Written by Craig D. Robins, Esq.
It was big news today as the government reached an $8.5 billion settlement to resolve foreclosure abuse issues involving ten major mortgage banks including Bank of America, JPMorgan Chase, Wells Fargo and Citibank.
The settlement is broken down to give $3.3 billion to homeowners who went through foreclosure in 2009 and 2010, and $5.2 billion to troubled homeowners. This settlement resolves a complex independent foreclosure review process that had been previously mandated by banking regulators.
There was another settlement last year involving the attorneys general in most states, in which mortgage bankers agreed to pay $25 billion. However, some commentators have complained that the banks aren’t assisting homeowners fast enough with that settlement. It is hoped that today’s settlement will provide more immediate relief to struggling homeowners.
If You Were In Foreclosure in 2009 or 2010
Although the specifics of the settlement have not yet been fully disclosed, it appears that all homeowners who were in any stage of foreclosure during this period and suffered mortgage abuse will be entitled to compensation although those homeowners who previously sought financial reviews under the earlier 2011 federal directive may end up receiving more.
Even those homeowners who did not suffer any foreclosure abuse will be entitled to a small payment.
The settlement will not prevent homeowners from suing the lender if the homeowner feels the settlement payment does not adequately compensate the injuries.
One of the key objectives of the settlement is to get homeowners benefits as soon as possible and in as direct a manner as possible.
A payment agent or claims administrator for the settlement will attempt to contact all eligible homeowners by the end of March 2013.
The guidelines for determining the amount of compensation will likely be based on guidelines released last summer which provide for increasing benefits based on the severity of the mortgage abuse.
It appears that there will be 11 categories of potential harm, based on the severity of the mortgage abuse.
For example, failing to offer a homeowner a loan modification would be considered a lighter offense that may be worth $1,000; whereas as unfairly seizing and selling a person’s home would result in the biggest payment — as much as $125,000.
Other Relief You May Be Entitled to As a Troubled Homeowner
Pursuant to the terms of the settlement, the banks must also provide $5.2 billion in mortgage relief.
The banks will do this by one or more of the following means: reducing principal, forgiving debt, reducing interest rates, and permitting short sales. There will be other types of relief as well, which is still in the process of being worked out.
I personally think the banks are getting away with murder for having engaged in so much grossly fraudulent and improper activity. On the other hand, the conduct was so rampant, involving millions of homeowners, that from a practical perspective, settlements such as this may be the only way to obtain a resolution, to enable the country to move forward.
The best way a homeowner in foreclosure can preserve their rights and obtain the maximum amount of benefits under the settlement is to consult with an experienced foreclosure defense attorney. Our office regularly assists clients with these matters.
Newsday Quotes Me In Story About Settlement