Attorney General Bondi Announces Court Filings in $25 Billion National Mortgage Servicing Settlement
Florida consumers will soon see direct relief, New protections from $25 billion national settlement
TALLAHASSEE, FL – March 13, 2012 – (RealEstateRama) — Attorney General Pam Bondi today announced that she, 48 other attorneys general, the District of Columbia and the Department of Justice filed a complaint and proposed consent judgments requiring the nation’s five largest mortgage servicers to comply with comprehensive new mortgage loan servicing standards, to provide substantial direct consumer relief and monetary payments, and to submit to an independent monitor, as part of a $25 billion national mortgage servicing joint state-federal settlement.
Florida was one of only two states that obtained a guarantee from Wells Fargo, JP Morgan Chase, and Bank of America to ensure that at least $4 billion in relief under the settlement is provided to Floridians. This guarantee is similar and in proportion to the one provided to California. However, Florida’s guarantee is unique in that it includes not only principal reductions and other financial relief to financially troubled consumers, but it also guarantees refinancing relief to borrowers who are current on their mortgage payments but are stuck in higher interest loans that exceed the value of their homes. If the banks fail to meet the guarantee, they are subject to stiff penalties.
“Today’s filings pave the way for court orders that will provide substantial relief to Florida’s homeowners, hold banks accountable and reform the mortgage servicing industry,” stated Attorney General Pam Bondi. “We are one of the states on the monitoring committee, and we will ensure that banks comply with this agreement and that they are held accountable.”
Attorney General Bondi has obtained the following for Floridians:
· The total value of the settlement nationally is more than $25 billion in credits and $32 billion in total dollar value; Florida will receive a total value of more than $4 billion in credits and $8 billion in total dollar value. Florida’s share is broken down as follows:
o At least $3.1 billion will go toward assisting Florida’s financially troubled borrowers with loan modifications, including reducing principal loan balances, forgiving amounts in forbearance, and providing other loss mitigation (e.g. short sales and deficiency waivers).
o More than $309 million will go to providing refinancing relief to eligible Florida borrowers whose loans are currently underwater. “Underwater” loans are loans where the principal balance exceeds the market value of the home. To be eligible for refinancing, a borrower must be current on mortgage payments, have a loan-to-value ratio in excess of 100 percent, and have a current interest rate over 5.25 percent. Eligible borrowers will receive notices from the banks in the mail. If you have questions about your eligibility or about the program, you may contact your bank at the contact numbers listed below.
o Approximately $171 million in payments will be available to Florida borrowers who have already lost their homes, as partial payment for injury a borrower suffered as a result of improper servicing or a defect in the foreclosure proceeding.
§ Qualifying borrowers are expected to receive payments in the range of $1,800 to $2,000.
§ To be eligible, borrowers must have had a loan serviced by the settling banks and must complete a simple application and screening process.
§ Borrowers who receive a payment under this settlement may still be eligible for relief under the Office of the Comptroller of the Currency review process, which is currently ongoing (for more information, see www.IndependentForeclosureReview.com). However, any sums received in the OCC review process or under a separate settlement or legal action may be reduced by any payment received under the state-federal settlement.
· Florida will receive a payment of approximately $334 million to help fund housing-related and foreclosure prevention programs within the state and provide for civil penalties.
Today’s complaint and consent judgments against Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial, Inc. follow a joint federal-state investigation. Allegations included that the servicers’ misconduct “resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members’ and other homeowners’ rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds.”
Once court orders are issued, the settlement that was first announced February 9 will be finalized. It is the largest joint state-federal settlement ever obtained.
National Settlement: $25 billion
· Servicers must provide a minimum of $20 billion in benefits 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 through a complex system of settlement credits. Servicers also fund an underwater mortgage refinancing program for current, but underwater borrowers.
· Under an enhanced agreement with Bank of America, the company will write down principal on a large number of underwater homeowners to market value, which is in addition to its existing principal reduction obligations under the settlement.
· 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 (see below). Servicers will implement the new standards in phases over the next six months.
· Service members receive new protections that go beyond the Servicemembers Civil Relief Act (SCRA).
· An independent monitor will ensure mortgage servicer compliance (see below).
· States preserve the right to pursue all criminal prosecutions and many civil claims, including claims regarding the packaging of mortgage loans into securities.
· Borrowers and mortgage investors can pursue individual, institutional or class action cases without restriction.
New Mortgage Servicing Standards
The five mortgage servicers will implement extensive new servicing standards, which take effect in three phases over the next two to six months:
· Stop many past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork through new mortgage servicing standards.
· Require strict oversight of foreclosure processing, including of third-party vendors.
· Impose new standards to ensure the accuracy of information provided in federal bankruptcy court, including pre-filing reviews of certain documents.
· Make foreclosure a last resort, by requiring servicers to evaluate homeowners for other loan mitigation options first.
· Restrict banks from foreclosing while the homeowner is being considered for a loan modification.
· Set procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials.
· Create a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.
National Monitor Begins Work
Independent settlement monitor Joseph A. Smith, Jr. will oversee the terms of the finalized agreement and will help ensure compliance. A monitoring committee comprised of state attorneys general, the U.S. Department of Justice, and the U.S. Department of Housing and Urban Development will oversee the monitor, who will prepare quarterly compliance reviews.
The U.S. Department of Justice and state attorneys general can enforce through the court process compliance with the servicing standards and the banks’ financial obligations. A federal judge may assess civil penalties for violations of the consent judgments.
Participating Mortgage Servicer Consumer Numbers
Bank of America: 1-877-488-7814
Citigroup: 1-866-272-4749
Chase: 1-866-372-6901
Ally/GMAC: 1-800-766-4622
Wells Fargo: 1-800-288-3212
More information will be made available as settlement programs are implemented. The mortgage servicers are required to complete 75 percent of their consumer relief obligations within two years and 100 percent within three years.
To view the filings, please click here: http://www.justice.gov/opa/opa_mortgage-service.htm
For More Information:
www.MyFloridaLegal.com
www.NationalForeclosureSettlement.com
www.HUD.gov
Media Contact:
Jenn Meale
Phone: (850) 245-0150
