Major US banks 'provide debt relief worth $45bn'

22 February 2013

Distressed borrowers received in excess of $45 billion in mortgage debt relief from five major US financial groups, it has emerged.

According to the Financial Times, the landmark foreclosure violation settlement agreement last year resulted in the Bank of America (BoA), Wells Fargo, Citigroup, Ally Financial and JPMorgan Chase paying this huge sum to affected customers.

Data compiled by the Office of Mortgage Settlement Oversight revealed that around $19 billion worth of first and second-lien debt was either modified or forgiven, with the BoA being primarily responsible for most of the modifications due to the terms of its regulatory agreements.

Meanwhile, around $20 billion of the debt relief was of a direct consequence of instances of short sales, where financiers permitted overstretched borrowers to sell their homes for less than the amount they owed.

As such, the five groups agreed to provide aid of $20 billion to borrowers,with individual payments depending on the type of home loan held by each customer.

By Claire Archer

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