funds

Payments above $1,500 made to borrowers in connection with a short sale or deed-in-lieu of foreclosure

Facilitation of short sales or deeds-in-lieu

Forgiveness of remaining balances on first or second lien mortgages or payments to unrelated second lien holders to facilitate short sales or deeds-in-lieu of foreclosure and releases of liens

Deficiency waivers Waiver of loan amounts that remain due following a foreclosure on a first or second lien mortgage and release of liens

Forbearance for unemployed borrowers

Forgiveness of overdue payments on behalf of unemployed borrowers, and funds for traditional forbearance programs designed to keep unemployed borrowers in their homes until they can resume payments

Anti-blight activities

Payments to demolish properties owned by a servicer to prevent blight, donations of such property to municipalities, nonprofits, disabled service members, or families of deceased service members or principal forgiveness in lieu of foreclosure

Benefits for members of the armed services

Enhanced benefits for service members, including short-sale agreements and waivers of loan amounts due following a short sale

Refinancing programs

Rate-reduction assistance for homeowners who cannot refinance to lower rates because they would not have qualified for a refinance under the bank’s generally available refinance programs as of September 30, 2011

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The Services respective obligations are as follows:

Bank of America

Consumer Relief Obligations: $7,626,200,000

Refinancing Obligations: $948,000,000

Total Relief Obligations: $8,574,200,000

Chase

Consumer Relief Obligations: $3,675,400,000

Refinancing Obligations: $537,000,000

Total Relief Obligations: $4,212,400,000

Citi

Consumer Relief Obligations: $1,411,000,000

Refinancing Obligations: $378,000,000

Total Relief Obligations: $1,789,400,000

ResCapParties

Consumer Relief Obligations: $185,000,000

Refinancing Obligations: $15,000,000

Total Relief Obligations: $200,000,000

Wells Fargo

Consumer Relief Obligations: $3,434,000,000

Refinancing Obligations: $903,000,000

Total Relief Obligations: $4,337,000,000

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Credit for Consumer Relief

The Settlement defined various forms of consumer relief for which the servicers could receive credit. The servicers had some discretion as to the provision of these different kinds of relief to meet their overall obligations, although the Settlement established caps and minimums on certain types of relief.²

The Settlement requires that the servicer’s first lien mortgage modifications credit equal at least 30 percent of its total consumer relief requirement and that the combination of first and second lien modifications equal at least 60 percent, which can be reduced by 10 percent of overall consumer relief funds for excess refinancing. Under the Settlement, no more than 12.5 percent, 5 percent, 10 percent and 12 percent of the servicer’s total consumer relief funds may be through forgiveness of forbearance amounts on existing modifications, enhanced borrower transitional funds, deficiency waivers and anti-blight loss mitigation activities, respectively. Additionally, the Settlement requires that 85 percent of the first lien mortgages on occupied properties for which the servicer may get credit for first lien mortgage modifications have an unpaid principal balance before capitalization at or below the highest GSE conforming loan limit caps as of January 1, 2010.³

Furthermore, the servicers receive different amounts of credit depending on the type of consumer relief activity performed. Credit ranges from one dollar of credit for one dollar of certain types of first lien loan modifications to five cents of credit for a dollar of certain forbearance activities. This scoring system explains the difference between gross relief and credited relief under the NMS.

Credit for Refinancing Programs

Servicers could receive credit for refinancing first lien mortgages the servicer owns where the loan-to-value ratio is greater than 80 percent, provided that the borrower would not have qualified for a refinance under the servicer’s generally available refinance programs as of September 30, 2011. The amount of credit for refinancing was based on how much and for how long the homeowner’s interest payments were reduced.⁴

Bonuses and Penalties

The Settlement provided servicers a bonus credit of 25 percent for any first or second lien principal reduction or refinancing implemented on or before February 28, 2013. It also provided penalties from 125 percent to 140 percent of the unmet obligation if relief was not completed by the established deadlines.

