Settlements with Lenders
To date, there are three (3) major settlements with mortgage lenders that could effect your rights as a homeowner that was previously foreclosed upon or as a homeowner that is currently facing foreclosure. Please review the information below as well as my blog for further information.
The major settlements are:
- National Mortgage Servicing Settlement
- Bank of America and Fannie Mae settlement
- Independent Foreclosure Review settlement
National Mortgage Servicing Settlement - April 2012
The State of Maryland and the District of Colombia are two of the 49 states to sign onto the settlement agreement between the top 5 servicers (Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and Ally Financial). This settlement agreement represents the largest of its kind in U.S. history and is expected to bring close to $1 billion of benefits to Maryland. There is talk that there are at least 9 additional servicers that will join the agreement. The settlement agreement does not constitute a release of claims for any other civil remedy that may be available to borrowers.
If you are unclear who your “servicer” is, please visit the Foreclosure Resources tabs on this website for a list of applicable definitions.
Does this apply to me?
If your loan is or was serviced by one of the 5 servicers named above, you may be eligible for assistance.
If your loan is owned by Fannie Mae or Freddie Mac, but it is serviced by one of the 5 servicers name above, you are NOT eligible for principal reduction, loan modification or refinancing under the settlement.
If I am eligible, what can I get?
- Foreclosed borrowers -For borrowers who were victims of unfair servicing practices and were foreclosed upon between January 1, 2008 and December 31, 2011, you may be eligible for monetary relief (approximately $2000 depending on the collective borrower response). There will be a claims process involved. Although your bank is supposed to contact you, you may also submit your claim prior to being contacted by the bank. The Office of the Attorney General will post the claim forms on its website when the forms are available.
- Refinance - For borrowers who are current on their loans, you may be eligible to refinance your loan despite having negative equity. You must have a loan-to-value ratio in excess of 100% and must have a current interest rate in excess of 5.25%. The refinanced rate must reduce monthly payments by at least $100. If you meet this criteria, you will be offered a refinance.
- Modification/principal reductions – Principal reductions must be given for all first and second liens. The loan must be a conforming loan (see http://en.wikipedia.org/wiki/Conforming_loanfor a table of loan rates). Relief will only apply to loans that are not owed by Fannie or Freddie.
- Other loss mitigation and alternative options:
o Unemployment payment forbearance
o Cash for keys / relocation assistance
o Short sales
o Deficiency waivers
o Funding for remediation of blighted property
What else does the settlement require?
This settlement represents a major comprehensive reform of mortgage servicing practices. The new standards prevent robo-signing and improper foreclosure practices. The new standards will impose timelines for responding to borrower and will prevent “dual tracking”.
- The holders of loans and their legal standing to foreclosure must be documented and disclosed to borrowers.
- All denials of loss mitigation are subject to a right of appeal.
- Servicers will be required to designate a single point of contact for all loss mitigation assistance.
- Military personnel will have enhanced protections.
- Restrictions are imposed on default fees, late fees, third-party fees and force-placed insurance.
- When a loan is transferred to a new servicer, loss mitigation efforts will also transfer so that momentum will not be lost.
When does this become effective for me?
The settlement agreement was signed by the Maryland Office of the Attorney General, the Department of Labor, Licensing and Regulation’s Office of the Commissioner of Financial Regulation, the federal government and the 5 servicers named above. The next step is for a federal judge to sign off on the consent order that commemorates the agreement. At that point, the 5 servicers will be obligated to begin the process of implementing the relief measures outlined in the agreement.
Please note that while the clock is ticking, it is still going to take some time for the applicable protocols and programs to be finalized and put in place. In the interim, be sure to remain in contact with your servicer using the contact numbers below.
If the banks fail to comply, what is the enforcement mechanism?
Once the consent order is signed, an independent monitor will be appointed by the court to oversee compliance with the settlement agreement. The Office of the Attorney General will assist the monitor and borrowers will be able to contact the OAG to voice a complaint regarding their bank’s compliance and behavior.
