Breaking Down The Mortgage Settlement: How Far Does $26 Billion Go?

by Cora Currier, ProPublica.The big bank settlement over mortgage servicing abuses was finalized last week, detailing at last the agreement’s actual terms.Bank of America, Citigroup, Ally Financial (formerly GMAC), and JP Morgan Chase are together on the hook for billions, which will be divvied up between penalties paid to the federal and state governments, direct payments to homeowners wrongfully foreclosed upon, and credits to the banks for providing “consumer relief.” (Read the government’s complaint, and the banks’ consent judgment.)Here’s a breakdown of the settlement, showing exactly where the money is going, and how much help it will really provide for homeowners.

$1.4 billion: total direct payments from the settlement to homeowners who were wrongfully foreclosed upon between 2008 and 2011.

750,000: number of foreclosed homeowners expected to qualify.

$2,000: estimated average payout.

3.8 million: total number of foreclosures between 2008 and 2011.

25 percent: amount by which the number of foreclosures is expected to rise in 2012. That would mean about a million foreclosures, up from 804,000 last year, partly as a result of banks clearing a backlog held up by the settlement proceedings.

$3 billion: total banks can be credited for offering refinancing to underwater homeowners who owe more than their home is worth. (There are questions about how the exactly credits will work, and why the banks are being given incentives rather than punishment.)

$17 billion: total from the settlement banks can be credited for offering loan modification ($10 billion) and other forms of “consumer relief” ($7 billion) for underwater borrowers2014counted separately from the refinancing incentives.

11.1 million: number of underwater mortgages in the U.S.

$717 billion: total negative equity from those underwater mortgages.

3 million: approximate number of underwater mortgages owned or guaranteed by the government-controlled Fannie Mae or Freddie Mac, which are not covered by the settlement.

5 percent: portion of the country’s underwater mortgages that might qualify for modification under the settlement, according to an estimate by the Brookings Institute. (Officials have put the number closer to 10 percent).

$10.9 billion: Bank of America total outlay in the settlement, the biggest of any bank.

$2.0 billion: Bank of America fourth quarter 2011 profits.

$1 billion: settlement over allegations that Bank of America passed on bad loans for the Federal Housing Authority to insure. A government audit made public with the settlement showed similar patterns at other banks.

$6 billion: amount that the FHA paid in insurance claims on defaulted mortgages handled by the five banks between 2008 and 2010.

60-200: number of documents signed daily by single employees at Bank of America loan processers, according to the government audit.

12-18 inches: height of the stacks of documents one Bank of America employee signed “without a review.”

$1 million: fine to be levied on the banks for each violation of the terms of the overall settlement, escalating to $5 million for repeat violations. (Exactly how fines will be tallied is still unclear.)