Non-Creditable Requirements

The Settlement also imposed several non-creditable consumer relief requirements on each servicer, including that the servicer:

Not implement any consumer relief “through policies that are intended to (i) disfavor a specific geography within or among states that are a party to [the Settlement] or (ii) discriminate against any protected class of borrowers;”
Not require borrowers to waive or release legal claims and defenses as a condition of approval for loss mitigation;
Modify second lien mortgages when a servicer party to the Settlement modifies a first lien mortgage;
Extinguish certain second liens;
Reduce credits claimed for consumer relief by the amount of state or federal incentive payments when they are the source of the claimed credit;
Implement a refinancing program for all borrowers who meet specified minimum eligibility criteria;
Identify and solicit active service members who have loans in the servicer’s own portfolio and qualify for refinancing; and
Waive any deficiency amount remaining on loans in its own portfolio after certain short sales when the seller is an eligible service member.

Assertion and Testing of Relief

Crediting required the following actions by three distinct entities:

The servicer performed the relief activities and reported to the state parties and me quarterly (State Reports). For testing and validation, it also reported its activities to its Internal Review Group (IRG), a group of servicer’s employees or contractors that is independent of the servicer’s mortgage loan servicing operations.
The IRG tested and confirmed the eligibility of the servicer’s relief activities and the amount of credited relief, and reported to me at the end of each calendar year (and more frequently under certain circumstances) and when the servicer asserted that it had satisfied its relief obligations.
As Monitor, I ultimately determined whether and when a servicer satisfied its obligations. I worked with my primary professional firm (PPF), BDO Consulting, to review the IRG’s satisfaction reports and conduct other procedures to determine whether the reports were correct and complete. My PPF also compared the relief information previously provided in the servicers’ State Reports with the information the servicers reported to their IRGs to determine whether there were any material inaccuracies, identify any apparent differences, and inquire with the servicers and IRGs to understand those differences. Finally, my PPF and I determined whether the servicers complied with the Settlement’s non-creditable requirements. After completing this work, the NMS required me to file reports with the Court detailing my conclusions on the servicer’s performance.

Each IRG, my colleagues and I used methods outlined in a work plan to determine that all or a portion of the servicer’s obligations had been performed or satisfied. These work plans were negotiated by the servicers and me and were reviewed by the Settlement’s Monitoring Committee, which is comprised of representatives of the U.S. Department of Housing and Urban Development, the U.S. Department of Justice, and 15 states.

In October 2013, I filed interim reports with the Court outlining the progress of four of the servicers toward their relief obligations through December 31, 2012.⁵ Once each servicer was confident it had completed its total relief requirements, it reported its activities to its IRG. The IRG then reviewed the servicer’s report and asserted to me the servicer’s progress toward its obligations. I received these reports from the IRGs of Bank of America and Chase in spring 2013 and from Citi and Wells in summer 2013. My PPF then reviewed the IRGs’ satisfaction reports and retested their testing samples to determine compliance.

Including the relief testing from all the interim and final reports, my team, comprising 65 individuals, spent more than 36,000 hours evaluating the five servicers’ cumulative relief activities under the NMS.

Monitors Role: Crediting Process

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Determination of Performance

Based on the procedures outlined above, I have determined that the servicers have fully satisfied their relief obligations.

I have certified credited relief of more than $20 billion out of more than $50 billion of total gross dollar relief. As previously discussed, the amount of credit the servicers earned toward their obligations differs depending on the type of relief activity performed. I have also concluded that all the servicers complied with the Settlement’s caps and minimums regarding the types of relief provided.

Relief Amounts

Bank of America

Number of Loans: 317,028 Total Gross Dollar Relief⁶: $27,344,833,073 Total Credited Relief: $9,610,418,492

Total Relief Obligations: $8,574,200,000

Chase

Number of Loans: 125,553 Total Gross Dollar Relief⁶: $11,124,434,955 Total Credited Relief: $4,463,524,210

Total Relief Obligations: $4,212,400,000

Citi

Number of Loans: 58,822 Total Gross Dollar Relief⁶: $3,515,708,965 Total Credited Relief: $1,792,967,705

Total Relief Obligations: $1,789,000,000

ResCap

Number of Loans: 7,434 Total Gross Dollar Relief⁶: $554,086,749 Total Credited Relief: $257,411,785

