While the $25 billion settlement between five of the nation’s largest servicers and 49 of the state attorneys general awaits approval from a judge, there is some relief in the industry that the 16 months of investigation and negotiation has come to a close.
“The best thing about the mortgage settlement is that it’s done,” said Stan Humphries, Zillow’s chief economist on the company’s website.
“The agreement brings closure to these issues and enables the company to move forward in our ongoing efforts to help borrowers find affordable and sustainable payment relief whenever possible,” Ally stated Thursday afternoon.
However, while federal and state officials are congratulating themselves, the settlement’s impact on the broader market remains questionable. “It will be a good thing for many individuals,” Humphries admits, but “[a]s far as helping the housing market as a whole, it’s a drop in the bucket.”
Nonetheless, Mike Heid, president of Wells Fargo Home Mortgage suggests the settlement will have some positive impact. “Today’s agreement represents a very important step toward restoring confidence in mortgage servicing and stability in the housing market,” he stated Thursday after the settlement announcement.
Wells Fargo has agreed to pay $1.01 billion to the government and $4.34 billion in borrower relief.
The bank stated Thursday that it will begin an expanded refinance program and borrower relief program at the start of March.
JPMorgan Chase will pay $1.08 billion to the government and has designated $4.21 billion in borrower aid.
In a brief statement responding to the settlement, a JPMorgan Chase spokesperson said Thursday, “We have worked very hard with the Federal Government and State Attorneys General over the past year to address a variety of challenging and complex issues to reach this settlement.”
“The settlement includes far reaching relief that will help many of our customers and complement our already extensive efforts to improve our borrower assistance efforts and servicing processes,” the spokesperson continued.
Citigroup will pay $4.15 million to the government and $1.79 billion in borrower aid.
“The monetary component of Citi’s portion of the settlement amount is to be paid in three parts: a payment in cash upon final settlement; customer relief payments; and refinancing concessions, for a total value of approximately $2.2 billion,” Citigroup stated Thursday.
Answering any concerns from investors, the bank also stated that it anticipates it has enough in reserves to cover its customer relief obligations “and all but a small portion” of its obligation to the government under the settlement.
Like Citigroup, Ally does not expect its commitment under the settlement will harm the bank. “Ally expects that the financial impact of the agreement will not be material on financial results for the first quarter of 2012 and future periods,” Ally stated.
Ally has agreed to pay $110 million to the government and $200 million in aid to borrowers.
Bank of America will pay $3.24 billion to the government and $8.58 billion in relief to borrowers.
A portion of BofA’s government payment – $1 billion – will be paid to settle a separate claim on behalf of Countrywide for loan originations issues.
“We believe this settlement will help provide additional support for homeowners who need assistance, brings more certainty to the housing market and aligns to our ongoing commitment to help rebuild our neighborhoods and get the housing market back on track,” Dan Frahm, a BofA spokesperson stated Thursday.
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