$25 Billion Joint State-Federal
Mortgage Servicing Settlement
on Foreclosure Wrongs
Click here for Press Release
Click here for Warning of Fraud Calls About Mortgage Settlement
Consumer - National Mortgage Settlement Information Form
The federal government and the country’s five largest loan servicers-- Ally, Bank of America, Citi, JPMorgan Chase and Wells Fargo. The settlement will provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government. It’s the largest civil settlement reached by the Attorneys General since the tobacco settlement.
The agreement settles state and federal investigations finding that the country’s five largest loan 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 underwater. 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.
Immediate payments to borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process. $1.5 billion will be distributed nationwide to some 750,000 borrowers.
Immediate payments to signing states to help fund consumer protection and state foreclosure protection efforts. Alabama will receive $26,474,753 million to be used strictly for state foreclosure prevention programs and attorney general’s office costs and fees.
First ever nationwide reforms to servicing standards; something that no other federal or state agency has been able to achieve. These servicing standards require single point of contact, adequate staffing levels and training, better communication with borrowers, and appropriate standards for executing documents in foreclosure cases, ending improper fees, and ending dual-track foreclosures for many loans.
State AG oversight of national banks for the first time. Something no court could award.
- National banks will be required to regularly report compliance with the settlement to an independent, outside monitor that reports to state Attorneys General.
- Servicers will have to pay heavy penalties for non-compliance with the settlement, including missed deadlines.
Banks are still accountable for other claims not covered by this settlement.The agreement holds the banks accountable for their wrongdoing on robo-signing and mortgage servicing. This settlement does not seek to hold them responsible for all their wrongs over the past five years and the agreement and its release preserve legal options for others to pursue.
- Governmental entities and private parties are aggressively pursuing securities cases against the banks.
- A joint federal-state task force has been formed to investigate and prosecute those responsible for the collapse of the mortgage lending and investment markets.
- Individuals may still pursue private claims.
- This settlement includes absolutely no criminal immunity for any individual who violated the law.
TIMELINE
Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance.
Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
This settlement will be executed over the next three years.
WHERE YOU CAN GO FOR HELP
Because of the complexity of the mortgage market and this agreement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief.
For loan modifications and refinance options, borrowers may be contacted directly by one of the five participating mortgage servicers. Keeping in mind the timeline above, you may contact the banks directly if you need additional information:
- Bank of America: 877-488-7814
- Citi: 866-272-4749
- Chase: 866-372-6901
- GMAC: 800-766-4622
- Wells Fargo: 1-800-288-3212
For payments to foreclosure victims, a settlement administrator designated by the attorneys general will send claim forms to eligible persons. Even if you are not contacted, if your loan is serviced by one of the five settling banks, you are encouraged to contact your servicer at the numbers above to see if you are eligible.
More information will be made available as the settlement programs are implemented.
For more information on the proposed agreement:
Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. You may visit the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:
These sites will also include information about mortgage and foreclosure programs you may be eligible to access.
For more information on this settlement, including frequently asked questions and the settlement document itself, please visit: www.nationalmortgagesettlement.com.
Frequently Asked Questions
Click here for a list of Freqently Asked Questions
