Industry NewsMortgage

Banks using short sales to meet robo-signing obligations

Settlement provides help to 137,846 borrowers in 4 months

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Banks are relying heavily on short sales to meet their obligations under the terms of a $25 billion settlement with the nation's five largest mortgage servicers over so-called "robo-signing" practices. That's according to a progress report from the settlement's monitor detailing the first four months of implementation.The terms of the settlement require the five servicers -- Bank of America, Citi, JPMorgan Chase, Wells Fargo and Ally Financial -- to provide about $17 billion in homeowner relief, including short sales, loan modifications and principal reductions; and $3 billion to help underwater borrowers refinance.As a group, the five banks reported providing a total of 137,846 borrowers with $10.56 billion in relief during the four months through June -- an average of about $76,615 per borrower. The vast majority of that relief was in the form of short sales, in which the servicer agreed to allow borrowers to sell their homes for less than the amount owed on the mortg...