February 13, 2012 – (RealEstateRama) — Attorney General William J. Schneider announced that Maine joined a landmark $25 billion joint federal-state agreement and the nation’s five largest mortgage servicers over foreclosure abuses, fraud and unacceptable nationwide mortgage servicing practices.
U.S. Attorney General Eric Holder, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan and a bipartisan group of 49 state attorneys general announced the national settlement today in Washington, D.C.
“This agreement lays out the best first step to get relief directly to eligible Maine borrowers who were harmed,” said Attorney General Schneider. “The statewide impact of these prohibited foreclosure practices will be offset through funding for foreclosure prevention programs, legal assistance to homeowners in foreclosure, and compensation to the state’s general fund.”
The state’s estimated share of the settlement is $21 million.
- Maine’s borrowers who are in default on their mortgages will receive an estimated $7 million in direct borrower relief through principal reduction, short sales, borrower transition efforts, etc.
- Maine’s borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 qualify for a cash payment from a $1.9 million fund set aside for this purpose.
- The value of refinanced loans to Maine’s underwater borrowers who are current on their loans would be an estimated $4.5 million.
- The state will receive a direct payment of $8.2 million for state foreclosure prevention programs, legal assistance to homeowners and the general fund.
The unprecedented joint state-federal settlement is the result of a massive civil law enforcement investigation and initiative that includes state attorneys general and state banking regulators across the country, and nearly a dozen federal agencies. The settlement holds banks accountable for past mortgage servicing and foreclosure fraud and abuses and provides relief to homeowners. With the backing of a federal court order and the oversight of an independent monitor, the settlement stops future fraud and abuse.
Under the agreement, the five largest servicers, Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo, have agreed to a $25 billion penalty under a joint state-national settlement structure.
- Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Given how the settlement is structured, servicers will actually provide up to an estimated $32 billion in direct homeowner relief.
- Servicers commit $3 billion to a mortgage refinancing program for borrowers who are current, but owe more than their home is currently worth.
- Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government). The state payments include funding for payments to borrowers for mortgage servicing abuse.
- Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
- An independent monitor will ensure mortgage servicer compliance.
- Government can pursue civil claims outside of the agreement, any criminal case; borrowers and investors can pursue individual, institutional or class action cases regardless of agreement.
The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The settlement also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.
On January 27th, federal and state authorities announced the formation of the Residential Mortgage-Backed Securities Working Group. The working group will investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.
“In addition to providing significant relief for homeowners, this settlement also imposes new servicing standards on these national lenders,” said Will Lund of the Bureau of Consumer Credit Protection, which administers Maine’s foreclosure diversion program. “These standards will ensure that homeowners have a fair opportunity to negotiate a loan modification and avoid losing their homes.”
The final agreement, through a consent judgment, will be filed in U.S. District Court in Washington, D.C. and will have the authority of a court order.
Because of the complexity of the mortgage market and this agreement, which will span a three year period, in some cases participating mortgage servicers will contact borrowers directly regarding loan modification options. However, borrowers should contact their mortgage servicer to obtain more information about specific loan modification programs and whether they qualify under terms of this settlement. Settlement administrators or state attorneys general may also contact borrowers regarding certain aspects of the settlement.
To Get More Information:
Go to www.maine.gov/ag for the Maine Attorney General’s website or call the consumer protection division at (207) 626-8849 Monday through Friday 9:00 a.m. to 12:00 a.m. or 626-8861 to leave a message.
Email consumer.mediation (at) maine (dot) gov or mail Maine Attorney General, Consumer Protection Division, 6 State House Station, Augusta, Maine 04333. Include the following information:
- Former Address
- Loan Servicer
- Current Address
- Phone or email address
- Date of foreclosure
Go to www.NationalForeclosureSettlement.com for more information on this settlement, including frequently asked questions.
To find out if you are eligible for any of the benefits of the settlement contact your mortgage servicer:
- Ally/GMAC: 800-766-4622
- Bank of America: 877-488-7814
- Citi: 866-272-4749
- Chase: 866-372-6901
- Wells Fargo: 800-288-3212
Graphic showing settlement breakdown (PDF)
Martha Demeritt, (207) 626-8599