The 5 servicers will be subject to the federal court (consent) order and that order will enforceable in federal court. Compliance with standards outlined in the agreement will be enforceable in court. We will not know exactly how a borrower may enforce the agreement until the final text of the consent order is available.
How do I contact my bank?
Wells Fargo 800-288-3212
Bank of America 877-488-7814
JP Morgan Chase: 866-372-6901
Ally Financial/GMAC: 800-766-4622
BANK OF AMERICA AND FANNIE MAE SETTLEMENT - JANUARY 2013
Bank of America agrees to pay Fannie Mae over $11 billion for selling Fannie Mae bad mortgages. Bank of America and 9 other lenders entered into a settlement agreement with bank regulators to resolve claims of foreclosure abuse and botched loan modifications.
Bank of America will pay the agency about $3.6 billion to compensate for faulty mortgages and $6.75 billion to buy back mortgages that could have resulted in future losses for the government. The bank also agreed to sell to other firms the right to collect payments on $306 billion worth of home loans.
This settlement is separate from the other settlements discussed herein.
Note: This settlement has not specified whether or not any relief will trickle down to homeowners that were previously foreclosed upon or that are currently facing foreclosure.
Please visit my blog for full text articles on this subject.
INDEPENDENT FORECLOSURE REVIEW SETTLEMENT - JANUARY 2013
The January 7, 2013 Independent Foreclosure Review Settlement was driven by banking regulators who felt that the mandatory foreclosure review was inefficient, costly and not yielding relief for homeowners. Thirteen (13) mortgage servicing companies subject to enforcement for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement with the OCC and Federal Reserve Board to pay more than $9.3 million in cash and other assistance to help borrowers.
Note: The settlement ended the Independent Foreclosure Review for ten (10) of the servicers and will result in $3.6 billion in cash payments to nearly 4.2 million eligible borrowers and $5.7 billion in additional assitance. The Independent Foreclosure Review process will continue for loans being serviced by Ally, Everbank and Onewest.
Relief will be distributed to homeowners even if they did not file a claim for their loans to be reviewed. A payment agent will be appointed to administer payments to borrowers. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. The servicers' internal complaint process will remain available to borrowers.
Relief includes loan modification, principal reduction, forgiveness of deficiency balances.
You could be contacted as early as March 31, 2013. This agreement is separate from the National Mortgage Servicing Settlement that occurred in early 2012.
If your loan is serviced by one of the following lenders, then you may be eligible for additional relief under the settlement:
Bank of America
JP Morgan Chase
(Note: Ally Financial, HSBC, OneWest Bank and Everbank were originally a part of the settlement but did not sign on to this agreement).
For more information, contact 888-952-9105.
This settlement is separate from the other settlements discussed herein.
Please visit my blog for full text articles on this subject.
JPMORGAN CHASE SETTLEMENT - NOVEMBER 2013
The Justice Department, along with federal and state partners, announced a $13 billion settlement with JPMorgan - the largest
settlement with a single entity in American history - to resolve federal
and state civil claims arising out of the packaging, marketing, sale
and issuance of residential mortgage-backed securities (RMBS) by
JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009. As
part of the settlement, JPMorgan acknowledged it made serious
misrepresentations to the public - including the investing public -
about numerous RMBS transactions. The resolution also requires JPMorgan
to provide much needed relief to underwater homeowners and potential
homebuyers, including those in distressed areas of the country. The
settlement does not absolve JPMorgan or its employees from facing any
possible criminal charges.
JPMorgan will pay out the remaining $4 billion in the form of relief to
aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns
and Washington Mutual. That relief will take various forms, including
principal forgiveness, loan modification, targeted originations and
efforts to reduce blight. An independent monitor will be appointed to
determine whether JPMorgan is satisfying its obligations. If JPMorgan
fails to live up to its agreement by Dec. 31, 2017, it must pay
liquidated damages in the amount of the shortfall to NeighborWorks
America, a non-profit organization and leader in providing affordable
housing and facilitating community development.
