Benefits of National Mortgage Foreclosure Servicing Settlement
Moving Forward in Connecticut
Attorney General George Jepsen said the programs of benefits resulting from the $25 billion mortgage foreclosure servicing settlement are moving forward in Connecticut, including $119 million in loan modifications and $36 million in refinancing relief.
The five largest loan servicing companies that were parties to the settlement are alerting mortgage customers to the new programs and the criteria they will use to determine if the customers qualify for changes to their mortgage loans.
The companies include Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly GMAC). Connecticut borrowers who wish to be considered for the settlement programs should contact their loan servicers.
“We are seeing real progress by the banks in rolling out these programs,” Attorney General Jepsen said. “While many borrowers are expected to benefit, unfortunately, not everyone will qualify,” he said.
Offers for principal reduction loan modifications have been made to some customers of the five banks and other offers are anticipated over the next year. The mortgage servicers are required to complete 75 percent of their consumer relief obligations within two years and 100 percent within three years.
Loan modifications represent an estimated $119 million of Connecticut’s $190 million share of the settlement funds. The banks also agreed to provide $36 million in refinancing to Connecticut borrowers whose homes are worth less than their mortgages. They will also provide cash payments of approximately $1,500 to an estimated 7,500 Connecticut borrowers who experienced loan servicing abuses and who lost their homes to foreclosure between January 1, 2008 and December 31, 2011.
Bank of America, for example, is notifying potentially eligible customers within a 30 mile radius of its service centers, including one in Southington, about a 1st Lien Principal Reduction program. To qualify, a borrower must have a first-lien mortgage and meet the following eligibility criteria: 60 or more days delinquent as of Jan. 31, 2012; monthly mortgage costs that are more than 25 percent of documented monthly income; house must be worth less than the unpaid balance on the mortgage; and loan needs to be owned by Bank of America or serviced for others who have given the Bank the right to reduce principal if necessary on troubled loans.
Jepsen urged borrowers whose loans are owned by the five servicers, to contact them directly at the following numbers for more information about the assistance programs and whether they qualify for help: Bank of America: 1-877-488-7814; Citigroup: 1-866-272-4749; Chase: 1-866-372-6901; Ally/GMAC: 1-800-766-4622; Wells Fargo: 1-800-288-3212.
Distressed homeowners also can make direct contact with representatives of the five loan servicers, as well as other banks, at a state-sponsored mortgage loan assistance event planned for eastern Connecticut on July 10 at the University of Connecticut in Storrs. More information is available at the state Department of Banking website
. Two previous events were held in Hartford and Bridgeport.
The $28 million in direct funding from the settlement to the state was allocated this week to continue and expand existing foreclosure prevention programs, such as the state Department of Banking’s Mortgage Foreclosure Prevention Hotline and Connecticut Fair Housing Center; HUD-approved housing counselors; the Judicial Department’s Foreclosure Mediation Program and Voluntary Attorney Foreclosure Advice program; nonprofit legal aid groups that help homeowners facing foreclosure; loan modification programs supported by the Connecticut Housing Finance Authority and the Mortgage Crisis Job Training program in the Department of Labor.
The settlement also imposed extensive new mortgage loan servicing standards on the five banks, which take effect this summer. These new standards will stop many past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork. They will also require strict oversight of foreclosure processing, including by third-party vendors; restrict banks from foreclosing while the homeowner is being considered for a loan modification and make foreclosure a last resort, by requiring servicers to evaluate homeowners for other loan mitigation options first.
The new standards also establish procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials. They also require the servicers to provide a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.
Jepsen serves on the monitoring committee of state attorneys general, the U.S. Department of Justice, and the U.S. Department of Housing and Urban Development, which is working with independent settlement monitor Joseph A. Smith, Jr. to ensure the servicers fulfill their
obligations under the settlement. Smith has created an online tool for consumer advocates to report mortgage servicing complaints. The online form is available at: www.mortgageoversight.com/report-client-issues
. Information gathered from this site will help Smith track how the servicers are treating customers.
Assistant Attorneys General Joseph Chambers and Matthew Budzik, head of the Finance Department, are assisting the Attorney General with these efforts.