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A broad-ranging national mortgage settlement had been reached by the Attorney General. If you are a homeowner struggling to pay your mortgage or facing foreclosure, or if you have already lost your home to foreclosure, it is possible that this settlement could help homeowners gain mortgage refunds.
National Mortgage Settlement 2012 information from Home Destination: help for homeowners of distressed properties, underwater homes, and those facing foreclosure or short sale.
Office of National Mortgage Settlement Oversight
On Oct. 2, 2012 Joseph Smith, newly appointed Monitor of the National Mortgage Settlement, announced that the five banks participating in the Settlement are now required to be in full compliance with the agreement’s 304 servicing standards, or rules that guide their interaction with consumers. The Office of National Mortgage Settlement Oversight was established to ensure citizens that there will be compliance or consequences. HUD, The US Department of Justice, and state Attorney Generals spearhead the settlement against five mortgage servicers.
NOTE: For more frequent updates on the topic, check out the Charfen Institute.
"Today is the 180th day since the entry of the consent judgments comprising the National Mortgage Servicing Settlement. As of today, the five banks subject to the Settlement are required to operate in full compliance with its servicing standards. I will conduct careful and thorough reviews of the banks’ processes to assure and verify that they are compliant with the Settlement’s rules. While my team and I will work to review the banks’ compliance ourselves, I also need to hear from consumer professionals in the marketplace who work on these issues day in and day out. I am asking these professionals to report to me when they see a mortgage servicer breaking the rules established in the Settlement. Please visit www.mortgageoversight.com/forms to tell me about what you are seeing.”
Settlement Addresses Misconduct And Deceptive Banking Processes
While not every homeowner will qualify for relief under the settlement, the terms are significant and will help many homeowners or individuals already foreclosed on. Those who do qualify may receive various forms of relief depending on their circumstances. The National Mortgage Settlement addresses misconduct that resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members’ and other homeowners’ rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds. Download the Complaint for full details.
National Mortgage Settlement Facts -
The settlement was negotiated by state attorneys general, the United States Department of Justice and the United States Department of Housing and Urban Development.
National Mortgage Agreement Fines 5 Largest Loan Servicers
The National Mortgage Agreement settles state and federal investigations finding that the country’s five largest loan servicers made an illegal practice of routinely signing foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. The settlement provides benefits to home loan borrowers whose mortgages are owned by the settling banks as well as to many of the borrowers whose loans they service. Homeowners welcome the positive aspects to the settlement. It creates some incentives for the five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial (the former GMAC) — to be more aggressive in offering relief to struggling borrowers whose home property values have fallen below their mortgage balances. On March 12, 2012 the NY Times reported that because of a complicated formula being used to distribute the money, federal officials say the ultimate benefits provided to homeowners could equal a larger sum — $45 billion in the event all 14 major servicers participate.
First Homeowner Success Stories
Stories of distressed homeowners finding help from the National Mortgage Settlement to stop foreclosure on their homes are surfacing. Reported on money.cnn.com, April 24, 2012, Tamera and Tom Hewlett-Vallejo came within a day of losing their Sacramento, Calif., home in a foreclosure auction last month. But as a result of the $26 billion national mortgage settlement, the Vallejos were given a last-minute chance to save their home.
Their mortgage lender, Bank of America (BAC, Fortune 500), called off the auction at the last moment. BAC then went further and offered to slash the Valleyos home mortgage by more than $85,000, which included a cut in their interest rate, which was dropped from 4.6% from 6.7%. In dollars and cents, a mortgage calculator would they will be paying about $570 less per month, now at a more affordable payment of $2,100.
Cuyahoga County in Ohio eligible for $12M chunk of National Mortgage Settlement funds as stated by www.bizjournals.com. Regulations in place state that counties have until June 30, 2012 to apply for their share of the funding, which will be awarded in August. The funding must be spent by 2013, and counties have to match funding they receive beyond $500,000.
