What the Foreclosure Settlement Means For You
Posted on | February 19, 2012 | No Comments
The U.S.’s five largest banks – Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial – have completely struck a deal with the 49 states to resolve charges of rude and careless foreclosure practices since 2008.
Under a deal proclaimed Thursday, the banks will entrust $26 billion to help submerged homeowners and recompense those who lost their houses due to inappropriate foreclosure practices. The banks also decided to change the approach they handle and endorse foreclosures.
A group of state attorneys general asserted that banks lost significant paperwork, cut corners and joined robo-signers to testify to facts they had no facts of on hundreds of documents a day.
The resolution has been in the works for more than a year. The banks and servicers have dedicated at least $17 billion to lessen principal for borrowers who owe more than their homes are worth and are late on payments. The cost of principal reduction is about $20,000 per borrower. Another $3 billion will go to refinancing mortgages for borrowers who are up to date on their payments. This will facilitate them to take advantage of the low interest rates available.
The banks will pay $5 billion straight to the states, the only hard money implicated in the deal. Out of that fund will costs of $1,500 to $2,000 to homeowners who lost their homes due to foreclosure. Other cash will be paid to legal aid and homeowner advocacy organizations to support individuals facing foreclosure or going through servicer abuses. Another $1 billion will be paid by Bank of America to the Federal Housing Administration.
Mega foreclosure settlement has many homeowners in the Washington area asking if they are owed money. First, the whole region is incorporated in the settlement. Second, homeowners should have their home loan serviced by one of these banks: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. (A mortgage servicer is the firm you give your payment to every month) For refinance options and loan modifications, borrowers may be reached directly by one of the five participating mortgage servicers. For borrowers who have their house foreclosed between Jan. 1, 2008 and Dec. 31, 2011, a settlement officer chosen by the attorneys general will send claim forms to persons qualified for cash compensation. If you think you might meet the criteria and you have not been reached by your bank, you are expected to get in touch with your servicer to see if you are entitled. Don’t expect to be contacted right away. It will take at least six to nine months for the resolution officer, attorneys general and the mortgage servicers to work together to recognize homeowners eligibility for the immediate cash payments, principal discounts and refinancing. Those eligible will be given letters.
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