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Mortgage Settlements

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On February 9, 2012, an historic joint state-federal settlement was reached between Arizona and 48 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 $1.3 billion.

The agreement settled 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. The U.S. District Court for the District of Columbia signed and entered Consent Judgments reflecting the terms of the settlement on April 4, 2012. Copies of the Complaint and Consent Judgments can be found at the bottom of this page.

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 3 years of entry of the judgments.

    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. An estimated $1.3 billion in benefits will be realized by some 750,000 borrowers nationwide under this program.  See www.independentforeclosurereview.com or www.occ.treas.gov for further information about the OCC review process, which is separate and apart from relief under the multistate settlement. 
  • Payments to signing states to help fund consumer protection and state foreclosure protection efforts. Arizona has received $47.7 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, are required to regularly report compliance with the settlement to an independent, outside monitor who 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 Consent Judgments hold the servicers accountable for their wrongdoing on robo-signing and mortgage servicing.  The judgments do not seek to hold them responsible for all their wrongs over the past five years, and the judgments and their releases 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.
    • The judgments include absolutely no criminal immunity for any individual who violated the law.

TIMELINE

  • Settlement negotiators for the states have selected an administrator to handle the logistics of the cash payments to borrowers who were foreclosed on.
  • The settlement administrator, attorneys general and the mortgage servicers are working to identify homeowners eligible for the cash payments, as well as for principal reductions and refinancing. Those eligible should receive letters, but they can contact this Office or their servicer to ask to be included.
  • It is hoped that the cash payments will be distributed in mid-2013. Any question or comments may be directed to the claims administrator Rust Consulting at (866) 430-8358.
  • This settlement will be executed over the three years following entry of the judgments.
  • The servicing standards reform were implemented in phases and were to be fully implemented by October 2, 2012.

WHERE YOU CAN GO FOR HELP

Because of the complexity of the mortgage market and the judgments, which will be performed over a three-year period, borrowers may 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, contact the banks directly if you need additional information about your eligibility for relief under the settlement:

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

For cash 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 1/1/2008 and 12/31/2011. If you are not contacted, and your loan was foreclosed upon by one of the settling banks during that time period, or if you have further questions, you may contact the claims administrator Rust Consulting at (866) 430-8358. You may also visit www.NationalMortgageSettlement.com for more information, or write to: National Mortgage Settlement Administrator, P.O. Box 8043, Faribault, MN 55021-9443.

If you believe you may be eligible for relief under this settlement but are concerned you will be difficult to locate, please contact the claims administrator, Rust Consulting, at (866) 430-8358. We will collect and forward your information to the appropriate person to ensure you are contacted if you are eligible.

If you are in bankruptcy and want to find out how the settlement will affect you, information is available on the U.S. Trustee's website at:http://www.justice.gov/ust/eo/public_affairs/consumer_info/nms/index.htm

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

For more information on the settlement:

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.

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 our complaint section. 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

Press Release: (4/24/12) AG HORNE ISSUES NATIONAL MORTGAGE SETTLEMENT CONSUMER ALERT TO ARIZONANS


Joint State-Federal Mortgage Servicing Settlement FAQ

Highlights of Servicing Standards

Settlement graphic

Complaint

Consent Judgment B of A - Signed 4-4-2012
Consent Judgment Wells Fargo - Signed 4-4-2012
Consent Judgment Citi Group - Signed 4-4-2012
Consent Judgment JPMorgan Chase - Signed 4-4-2012
Consent Judgment Ally-Residential-GMAC - Signed 4-4-2012


 

Help on the Way for Distressed AZ Homeowners (video)

 

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