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How Can the National Mortgage Settlement Agreement Help Me?

Announced on February 9, 2012, the $25 billion dollar National Mortgage Settlement Agreement is expected to benefit distressed homeowners in 49 states.

Last week President Obama announced the passing of the largest federal and state civil settlement in a decade. 

A $25 billion federal-state mortgage servicers settlement, between government officials, state attorneys general, and Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial, was designed to help underwater and struggling homeowners who are upside down with their mortgage loans get back on their feet again and is projected to benefit nearly one million home owners.  That number could increase if other mortgage servicers jump on board to be included in this settlement.

Part of this settlement is a new set of banking guidelines that were written to prevent future abuses and bad practices that were, in part, responsible for spawning the economic crisis that has touched all of us.

Florida and California, the top two states hardest hit by the foreclosure crisis, are targeted for the largest state percentage of settlement funds, with Florida receiving a third of the total settlement.

A number of pre-defined groups of distressed home owners, who are targeted to benefit from this settlement, will have the opportunity to do so as outlined below:

  • Home owners who have already had a foreclosure:   If your foreclosure falls between 2008 through 2011, you could qualify for a settlement payment of up to $2,000.   If you’re not sure, but think you may be eligible, you should contact your bank to get more information.  The number of people who participate in this settlement will affect the payment amount.  If you qualify, you should receive claim forms in the mail from an administrator from the Attorney General’s office.
  • Home owners – behind on mortgage payments: You may qualify for a principle reduction to your mortgage(s).  You must owe more on your mortgage than your home is worth and be behind on your mortgage payment or at risk of imminent default because of impending circumstances, to be considered for a reduction to the principle amount owed on your mortgage.  The average payout for a principle reduction is estimated to be about $20,000 per household.
  • Home owners – current, but struggling to make payments:  You could be eligible for a refinance of your mortgage(s) at today’s historically low interest rates.  Your mortgage amount must exceed your home’s value for this option also.

Execution of this agreement will take place over the next 3 years.  In the next 6-9 months, all administrative parties involved will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing.  If you’re identified as an eligible participant, you will be notified by mail.

To learn more about the details of the National Mortgage Settlement visit: 

http://www.nationalmortgagesettlement.com/

If your mortgage is owned by Fannie Mae or Freddie Mac, you unfortunately will not qualify to participate in the National Mortgage Settlement program, but you should explore your options for relief through the governmental programs: HARP, HAFA, or HAMP.

One of the most beneficial and long lasting benefits of the mortgage servicers settlement agreement will be that new standards have been written for foreclosure procedures and will now be in place to prevent future abuses like ‘robo-signing.’  Formal enforcement systems, practices, and procedures will also assure that such widespread abuse by the banking industry will be a part of our history, and not follow us into the future. 

This devastating, modern day economic crisis has not been the result of a single sector of people making errors in judgment and taking advantage of a poorly crafted and loosely regulated system.  Rather, it is a culmination of a lot of bad individual decisions as well as a ‘perfect storm’ of sorts.  Hopefully, we ALL have learned something from this period in our history and will not be doomed to repeat the same mistakes that got us here in the first place.

Our collective, potential future and what we do with what we’ve learned is up to all of us.  

This quote from J.R Tolkien sums it up quite nicely, in my opinion:

“All that is gold does not glitter, 
Not all those who wander are lost; 
The old that is strong does not wither, 
Deep roots are not reached by the frost. 

From the ashes a fire shall be woken, 
A light from the shadows shall spring; 
Renewed shall be blade that was broken, 
The crownless again shall be king.” 

Other resources:

US Attorney General - Statement of Agreement

To contact your mortgage servicer:

Bank of America Inquiries

Wells Fargo Inquires

Citi Group Inquiries

J P Morgan Chase Inquiries

Ally Financial Inquiries

Help for Fannie & Freddie Mac loans

Loan lookup tools

HAFA

HAMP

HARP

About this column: Wendy Herndon works for The Serena Group in Bradenton as a licensed real estate agent, marketing and listing specialist and office manager. Visit them at Bradenton-Florida-RealEstate.com or facebook.com/bradentonsarasotarealestateforsale

Superreggie February 15, 2012 at 03:48 PM
How does the bank know I'm underwater? Are they going to appraise all the houses? Like I have to wait for the bank to send me this Marci letter? Yeah right!

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