One of the tragedies of the recession of the last four years has been the struggle of homeowners to keep their homes in the face of job loss and declining home values. Apparently, many homeowners have not been treated fairly in this process, and many may have lost their homes or been wrongly treated by loan servicers.
In February, the nation’s five largest mortgage servicers reached an agreement with 49 state attorneys general and the federal government to pay $25 billion in relief to distressed homeowners and direct payment to states and the federal government. This settlement is a result of the collapse of numerous mortgage lending practices and addresses the banks’ servicing of loans, including their handling of foreclosures.
Loan servicers were routinely signing foreclosure documents outside the presence of a notary and without confirming details contained in them. The funds received in the settlement will be divided up among the participating states and various federal agencies. This agreement is the largest settlement between states and private companies since the tobacco settlement agreement signed more than a decade ago.
Aid to qualifying candidates
Beginning in February, the settlement administrator, Georgia’s attorney general, and the five mortgage servicers started working to identify homeowners who are eligible for cash payments, principal reductions or refinancing. A candidate’s mortgage must be owned by one of the settling institutions — Bank of America, Morgan Chase, Citibank, Wells Fargo and Ally/GMAC. Loans backed by Fannie Mae, Freddie Mac or the Federal Housing Administration are not eligible.
This identification process is expected to continue until July or possibly as late as October. Homeowners will be notified of their qualification through a letter in the mail or by phone from one of the five participating mortgage services. Determinations of those who can receive mortgage assistance will likely not be made until the fall. Administration of these claims will begin this month and will conclude in early 2013. The full settlement will be executed over the next three years.
Determination of qualifying payments and adjustments will be made on a case-by-case basis of the lender. Those who do qualify can receive assistance based on their need and specific categorization:
• Eligible homeowners who are behind on loan payments — eligible for first and second lien principal reductions.
• Homeowners with "underwater mortgages" — eligible to refinance at current rates.
• Borrowers who lost their homes to foreclosure between Jan. 1, 2008, to Dec. 31, 2011 — recipients may file an individual claim with the Office of the Comptroller of the Currency (an independent bureau of the U.S. Department of the Treasury) to pursue assistance for possible foreclosure crisis.
Of the $25 billion settlement, Georgia Attorney General Sam Olens estimates the state will receive $814.5 million. The groups and the estimated payments are projected to be distributed in the following manner:
• Eligible homeowners needing loan modifications — $526 million.
• Current homeowners who owe more than their house is currently worth — $101.8 million.
• Borrowers who lost their homes to foreclosure (if lost between Jan. 1, 2008-Dec. 31, 2011) — $82.7 million.
Also as part of the settlement, Georgia received $104 million for being one of the 49 signing states. The Georgia General Assembly recognized this payment in the 2012 general appropriations bill by allocating these funds to the OneGeorgia Authority and to the Regional Economic Business Assistance program (REBA). OneGeorgia and REBA are state programs that help businesses relocate and expand in Georgia.
If you remember, OneGeorgia and REBA funds were utilized earlier this year to lure Baxter International and Caterpillar Inc. to build new facilities in the state. Caterpillar is expected to spend $200 million and employ 1,400 people to make construction equipment currently produced in Japan. Baxter is expected to spend $1 billion to build a biopharmaceutical manufacturing plant that will employ 1,500 people. Gov. Nathan Deal felt that the state economy plays a vital role in the housing market and needs investments such as these to create jobs and jumpstart demand for housing purchases.
Questions and assistance
You can find additional information about the national mortgage settlement at the Web site www.nationalmortgagesettlement.com. If you believe you may qualify for homeowners assistance or have questions about qualifying, you can contact your mortgage servicer. A mortgage servicer administers mortgage loans, including the collecting and recording of payments from borrowers. A servicer also handles loan defaults and foreclosures. The company that you make your monthly payment to is your mortgage servicer.
However, your mortgage servicer may not be a lending institution and may not own your loan. Many of the loans administered by servicers are owned by third-party investors. The phone numbers for mortgage servicers under the agreement are:
• Ally/GMAC 800-766-4622
• Bank of America 877-488-7814
• Citi 866-272-4749
• JP Morgan Chase 866-372-6901
• Wells Fargo 800-288-3212
To determine if your loan is owned by Freddie Mac or Fannie Mae, check out these links:
Freddie Mac: https://ww3.FreddieMac.com/corporate
Fannie Mae: http://www.FannieMae.com/loanlookup.
I may be reached at
234 State Capitol, Atlanta GA 30334
(404) 656-5038 (phone)
(404) 657-7094 (fax)
E-mail at Jack.Hill@senate.ga.gov
Or call toll-free at
1-800-367-3334 day or night
Reidsville office: (912) 557-3811