National Mortgage Settlement Reached

National Mortgage Settlement Reached

By James A. Bowditch
Montana Association of REALTORS® Legal Counsel

In a press release last week the U.S. Attorney General’s Office announced a $25 billion settlement between the U.S. government and state attorneys general and the country’s five biggest banks: Bank of America, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup, and Ally Financial, Inc. (formerly GMAC).  The agreement settles state and federal investigations finding that these five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. 

Exact details of the settlement have not been released because, according to various news reports, a fully authorized, legally binding deal has not yet been signed.  This is partially due to the continued attempts by the federal government and the states’ attorneys general to get additional banks to join in the settlement who presumably will contribute to the settlement amount.  However, the following information has been provided concerning the settlement:

• The banks will dedicate $20 billion toward various forms of financial relief to borrowers.
• Of that amount, $10 billion will go toward reducing the principal on loans for borrowers who, as of the date of the settlement, are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth.
• At least $3 billion will go toward refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth.
• Up to $7 billion will go towards other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance

The State of Montana is expected to receive $20.4 million which will include resources for loan term modifications and other direct relief, direct payments to those foreclosed upon, refinancing options for underwater borrowers and a direct payment to fund state counseling services.

MAR will provide additional information as details are released.

Useful Links:
National Mortgage Settlement website
Montana Attorney General press release