Since the real estate bubble burst a few years ago, many homeowners have lost their properties to foreclosure. Recently, federal and state officials announced that the federal government and every state except Oklahoma have reached a $25 billion agreement with five of the largest mortgage lenders in connecting with loan servicing and foreclosure abuse. The investigation and negotiation process took 16 months to complete and emerged as the largest joint federal-state settlement in history.
The agreement included Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial, which was previously known as GMAC. These lenders agreed to provide financial relief to homeowners and adhere to new homeowner protection guidelines. According to Secretary Saun Donovan of HUD, “This historic settlement will provide immediate relief to homeowners forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to state consumers.”
The $25 billion will be split in two ways: $20 billion will be designated for financial relief to borrowers and $5 billion will go directly to federal and state government agencies. The $20 billion will then be broken down into 3 categories: $10 billion has been designated to principal reductions for homeowners currently delinquent, $3 billion will be used to refinance loans for underwater borrowers, and the remaining $7 billion will be used to assist homeowners through other means such as short sales and relocation assistance.
The $5 billion will be distributed in two ways: $1.5 billion will be used to create a Borrowers Payment Fund, which will give cash assistance to homeowners whose homes were foreclosed on between 2008 and 2011 and were subject to lender errors or misconduct. . It is estimated that each foreclosure victim could receive up to $2,000 after losing their homes. The remaining $3.5 billion, according to the Department of Justice, will be used to fund public loss.
Along with the cash, the five service providers agreed to adhere to a new set of servicing standards set by the Obama administration in the latter part of 2011. Servicers have agreed to notify all borrowers within 14 days of their loan being referred to a foreclosure attorney, and they also agreed to discontinue dual tracking, in which foreclosure is being pursued while a homeowner is in pursuit of a loan modification or bankruptcy.
If you were one of millions affected by the above scenario, I urge you to contact your original lender ASAP if you have not already done so!
For more, call 847-292-4700, e-mail firstname.lastname@example.org or visit www.zerillorealty.com.