Fines - 5 Billion
Of the total $25 billion settlement, around $5 billion will be paid as fines.
Principal Reduction - 10 Billion
For homeowner who are either delinquent or at imminent risk of default, and whose homes are worth less than what they own on their mortgages.
Refinancing - 3 Billion
An added $3 billion will be used to help homeowners who are current on their mortgage payments, but owe more than their homes are worth refinance.
Underwater Home Loan Balances - 10 Million
To pay the remaining $17 billion, banks will receive credits for helping troubled borrowers, of which $10 billion goes toward cutting loan balances for borrowers who are underwater, owing more than their homes are worth.
Bank Waivers - Up to 10%
Banks can satisfy up to 10% of the $17 billion in credits, for example, by waiving the right to pursue deficiency judgments on mortgages that have recourse, such as home-equity loans
Relocation Assistance - Up to 5%
Banks can satisfy up to 5% of the credits by providing more generous relocation assistance to foreclosed homeowners.
National Mortgage Settlement Benefits To Minnesota Homeowners
Direct Payments To Borrowers - Homeowners are eligible for cash refunds estimated to be approximately $2,000 if they lost their home as a result of financial hardship and while either trying to save it through a modification or if errors happened in the foreclosure process.
Principal Reductions and Other Relief - Minnesota borrowers of loans owned or serviced, by the five banks will also be eligible for principal reductions, forbearance for unemployed borrowers, transitional housing assistance, short-sale assistance, and other relief.
Refinancing Benefits -The National Mortgage Settlement allows mortgage borrowers, owned by the five banks, to refinance to a lower interest rate if they are current on their mortgage and have no delinquencies in the last 12 months, are currently “underwater” on their mortgage, and have an interest rate of 5.25 percent or more.
NOTE: View the Minnesota General Attorney General website for full details. This settlement gets some money back to people who have been hurt by the big five banks and hopefully will help others trying to work out loan modifications down the road,” said Attorney General Swanson.
Over the next 30 to 60 days, settlement negotiators will be establishing roles to manage the workflow of the settlement and monitor settlement compliance.
Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners that qualify for the immediate cash payments, principal reductions, and refinancing. Both the mortgage market and this agreement are complex, meaning that borrowers won't immediately know if they are eligible for relief.
The National Mortgage Settlement will be implemented over the next three years. However, there are incentives for banks to provide the money in the next 12 months.
NOTE: Home mortgage borrowers may be contacted directly by one of the five participating mortgage servicers noted above. Understanding the timeline may help you determine if you wish to contact the banks directly should you need additional information:
Ally Financial/GMAC: (800) 766-4622
Bank of America: (877) 488-7814
Citi: (866) 272-4749
Chase: (866) 372-6901
Wells Fargo: (800) 288-321
Download the National Mortgage Settlement Servicing Standards Deadline
Download the National Settlement Executive Summary Foreclosure Misconduct Claims
Download the National Mortgage Settlement USDOF Filing News Release
Download the National Mortgage Settlement Complaint
Download the Mortgage Servicing Settlement Fact Sheet
Download the Mortgage Settlement Veteran Service Benefits
Download the Return Integrity And Accuracy Foreclosure Bankruptcy Proceedings document
Download the Federal Reserve Consumers Guide to Mortgage Settlement Costs
Download the National Mortgage Settlement Talk in 2010
Download the National Settlement Mortgage Worksheet
Download the Minnesota Mortgage Foreclosure Profile.
Download the Ally GMC Settlement Document
Download the Bank Of America Settlement Document
Download the Citi Settlement Document
Download the J.P. Morgan Chase Settlement Document
Download the Wells Fargo Settlement Document
Jenna Thuening understands depleted equity, and helps home owners determine foreclosure eligibility, negotiating a successful short sale, and helping you understand foreclosure and short sale terminology. Home Destination brings homeowners, current news on the Minnesota Mortgage Program, Minneapolis home prices, information for the unemployed, immigrant communities, and veterans benefits if facing foreclosure.