Federal Government & Attorneys General reach landmark settlement with major banks
Roughly $25 billion in relief for distressed borrowers, states and federal government…
In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country’s five largest mortgage servicers:
Ally/GMAC
Bank of America
Citi
JPMorgan Chase
Wells Fargo
The settlement provides 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 mortgage 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.
KEY PROVISIONS OF THE SETTLEMENT
- Immediate aid to homeowners needing loan modifications now, including first and second lien principal reduction.
- The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.
- State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.
- Immediate aid to borrowers who are current, but whose mortgages currently exceed their home’s value.
- Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.
Gateway Consulting – California – San Diego – Loan Modification & Foreclosure Specialists