OCWEN SETTLEMENT - DECEMBER 2013
The CFPB, attorneys general and state banking regulators in 49 states and District of Columbia have entered into a settlement agreement with Ocwen Financial Corporation and Ocwen Loan Servicing (also to include Litton Loan Servicing, Homeward Residential Holdings LLC fka American Home Mortgage Servicing, Inc. ("AHMSI") to provide $2 billion in principal reduction loan modifications for first liens on properties that are under water and to refund $125 million to borrowers that were foreclosed upon by any of the above-referenced entities between January 1, 2009 and December 31, 2012. Additionally, the agreement will impose additional homeowner protections (as outlined in the 2012 National Mortgage Settlement).
If you are a borrower entitled to a refund, you will receive a Notice Letter and Claim Form from the settlement administrator beginning June 2014.
Please note that if your loan is currently serviced by Ocwen, the settlement does not require that Ocwen stop all foreclosures. Borrowers should contact Ocwen to determine what home retention options may be available for them.
Ocwen can be reached at 800-337-6695 or firstname.lastname@example.org.
CITIGROUP SETTLEMENT - 2014
The $7 billion deal that Citigroup
agreed to strike with the Justice Department involves one of the
largest cash penalties ever paid to settle a federal inquiry into a bank
suspected of mortgage misdeeds.
But another major
component of the settlement has little to do with troubled mortgages. As
part of the deal, Citigroup has also agreed to provide $180 million in
financing to build affordable rental housing.
SUNTRUST SETTLEMENT - JULY 2014
Department of Justice has announced an agreement with SunTrust
Mortgage Inc. that resolves a criminal investigation of SunTrust’s
administration of the Home Affordable Modification Program (HAMP).
As detailed in documents filed today, SunTrust misled numerous
mortgage servicing customers who sought mortgage relief through HAMP.
Specifically, SunTrust made material misrepresentations and omissions to
borrowers in HAMP solicitations, and failed to process HAMP
applications in a timely fashion. As a result of SunTrust’s
mismanagement of HAMP, thousands of homeowners who applied for a HAMP
modification with SunTrust suffered serious financial harms.
SunTrust has agreed to pay $320 million to resolve the criminal
investigation into SunTrust’s HAMP Program. The money is divided as
– SunTrust will pay $179 million in restitution to compensate borrowers
for damage caused by its mismanagement of HAMP. That money will be
distributed to borrowers in eight pre-determined categories of harm. If
more than $179 million is needed, the bank will also guarantee an
additional $95 million for additional restitution. SunTrust will also
pay $10 million in restitution directly to Fannie Mae and Freddie Mac.
– SunTrust will pay $20 million to establish a fund for distribution to
organizations providing counseling and other services to distressed
homeowners. Specifically, SunTrust will pay this amount to a grant
administrator selected by the government, which funds will in turn be
awarded to housing counseling agencies and other non-profits devoted to
consumer counseling and advocacy.
WELLS FARGO MATERNITY SETTLEMENT - OCTOBER 2014
The U.S. Department of Housing and Urban Development has announced a $5 million settlement with Wells Fargo Home Mortgage for lender discrimination against women that were pregnant, had recently given birth or were out on maternity leave.
Under the settlement, Wells Fargo will distribute $165,000 among the six (6) families that were the named Plaintiffs in the lawsuit, create a fund with at least $3.5 million to compensate other applicants that were discriminated against, and pay $20,000 to an additional 175 claimants. If there are more than 175 claimants, Wells Fargo will replenish the fund with $1.5 million and pay the next 75 claimants $20,000 each.
Additionally, Wells Fargo is required to modify its underwriting guidelines related to reviewing applications from applicants that are on maternity leave.
GOLDMAN SACHS SETTLEMENT - JANUARY 2016
Potential $1.8 billion in relief for underwater and affected homeowners. Settlement details still pending.
