Mortgage Settlement Agreement Reached Feb 9th
The Federal Reserve Board announced on Thursday, February 9th that it has reached an agreement in principle with the nation’s five largest mortgage servicers following investigations into unsafe and unsound practices in mortgage loans servicing and foreclosure processing. The investigations found that these organizations routinely signed 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 borrowers whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.
The institutions included in this agreement are:
Bank of America
JP Morgan Chase
Mortgages held by Fannie Mae and Freddie Mac are not eligible for settlement payments. Check out the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:
New information was released on April 6th, 2012 about how this settlement will specifically help Washington homeowners:
Washington’s share of the record $25 billion dollar settlement over alleged widespread mortgage fraud is about $648 million, to be used in a few different ways.
Here are the highlights of WA’s settlement share:
- $483 million will go to loan modifications, including principal reduction, for borrowers who are at risk of default.
- $24 million is set aside for restitution payments to borrowers who lost their homes to foreclosure between Jan 1, 2008 and Dec 31, 2011.
- $84 million is designated for helping borrowers who are current but underwater refinance their loans.
- $45 million will go to state foreclosure relief and housing programs distributed through the AG’s office.
See the full press release from the AG's office here.
Who is affected by this 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. State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.
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 between January 1, 2008 and December 31, 2011. Borrowers will be contacted by a settlement administrator over the next 6 to 9 months for cash restitution. Even if you don’t hear from your servicer, you are encouraged to contact them yourself to see if you are eligible.
- 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 in the mail.
- This settlement will be executed over the next three years.
If you believe you are eligible for relief under this settlement but are worried your lender will not be able to locate you, contact your Attorney General’s office. Washington State's Attorney General is Rob McKenna. Visit his website or call his office at (360) 753-6200.
Check out the National Mortgage Settlement website for more information on the settlement agreement, help for borrowers, FAQs and further links.