National Mortgage Settlement

Feb 13, 2012 by

The federal government and forty-nine state attorneys general reached last week a settlement with these mortgage servicers:

Ally/GMAC  (800-766-4622)

Bank of America  (877-488-7814)

Citi  (866-272-4749)

JPMorgan Chase  (866-372-6901)

Wells Fargo  (800-288-3212)

With its $25 billion price tag for these banks, this is the largest consumer financial protection settlement in U.S. history. The settlement agreement holds the banks accountable for wrongdoing in “robo-signing” and mortgage servicing.

Who Benefits Under the Settlement?

  • Homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.
  • Borrowers who are current, but underwater. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.
  • Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers. $1.5 billion will be distributed nationwide to some 750,000 borrowers.

Are You Eligible for Benefits?

Oklahoma elected not to participate in the settlement, so its residents cannot benefit.

Residents of the other forty-nine states won’t know if they’re eligible for benefits for some time yet. Here’s the timeline:

  • Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance.
  • Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
  • The settlement will be executed over the next three years.

Loans owned by Fannie Mae or Freddie Mac are not included in the settlement. Check these links to learn if either Fannie Mae or Freddie Mac owns your loan:

If you lost your home to foreclosure between 01 January 2008 and 31 December 2011, a settlement administrator designated by the attorneys general will send you claim forms if you’re eligible for cash restitution.

If you think you could be eligible for settlement benefits, stay on top of this and be pro-active. Don’t depend on bureaucrats or banks to make sure you get what you’re due.

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