Attorney General Press Release Header
February 9, 2012

Attorney General Announces $25 Billion Joint Federal-MultiState Settlement on Mortgage Foreclosure Servicing Wrongs

State Share Estimated at More than $190 Million

HARTFORD -- Attorney General George Jepsen, a member of the negotiating team, joined Thursday in the national announcement of a landmark $25 billion joint federal-multistate agreement with the nation’s five largest mortgage servicers over foreclosure abuses and fraud, and unacceptable nationwide mortgage servicing practices.

The largest joint federal-state settlement in history was produced after 15 months of intense negotiations. All 50 states are participating. It provides more than $190 million in relief to Connecticut homeowners and the state, and imposes new consumer protections on future mortgage loan servicing practices. 

Jepsen was among a bipartisan group of state attorneys general in Washington D.C. participating in the announcement Thursday with U.S. Attorney General Eric Holder, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan.

Under the agreement, Bank of America, Citibank, JP Morgan Chase, GMAC and Wells Fargo, have agreed to pay a combined $25 billion under a joint state-national settlement structure.

I helped to negotiate and strongly support the bipartisan settlement reached with the nation’s largest mortgage servicing companies over their widespread and improper foreclosure practices. There are many reasons why I believe this settlement is good for Connecticut, but the most important reason is this: it provides immediate help to thousands of Connecticut homeowners at a time when they can still use that help to save their homes,” Jepsen said.

“As important as the financial relief, the settlement requires the banks to change the way they service distressed loans and it holds the banks accountable for what have become familiar abuses. For the first time, state attorneys general will have authority to monitor how federally regulated banks comply with the new servicing rules and to impose heavy penalties on those banks that fall short,” Jepsen said.

The state’s estimated share of the settlement is $190 million.

  • Connecticut borrowers will receive an estimated $119 million in benefits from loan term modifications and other direct relief.
  • The estimated 7,500 Connecticut borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse would qualify for an estimated $1,500 in cash payments to individual borrowers.
  • The value of refinanced loans to Connecticut’s underwater borrowers would be an estimated $36 million.
  • The state will receive a direct payment estimated at $27 million to help pay for local foreclosure prevention programs, such as the Connecticut Department of Banking’s foreclosure prevention hotline, HUD- approved housing counselors, the Judicial Branch’s foreclosure mediation program, non-profit legal aid groups that help homeowners facing foreclosure, and loan modification programs supported by the Connecticut Housing Finance Authority.

The unprecedented joint state-federal settlement is the result of a massive civil law enforcement investigation and initiative that included 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 will stop future fraud and abuse.


  • Servicers commit to provide 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 and 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 pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.

The final settlement 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.

In many cases, participating mortgage servicers will contact borrowers directly regarding loan modification and refinance options.  However, borrowers may contact their mortgage servicer at the numbers listed below to obtain more information about specific loan modification programs and whether they qualify under terms of this settlement. A settlement administrator hired by the state attorneys general may also contact borrowers and victims of foreclosure.

Bank of America: 877-488-7814

Citi: 866-272-4749

Chase: 866-372-6901

GMAC: 800-766-4622

Wells Fargo: 800-288-3212

Assistant Attorney Generals Joseph Chambers and Matthew Budzik, head of the Finance Department, assisted the Attorney General in the settlement negotiations.

More information will be made available as the settlement programs are implemented.

More information on the agreement is available at the following websites:

Attorney General's Site


Media Contact:

Susan E. Kinsman

860-808-5324 (office)

860-478-9581 (cell)

Consumer Inquiries:


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