Foreclosure settlement reached between government and major banks

After several months of negotiations, the federal government and 49 of the 50 state attorneys general (Oklahoma elected to opt out of the settlement) have reached an agreement with the country's five largest loan servicers.  The agreement will provide as much as $25 billion in relief to distressed borrowers, borrowers in foreclosure and borrowers who have already been foreclosed upon, in the form of direct payments from the loan servicers to the states and the federal government.

The settlement provides benefits to borrowers whose loans are owned by Ally/GMAC, Bank of America, Citi, J.P. Morgan Chase and Wells Fargo, and many of the lenders whose loans they service.  The settlement provides for three key areas of assistance:

1.  Homeowners need loan modifications now, including the possibility of principal reduction;

2.  Borrowers who are current but underwater, permitting streamlined refinancing and today's low interest rates; and

3.  Borrowers who lost their homes to foreclosure already, providing direct payments totalling $1.5 billion to approximately 750,000 borrowers.

Loans owned by Fannie Mae or Freddie Mac are not part of this settlement.

During the next six to nine months, a settlement administrator will be working to identify eligible homeowners, who will either be sent a letter (for modification or refinancing) or a claim form (for restitution if you lost your home to foreclosure between January 1, 2008 and December 31, 2011).  The settlement will take three years to be executed.

If you believe that may be eligible for relief, you can contact the state attorney general's office for assistance.  They will update your information, ensure that you are eligible and forward your information to the appropriate party.  You may also contact your lender directly if your loan is owned or serviced by one of the five banks involved in the settlement.

No Comments

Leave a comment
Comment Information

Need Help With A Specific Issue?