In February of this year, the nation’s five largest mortgage servicers agreed to a landmark $25 billion settlement with a coalition of state attorneys general and federal agencies. The settlement addresses past mortgage loan servicing and foreclosure abuses and fraud, provides substantial financial relief to borrowers harmed by bank fraud, and establishes significant new homeowner protections for the future. The settlement involves country’s five largest loan servicers: ALLY/GMAC, BANK OF AMERICA, CITI, JP MORGAN CHASE AND WELLS FARGO. Arizona is included in the settlement.
The National Association of Attorneys Generals provides an excellent summary of the Settlement on their website at naag.org. Some highlights of the web site summary are:
Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Servicers will likely provide up to an estimated $32 billion in direct homeowner relief.
Servicers commit $3 billion to an underwater mortgage refinancing program.
Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
An independent monitor will ensure mortgage servicer compliance.
States can pursue civil claims outside of the agreement including securitization claims as well as criminal cases.
Borrowers and investors can pursue individual, institutional or class action cases regardless of agreement.
We will be reporting more on his historic settlement in future blogs.