Five of the biggest U.S. banks have cut struggling homeowners' mortgage balances by $1.68 billion in Arizona, says a report issued Thursday by the monitor of a landmark settlement over foreclosure abuses.
So far, 22,292 Arizona homeowners have gotten relief at an average of $75,604 apiece from the banks: Ally Financial Inc., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., and Wells Fargo & Co., the report shows.
That puts the average Arizona relief below the national average of $82,668 per homeowner, according to the report, which is based on the banks' own accounts of their progress. Monitor Joseph Smith said he must confirm the banks' data before they can get credit under the settlement.
Additional relief has been approved or is in process, but has not been completed, for a few thousand more Arizona mortgage borrowers under the settlement.
The breakdown by bank so far in Arizona mortgage forgiveness is: Bank of America, $1.026 billion; Chase, $385.6 million; Wells Fargo, $181.7 million; Citi, $80.2 million; and Ally, $11.5 million.
Total U.S. relief: $45.8 billion
Nationwide, the five banks have cut struggling homeowners' mortgage balances by $19 billion, part of a total $45.8 billion in relief provided under the settlement.
More than 550,000 borrowers received some form of mortgage relief between March 1 and Dec. 31, 2012, according to Smith's report.
The deal was struck a year ago by the federal government and 49 states, including Arizona, with the five largest U.S. mortgage servicers. Under the settlement, the five agreed to reduce balances on mortgages where the borrower owes more than the home is worth and to refinance some loans. The banks also are required to make foreclosure their last resort, and they can't foreclose on a homeowner who is being considered for a loan modification.
The settlement closed a painful chapter of the financial crisis when home values sank and millions edged toward foreclosure. Many companies had processed foreclosures without verifying documents.
The agreement reduces mortgage debt for only a fraction of those whose mortgages are underwater. About 11 million U.S. households are underwater, and the settlement is expected to help about a million of them.
Smith's report says $19.5 billion of the $45.8 billion in relief was in the form of short sales, in which lenders agree to accept less than what the seller owes on the mortgage. Lenders are increasingly favoring short sales rather than waiting for troubled loans to go through the foreclosure process.
In Arizona, $1.05 billion of the $1.685 billion in relief came in the form of short sales, for 10,668 borrowers whose average relief was $98,869 each.
Of the roughly $19 billion in reduced mortgage principal nationwide, according to the report, Bank of America had provided $13.5 billion; JPMorgan Chase, $1.8 billion; Citigroup, $1.9 billion; Wells Fargo, $1.4 billion; and Ally, $238 million.
Ally, the former financial arm of General Motors Co., now has fulfilled its obligation for the relief it is required to provide under the settlement, Smith said.
"I believe we have made progress, particularly as it relates to (mortgage) relief, but I know from my regular conversations with advocates across the nation that the banks and I have much more work to do on behalf of borrowers," Smith said.
Norma Coile of The Arizona Daily Star and Marcy Gordon of The Associated Press contributed to this report.