California's struggling homeowners are on track to get at least $20 billion in mortgage reductions and other relief under a multistate settlement five major banks agreed to a year ago, according to a report Thursday.

A total of 175,000 California borrowers were helped last year, and nearly 72,000 of those had their mortgages reduced or forgiven, according to Katherine Porter, the state appointee monitoring the banks' compliance. Another 20,000 are in trial mortgage reductions under the agreement, which settled charges of improper foreclosures across 49 states.

"California is faring very well under this deal," Porter said.

She'll get no argument from Marona Nazlou, who operates a sandwich shop in Santa Clara.

"God bless," said Nazlou, who had a second mortgage forgiven by Bank of America last fall.

The second was for about $490,000, according to his broker, Myron Von Raesfeld.

"When he opened up the letter, I said you just got a half-million-dollar gift from Bank of America," Von Raesfeld said.

Nazlou said he fell behind on his mortgage payments as the economy soured and his house lost much of its value.

"We work very hard, but my situation got much worse," he explained. Now he is in the three-month trial period of a modification on his first mortgage.

Bank of America has focused on forgiving second mortgages, Porter said, adding that people are contacting her office after getting letters from the bank telling them their second mortgage has been eliminated. "They say, 'Is this a scam?' It isn't."


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BofA has erased $3.8 billion in 37,000 second mortgages so far, she said.

"They don't reduce it, they eliminate it. You get a letter in the mail, and 30 days later they release your second mortgage and report it to the credit bureau 'paid in full.'"

California was the hardest hit by reckless subprime lending that ended with massive numbers of foreclosed homes across the state. Particularly hard hit were the Central Valley and Inland Empire, which are among the areas the state is targeting for the most relief.

About 59,000 short sales totaling $8.8 billion have been done under the agreement in California, according to the California monitor's office. Under a short sale, the home is sold for less than the value of its mortgage; banks must agree to such a sale and then absorb the loss.

But some people want fewer short sales, which cost people their homes.

"The hope of folks regarding the agreement was that it would keep people in their homes through first lien principal reductions," said Kevin Stein of the California Reinvestment Coalition.

Nationally, the banks have extended $45.8 billion in all forms of relief to 550,000 borrowers, the Office of Mortgage Settlement Oversight reported Thursday. California has received about $18 billion so far, about 40 percent of the total.

Under the national settlement, announced last February, Wells Fargo, JPMorgan Chase, Citi, Ally/GMAC and Bank of America agreed to extend $25 billion in relief of various kinds to borrowers in 49 states. A scoring system gives less than a dollar's credit for a dollar's worth of some types of relief, so the total settlement has much more than $25 billion in relief flowing to consumers.

Under a special "California commitment" arranged by Attorney General Kamala Harris, three banks that do the most mortgage lending in California -- Bank of America, Chase and Wells Fargo -- agreed to provide $12 billion in mortgage relief under a system that rewarded speedy principal reductions on first mortgages and forgiveness of second mortgages. Extra credit was given for relief in the counties hit hardest by foreclosures.

Independently, Ally/GMAC has extended $71.4 million to 679 California borrowers, and Citi has helped 9,466 borrowers with $813 million in relief.

Although the agreement runs for three years from its signing last February, Wells Fargo, BofA and Chase have already exceeded their commitments by $3.9 billion and are likely to finish early, Porter said.

Contact Pete Carey at 408-920-5419. Follow him on Twitter.com/petecarey.