The National Mortgage Settlement

In recent years, some mortgage lenders have participated in using unfair and illegal practices with regard to home foreclosures, mortgage servicing and bankruptcy. These banks were found to have submitted foreclosure documents that were not signed in the presence of a notary and were not properly reviewed. This practice is commonly called robo-signing.

In February of this year, the largest ever consumer financial protection settlement agreement was reached between 49 states and 5 of the nation’s largest mortgage lenders. The state of Oklahoma decided not to join the settlement, so residents of Oklahoma will not be eligible for relief under this settlement.

The National Mortgage Settlement was approved by the United States District Court on April 4, 2012 and will provide about $25 billion in benefits to borrowers whose loans are owned or serviced by the 5 banks who settled.

The 5 mortgage servicers involved in the settlement are:

• Ally/GMAC: 800-766-4622
• Bank of America: 877-488-7814
• Citi: 866-272-4749
• JPMorgan Chase: 866-372-6901
• Wells Fargo: 800-288-3212

The bank that services the loan can be found on every mortgage statement. Since the agreement is complicated and it will take quite a while to notify all of the eligible homeowners, this settlement will be executed over a 3 year period.

The settlement will provide assistance for the following:

1. Homeowners who currently need loan modifications-This includes first and second lien principal reduction. Eligible borrowers will be contacted by the mortgage lenders and will receive letters offering principal reductions or other modifications starting in June 2012.

2. Borrowers who are current, but underwater-Eligible borrowers will be able to take advantage of today’s low interest rates by refinancing their mortgage despite their negative equity. Servicers will have to provide up to $3 billion in refinancing relief nationwide.

3. Borrowers who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2011-Cash payments will be distributed to borrowers who receive and return a claim form. There will not be requirement to prove financial harm and borrowers will not have to release private claims against the servicers nor will they have to relinquish the right to participate in the independent review process being conducted by federal banking regulators. $1.5 billion is expected to be distributed nationwide to some 750,000 borrowers.

To determine if a loan was affected by the settlement, please refer to the following sites for more information:

The website of the Executive Committee of the state attorneys general: 
http://www.nationalmortgagesettlement.com/

The United States Trustee Program’s website concerning the National Mortgage Settlement: http://www.justice.gov/ust/eo/public_affairs/consumer_info/nms/index.htm

The website of the Office of Mortgage Settlement Oversight: http://www.mortgageoversight.com/

For struggling borrowers who are not eligible under The National Mortgage Settlement, here are some other resources that could be of assistance:

The website for Making Home Affordable, which is an official program of the Departments of the Treasury & Housing and Urban Development: www.makinghomeaffordable.gov

The website of the Independent Foreclosure Review, which will determine whether individual homeowners suffered financial injury and should receive compensation or other remedy because of errors or other problems during their home foreclosure process: www.independentforeclosurereview.com