In February 2012, the United States Department of Justice announced a settlement with five major banks accused of robo-signing and other fraudulent foreclosure practices. Here are the major details of the settlement:
What’s the Settlement Worth?:
Roughly $25 billion dollars (with additional $4 billion pending the sign-on of 9 small banks).
Participating Banks:
Ally/GMAC – Bank of America – Citi – JPMorgan Chase – Wells Fargo
Where the Money Goes:
- $5 billion consisting of $2000 payments to borrowers who were foreclosed on between Jan. 1, 2008 and Dec. 31, 2011 and who were subjected to the fraudulent practices.
$20 billion will be used towards foreclosure alternatives:
- $10 billion will go to borrowers who are delinquent on their mortgage.
- $7 billion towards assisting homeowners through short sales, forebearance, relocation assistance, or other alternatives.
- $3 billion will be spent helping borrowers who owe more than the value of their home to refinance.
Deadlines (From March 2012):
30 – 60 Days: Negotiators will select an administrator to handle logistics of the settlement and monitor compliance.
6 – 9 Months: The settlement administrator and attorneys general will identify homeowners eligible for immediate cash payments and notify them by mail.
3 Years: The settlement should be completed by the banks.
Additional Notes:
Robo-signing practices are forbidden.
Dual-track Foreclosures (working with the homeowner on modification of the loan while simultaneously pursuing foreclosure) is forbidden.
Fannie Mae and Freddie Mac insured loans are not impacted by this settlement.
Special recourse is in place for Servicemembers who were charged over 6% interest rates after a valid request to lower their rates under the Servicemembers Civil Relief Act (SRCA) or who were wrongly foreclosed on. Any compensation by the banks to Servicemembers will be in addition to the core $25 billion settlement amount.
Money will be distributed differently for different states.
• California will receive the most of any state: $12 billion
• Oklahoma was not a party to this settlement, creating their own agreement worth $18.6 billion.
What does this mean for you the agent?
Banks will be open to exploring more options
Banks are incentivized to push completed paperwork through.
Phone numbers to help you research:
• Ally/GMAC: 800.766.4622
• Bank of America: 877.488.7814 (Available M-F 7am-9pm CT & Saturdays 8am-5pm CT)
• Citibank: 866.272.4749
• JP Morgan Chase: 866.372.6901
• Wells Fargo: 800.288.3212 (Available M-F 7am-7pm CT)
Websites that can help you do your research:
• Official Site for the Settlement: http://www.nationalmortgagesettlement.com
• To locate Attorney General in your state: http://www.NAAG.org
• To determine if a loan is ineligible due to insurance by Freddie or Fannie:
http://www.fanniemae.com/loanlookup
http://www.freddiemac.com/mymortgage
Information source is www.nationalmortgagesettlement.com.
Click here for the fact sheet.
