Arizona Mortgage Settlement - How Will Settlement Dollars Get To Homeowners?*
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 -
- Aid to homeowners needing loan modifications, including first and second lien principal reduction.
- Aid to borrowers who are current, but underwater. Eligible borrowers will be able to refinance at today’s historically low interest rates.
- 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.
- 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 the Arizona Attorney General's Office or their servicer to ask to be included.
- This settlement will be executed over the next three years.
*The information from this article came directly from Arizona Attorney General Tom Horne's webpage. Schern Richardson Finter Decker congratulates Mr. Horne on the settlement and is hopeful the settlement dollars will be made readily available to those homeowners who have suffered from the predatory lending of some mortgage banks.