March 16, 2012 /24-7PressRelease/ -- Help is on the way for many New Jersey and other U.S. homeowners struggling with their mortgages in the down economy. The federal and every state government except Oklahoma, plus D.C., have reached a mammoth, historic legal settlement with five major banks engaged nationwide in the mortgage servicing business.
The dispute put federal and state governmental units that were conducting investigations into alleged abusive mortgage industry foreclosure practices like "robo-signing," when banks hired large groups of people to sign hundreds of affidavits and legal documents related to foreclosures. News reports tell of untrained signers who did not even understand the purpose of the documents or many of the words in them.
The servicers and their liability portions of the $25 billion settlement are:
- Bank of America ($11.8 billion)
- Wells Fargo ($5.3 billion)
- JPMorgan Chase ($5.3 billion)
- Citigroup ($2.2 billion)
- Ally ($310 million)
Some of settlement terms will mean direct financial assistance to certain strapped homeowners. Here is a breakdown of where the proceeds will go:
- $20 billion to consumer relief, of which $3 billion will go to current but underwater borrowers for refinancing at 5.25 percent; and $17 billion to related initiatives affecting about 1 million homeowners like loan modifications, short sales, blight amelioration and similar programs
- $750 million to the federal government
- $4.25 billion to state governments, of which $1.5 billion is to go to borrowers hurt by "mortgage servicing abuse"; and $2.75 billion to states to stop foreclosures with programs like legal services for borrowers, mediation, consumer hot lines and more
However, some state officials are talking about how the settlement money could be used to fill deficits in state government budgets, drawing swift condemnation by consumer advocates.
In the settlement, the banks also agreed to change their practices in dealing with borrowers at risk of foreclosure. For example, a homeowner will be considered for a loan modification before foreclosure is imposed and banks must comply with proper legal procedures.
Compliance with the settlement agreement will be reviewed by an independent monitor, Joseph A. Smith, Jr., a respected recent North Carolina Commissioner of Banks.
According to the Courier-Post, New Jersey's share of the settlement proceeds will include:
- $75.5 million to government housing programs
- $660 million to borrowers in loan modifications and "other direct relief"
- $12.5 million to certain foreclosed-upon former homeowners who "suffered servicing abuse"
- $89.5 million for refinancing of underwater mortgages
Broadly, the agreement settles certain civil claims by the governments involved related to abusive mortgage servicing practices, but it does not prevent individual borrowers from pursuing their own legal remedies against the banks, or does the agreement prevent criminal prosecution.
If you are in trouble with your mortgage, are facing foreclosure or even have already lost your home, an experienced attorney can help determine what legal remedies you may have.
Article provided by Law Offices of Phillip F. Drinkwater III
Visit us at www.pfdlaw.com
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