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Thousands of underwater mortgages in N.Y. get adjustments

Rochester Business Journal
November 19, 2012

More than 7,000 New York homeowners have had underwater mortgages adjusted since state attorneys general, including New York’s Eric Schneiderman, and several major U.S. banks announced a deal last spring in which the banks agreed to provide relief to homeowners affected by the mortgage crisis, a report issued Monday by settlement monitor Joseph Smith Jr. found.

The five banks agreeing to the deal—Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.—among them write 60 percent of U.S. home mortgages. The settlement calls for the banks to pay out $25 billion nationally with $17 billion going directly to homeowners.

The Nov. 19 report is a preliminary update based on figures the banks submitted. Smith’s staffers will work to double check the banks’ numbers before a more formal report is turned in to a U.S. District Court in the second quarter 2013, Smith said. 
“No credit will be awarded to a servicer until I, as monitor, am satisfied that the servicer has met its obligations,” he promised.
Schneiderman arranged for $60 million of New York’s $130 million share of the national settlement amount to go to pay for legal services to help strapped homeowners deal with banks and loan servicers over the next three years.

He also serves as co-chairman of the Residential Mortgage-Backed Securities Working Group, a body convened by President Barack Obama in January to investigate the residential mortgage securitization that brought on the mortgage crisis.

Members of the working group include Department of Justice, Securities and Exchange Commission and state law enforcement officials.

Smith said institutions involved in the five-bank settlement have forgiven principal amounts of the mortgages of 967 New York borrowers with loans totaling $113.9 million. The banks also gave thousands of other homeowners a grab bag of boons, including forgiveness and reductions of second-mortgage debts, modifications to reduce total debt and letting homeowners complete short sales. New Yorkers aided by the program on average got $86,600 worth of relief, Smith found.

(c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail

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