Mortgage Settlements & Foreclosure Resource Center

Mortgage Settlement

On February 9, 2012, an historic joint state-federal settlement was reached between Arizona and 49 other states, the federal government and the country’s five largest residential mortgage loan servicers—Ally/GMAC, Bank of America, Citibank, 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. Arizona’s share is over $1.6 billion.

The agreement settles state and federal investigations finding that the country’s five largest loan servicers engaged in unacceptable and sometimes fraudulent mortgage servicing and foreclosure practices.  These practices violated state and federal 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

  • Aid to homeowners needing loan modifications, 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 within the next 3 years.

    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.

  • Aid to borrowers who are current, but underwater.  Eligible 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.

  • Direct 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 Office of the Comptroller of the Currency review process.  http://www.occ.treas.gov  An estimated $1.5 billion will be distributed nationwide to some 750,000 borrowers.  See www.independentforeclosurereview.com for further information. 

Payments to signing states to help fund consumer protection and state foreclosure protection efforts. Arizona will receive $102.5 million to be used for state foreclosure prevention programs, attorney general’s office costs and fees, and to remediate the effects of the foreclosure and housing crisis in Arizona.

  • First ever nationwide reforms to servicing standards; something that no other federal or state agency has been able to achieve. These servicing standards require a single point of contact, adequate staffing levels and training, better communication with borrowers, 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. 
    • The servicers, 4 of whom are 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 servicers 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 may pursue 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 select 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 should receive letters, but they can contact this Office or their servicer to ask to be included.
  • 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
  • Citibank: 866-272-4749
  • Chase: 866-372-6901
  • GMAC/Ally: 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.  You may be eligible if you were foreclosed upon by one of the settling banks between 1/1/08 and 12/31/11.  If you are not contacted, and your loan was foreclosed by one of the five settling banks during that time period, you may contact our Office at mortgagefraud@azag.gov or (602) 542-1797, or toll free at 1 (855) 256-2834 to leave your contact information.   We will collect and forward your information to the settlement administrator once appointed to ensure you are contacted if you are eligible.

If you believe you may be eligible for relief under this settlement but are concerned you will be difficult to locate, please contact our Office at mortgagefraud@azag.gov or (602) 542-1797, or toll free 1 (855) 256-2834.  We will collect and forward your information to the appropriate person to ensure you are contacted if you are eligible.

More information will be made available on this website as the settlement programs are implemented.

For more information on the proposed agreement:

Loans owned by Fannie Mae or Freddie Mac are not eligible for all of the benefits of 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, please visit: www.nationalmortgagesettlement.com.

Consumers who feel they have been a victim of consumer fraud, or who would like to report consumer fraud, may file a consumer complaint with our Office. To file a complaint online, consumers can visit: www.azag.gov/consumer/complaintform.html. Consumers can also contact the Arizona Attorney General’s Office Consumer Information & Complaints Unit at (602) 542-5763 / (520) 628-6504 / (800) 352-8431.

Press Release: (2/9/2012) AG HORNE ANNOUNCES ARIZONA TO RECEIVE APPROXIMATELY $1.6 BILLION AS PART OF NATIONAL MORTGAGE SETTLEMENT AND SETTLES SEPARATE LAWSUIT WITH B OF A FOR OVER $10 MILLION

pdf Highlights of Servicing Standards

Return to Top Up Arrow