HSBC SETTLEMENT - AUGUST 2016
Federal government together with state attorneys general in 49 states
and the District of Columbia reached a settlement in 2016 requiring HSBC
Mortgage, Inc., to provide $428 million in various forms of relief to
certain borrowers. The agreement was filed in the United States District
Court for the District of Columbia on February 5, 2016. The United
States District Court for the District of Columbia entered the Consent
Order on March 14, 2016. The agreement addresses HSBC's alleged
misconduct regarding its mortgage servicing and foreclosure practices.
HSBC must create an approximately $58 million fund for the approximately
75,000 HSBC borrowers who were foreclosed upon between January 1, 2008
and December 31, 2012. In addition, HSBC must adhere to significant
homeowner protections. The agreement requires that HSBC follow the
servicing standards set up by the 2012 National Mortgage Settlement
(NMS) with the five largest mortgage servicers. HSBC's compliance with
this settlement will be monitored by the same professional monitoring
team in charge of enforcing the NMS, led by former North Carolina
Banking Commissioner Joseph Smith.
• $370 Million in relief for borrowers who are still in their homes
• $58 Million in cash to foreclosed homeowners
• Modeled on National Mortgage Settlement
Borrowers must meet certain minimum criteria to be eligible to receive a Settlement payment. In particular:
• The loan was serviced by HSBC at the time of the foreclosure sale,
• The loan went to foreclosure sale between January 1, 2008 and December 31, 2012 ,
• The borrower made at least three payments on the loan,
• The home (or foreclosed property address) was, or was intended to be
the borrowers’ primary residence at the time
the mortgage loan was
• The borrower had a mortgage loan secured by a one-to-four unit residential property, and
• The unpaid principal balance of the first-lien mortgage loan did not
exceed $729,750 for a one-unit property;
$934,200 for a two-unit
property; $1,129,250 for a three-unit property; or $1,403,400 for a
Borrowers will be ineligible to receive a payment from the National
HSBC Settlement if they received a payment from:
(i) The National
Mortgage Settlement, involving Bank of America, JP Morgan Chase,
Citibank, Wells Fargo, and
(ii) the National Ocwen
Settlement, involving Ocwen Loan Servicing, Litton Loan Servicing, and
Mortgage Servicing Inc. (AHMSI) aka Homeward Residential;
or (iii) the National SunTrust Settlement.
Notices to be Sent to Eligible Borrowers:
- August 2016
Primary Deadline to File a Payment Claim:
- November 15, 2016
Payments to be mailed to eligible borrowers who make claims:
- We anticipate checks will be mailed in the first quarter of 2017.
who are eligible to participate in the HSBC Settlement will be mailed a
postcard followed by a Notice Letter and Claim Form in August 2016.
Borrowers who believe they are eligible but have not received a Notice
Letter by September 2016 may contact the administrator toll free by
calling 1-888-538-5792, Monday through Friday between 7:00 a.m. and 7:00
p.m. Central Time.
Please contact the National
HSBC Settlement Administrator with questions at 1-888-538-5792, Monday
through Friday, 7:00 a.m. - 7:00 p.m. Central Time.
PHH SETTLEMENT - JANUARY 2018
The settlement is between PHH and the Multi-State Mortgage Committee,
including more than 45 state mortgage regulators, along with 49 state
attorneys general, and the District of Columbia.
The settlement requires PHH to adopt new servicing standards and
provide monetary relief to affected borrowers, though the company
counters it already currently uses said standards. The settlement covers the company’s mortgage servicing practices,
including foreclosure activities, between Jan. 1, 2009 and Dec. 31,
As part of the settlement, PHH will pay more than $30 million to
borrowers who lost their homes to foreclosure or were referred for
foreclosure during the time period in question.
PHH borrowers whose homes were lost in foreclosure during that period
will qualify for a minimum $840 payment, while borrowers who faced
foreclosures that PHH initiated, but did not lose their home, will
receive a minimum $285 payment.