More than 2,000 Sonoma County homeowners received reductions in their loan balances or were allowed to walk away from their mortgages in short sales under a 2012 mortgage settlement between lenders and the state of California, according to a new report.
Overall, banks wiped out $272 million in mortgage debt owed by Sonoma County homeowners, according to a report released today on the impact of the mortgage settlement with the nation's three largest home lenders.
The report, prepared by a UC Irvine law professor appointed to monitor the settlement, found that lenders provided $149.4 million in mortgage relief to Sonoma County borrowers by approving short sales between January 2012 and the end of June.
The banks erased an additional $122.6 million in debt by restructuring loans to reduce the principal, according to the report by California Monitor Katherine Porter. The average principal reduction for a first mortgage in Sonoma County was $129,487. For a second mortgage it was $90,807.
Napa County homeowners received a total of $98.8 million in relief, while those in Lake and Mendocino counties received $23.9 million and $14.6 million respectively.
Overall, the three banks — Bank of America, JPMorgan Chase and Wells Fargo — provided more than $18.4 billion in mortgage relief to California borrowers, significantly exceeding the terms of the $12 billion settlement over allegations of lending abuses.
"The banks did exceed by 50 percent what they had to provide in terms of reduction in mortgage loan debt," said Adam Holofcener, staff attorney with the monitor program.
When the agreement was first announced in February 2012, the state estimated that Sonoma County could receive $267 million. The actual amount was slightly higher. But Lake and Mendocino counties received much less than the original estimates of $43 million and $23 million, respectively.
Linda Hedstrom, housing and economic development manager at California Human Development Corporation in Santa Rosa, said Lake and Mendocino homeowners lacked the same level of counseling programs that were available at the time in Sonoma. The lower-than-expected results in Lake and Mendocino may have occurred because fewer homeowners heard about the assistance programs.
"Unless you're out there pushing your services, people don't know you're there," Hedstrom said.