"What Does The $25 Billion Mortgage Settlement Mean To Me?"

March 16, 2012

The $25 Billion Foreclosure Settlement

video platformvideo managementvideo solutionsvideo player

What does it mean to you; and, are you included in the settlement?

First, let's look at the parties: The plaintiff's who signed the landmark multi-state deal are the attorney generals from 49 states, including California and the five major banks (JPMorgan Chase, Citi, Ally/GMAC,Wells Fargo and Bank of America).

What the Deal Includes

Under the deal, it is expected that 750,000 homeowners could expect to receive cash, with another one million to have their mortgage reduced. Ten billion of the $25 billion is earmarked to go towards principal reductions.

Basic Provisions of the Landmark Settlement

  • Immediate assistance to homeowners needing loans modifications--to include first and second lien principal reductions. Under the terms of the settlement, servicers are required to eliminate up to $17,000 billion in principal reductions, as well as provide other forms of loan modification relief to eligible homeowners.
  • Immediate financial aid to borrowers who are current on their loans, but whose mortgages exceed their home's value. Eligible borrowers will be able to refinance their mortgage to historically law interests rates. Three million has been earmarked in refinancing relief nationwide.
  • Immediate payments to borrowers who lost their home to foreclosure. Eligible borrowers will not be required to prove financial harm and will not be required to waive their legal rights against servicers or the right to participate in the Office of the Controller of the Currency (OCC) review process. $1.5 billion is earmarked for this type of relief.
  • Immediate funds and payments to the 49 Attorney Generals to help fund consumer protection and state-based foreclosure protection efforts.
  • Nationwide Reforms to Servicing Standard-a first ever! Newly created servicing standards will require a single point of contact between the homeowner and loan servicer, require adequate staffing levels and proper training of staff, better communications between servicers and borrowers, reasonable standards for executing foreclosure documents in foreclosure cases, a cessation of improper charging of fees, and ending "dual track" foreclosures for loans--meaning that a lender can no longer proceed with the foreclosure while a homeowner is being reviewed for a loan modification.
  • State Attorney Oversight of National Banks for the First Time--Ever!

California Attorney General, Kamala Harris,fought for added benefits to California--considered one of the two hardest states in foreclosures. California, to include a minimum of $12 billion in principal reductions for the State of California's homeowners which is part of a separate agreement. More important for California homeowners, attorney general Kamala Harris fought to narrow legal releases (legal waivers), which would allow investigations and lawsuits against lenders to continue.

Another benefit of the California settlement that attorney general Kamala Harris fought to include in the settlement, was a larger amount of money to go toward principal reductions--which up until now, lenders have been extremely reluctant to grant to California distressed homeowners. Twelve billion has been guaranteed for approximately 250,000 California homeowners whose homes are underwater and behind (or at risk of becoming behind) on their mortgage payments, for an average reduction of $48,000 each. Another $849 million is outlined to be dedicated to refinancing loans for approximately 28,000 homeowners who are current on their mortgaged, but underwater, homes, for an average of $30,321 each. Further, for those who have lost their home to foreclosure, another $279 million will be set aside to pay about 140,000 California homeowners who lost their home to foreclosure between 2008 and December 31k 2011, for an average payment of about $1,993 each. The California Attorney General's website has additional information about the terms of the settlement.

Helpful Links:

National Mortgage Settlement.com--to learn more about the national settlement.
Ally/GMAC--to determine eligibility if Ally/GMAC is your loan servicer.
CitiMortgage--to determine eligibility of Citi is your loan servicer.
Wells Fargo Bank--to determine eligibility if Wells Fargo Bank is your loan servicer.
JPMorgan Chase--to determine eligibility if JPMorgan Chase is your loan servicer.

How I Can Help

Six years ago California homeowners had little options and even less legal rights. Today, California homeowners have many options in connection with their distressed mortgage. I am able to provide a trust-worthy ear and legal assistance, to help a distressed homeowner determine, amongst other things, their best option--taking into account their short and long-term goals and the unique facts of their situation.

Helpful Links

About Me
Legal Services
Practice Areas

Articles

At Risk or Facing Foreclosure?

Other Blogs

California Family Law and Divorce Blog