Total Relief Obligations: $200,000,000

Wells Fargo

Number of Loans: 122,719 Total Gross Dollar Relief⁶: $7,923,863,398 Total Credited Relief: $4,568,334,894

Total Relief Obligations: $4,337,000,000

Total

Number of Loans: 631,556 Total Gross Dollar Relief⁶: $50,462,927,140 Total Credited Relief: $20,692,657,086

Total Relief Obligations: $19,112,600,000

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The gross dollar relief summarized above is slightly different than the gross dollar relief the servicers previously reported in their State Reports, which I summarized in Final Progress Report. Following exchanges between the IRGs and my PPF, my PPF and I have not identified any material inaccuracies in the servicers’ State Reports. Differences occurred when I determined that certain loans were not eligible for credit or the servicers decided not to seek credit for particular loans.

Additionally, on the basis of the review conducted by my PPF and other professionals, I have no reason to believe that any of the servicers failed to comply with the non-creditable consumer relief requirements previously discussed.

Bank of America Results

I have confirmed that Bank of America met its consumer relief and refinancing obligations and is entitled to claim credit in the amount of $9,610,418,492. Bank of America’s report to the Court can be found here. Bank of America has additional solicitation requirements that I am reviewing and will report on in the coming months.

Score Card: Bank of America Relief Crediting

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More than 35 percent of Bank of America’s total earned credit from relief activities was through first lien mortgage modifications, and approximately 11 percent was through refinancing relief.
Second lien portfolio modifications made up approximately 23 percent of Bank of America’s total earned credit.
Short sales and other types of consumer relief made up approximately 31 percent of Bank of America’s total earned credit.
Approximately 61 percent of the total earned credit was a result of relief afforded to borrowers on loans in Bank of America’s mortgage loan portfolio that is held for investment; and the remainder was a result of relief afforded to borrowers on loans that Bank of America was servicing for other investors.

Total Credited Relief for Bank of America - $9,610,418,492

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Gross vs. credited consumer relief for Bank of America

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Breakdown of Total Relief Credit by Type of Relief for Bank of America

First Lien Mortgage Modifications

Number of Loans: 32,858

Total Gross Dollar Relief : $4,869,347,311

Total Credited Relief: $3,365,196,272⁷

Second Lien Portfolio Modifications

Number of Loans: 141,539

Total Gross Dollar Relief : $9,655,705,939

Total Credited Relief: $2,210,934,257

Refinancing Program

Number of Loans: 20,247

Total Gross Dollar Relief : $811,006,154

Total Credited Relief: $1,013,769,682

Other Creditable Items

Number of Loans: 122,384

Total Gross Dollar Relief : $12,008,773,669

Total Credited Relief: $3,020,518,281

Enhanced Borrower Transitional Funds

Number of Loans: 23,525

Total Gross Dollar Relief : $162,354,522

Total Credited Relief: $68,349,672

Short Sales/Deeds-in-Lieu

Number of Loans: 98,859

Total Gross Dollar Relief : $11,846,419,147

Total Credited Relief: $2,952,168,609

Total Relief Programs

Number of Loans: 317,028

Total Gross Dollar Relief : $27,344,833,073

Total Credited Relief: $9,610,418,492

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Chase Results

I have confirmed that Chase completed $4,463,524,210 in total credited relief and has therefore completed its relief obligations. Chase’s report to the Court can be found here.

Scorecard: Chase Relief Crediting

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More than 41 percent of Chase’s total earned credit from relief activities was through first lien mortgage modifications, and approximately 14 percent was through refinancing relief.
Second lien portfolio modifications made up approximately 7 percent of Chase’s total earned credit.
Short sales and other types of consumer relief made up approximately 38 percent of Chase’s total earned credit.
Approximately 71 percent of the total earned credit was a result of relief afforded to borrowers on loans in Chase’s mortgage loan portfolio that is held for investment, and the remainder was a result of relief afforded to borrowers on loans that Chase was servicing for other investors.

Total Credited Relief - Chase

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