Federal Government & Attorneys General reach landmark settlement with major banks
Roughly $25 billion in relief for distressed borrowers, states and federal government.
From the “NationalMortgageSettlement.com” website.
After many months of negotiation, 49 state attorneys general and the federal government have reached agreement on a historic joint state-federal settlement with the country’s five largest loan servicers:
The settlement will provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government. It’s the largest multistate settlement since the Tobacco Settlement in 1998.
The agreement settles state and federal investigations finding that the country’s five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. 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.
- About the Settlement: Learn about the settlement, who is affected and what claims may still be pursued against the banks. Find links to your state Attorney General’s Office to find state-specific information and contacts.
- Help for Borrowers: Learn how to find out if your loan is affected by this settlement, the timeline for relief, how you will know if you are eligible. Find links to your state Attorney General’s Office to find state-specific information and contacts.
- News: Read the national news release and find links to your state Attorney General’s Web site for state-specific news.
- Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. You may visit the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:
Here’s what the plan will do for homeowners in specific situations;
Mortgage underwater but current with payments. More than 10 million homeowners in the U.S. owe more on their mortgages than their houses are worth. The latest plan would enable people who have been making loan payments on time to save about $3,000 a year on their mortgage by refinancing with lower-interest loans guaranteed by the Federal Housing Administration.
Mortgage underwater and behind with payments. More than $12 billion to be set aside to reduce principal for homeowners who are behind on their payments and owe more than their houses are currently worth.
Victims of foreclosure fraud. The plan will provide payments of about $2,000 a piece to approximately 750,000 families that have been the victim of improper foreclosure practices. Most commonly—routine electronic notarization of documents being transferred from one financial institution to another as part of the foreclosure process–a practice known as robo-signing.
This will most likely apply to people who lost their homes between Jan. 1, 2008, and Dec. 31, 2011.