Mortgage Fraud Settlement: Biggest Since Tobacco Cases
Last February, Florida Attorney General and 48 other states entered into a settlement agreement with five of the nation’s largest mortgage servicers: Bank of America, Citibank, JPMorgan Chase, Wells Fargo, and Ally/GMAC. Their liability stems from their systemic abuse of the foreclosure process as well as inappropriate mortgage-servicing practices.
Remember robo-signing? Recall, that’s when these mortgage servicers routinely sign(ed) foreclosure related documents outside the presence of a notary public and without having any knowledge of the facts in which they were attesting to. Both of these practices are illegal under current Federal and State law.
The total value of the settlement nationally is more than $25 billion in credits to distressed borrowers and $32 billion in total dollar value. A large portion is earmarked to be paid to the signing states and the federal government.
So, the deal offer’s some money for those who lost their homes during the housing market collapse; however, its primary objectives are forward-looking. These include partial loan forgiveness or “principal reduction,” to distressed homeowners.
Benefits for Floridians
(The info provided below was obtained from the Office of the Attorney General of Florida http://myfloridalegal.com/)
Florida will receive a total value of more than $4 billion in credits and $8 billion in total dollar value. Florida’s share is broken down as follows:
- At least $3.1 billion will go toward assisting Florida’s financially troubled borrowers with loan modifications, including reducing principal loan balances, forgiving amounts in forbearance, and providing other loss mitigation (e.g. short sales and deficiency waivers).
- More than $309 million will go to providing refinancing relief to eligible Florida borrowers whose loans are currently underwater. To be eligible for refinancing, a borrower must be current on mortgage payments, have a loan-to-value ratio (LTV) in excess of 100 percent (loan is underwater), and a current interest rate over 5.25 percent. Eligible borrowers will receive notices from the banks in the mail. If you have questions about your eligibility or about the program, you may contact your bank: Ally: 1-800-766-4622; Bank of America: 1-877-488-7814; Citibank: 1-866-272-4749; JPMorgan Chase: 1-866-372-6901; Wells Fargo: 1-800-288-3212
- Approximately $171 million in payments will be available to Florida borrowers who have already lost their homes, as partial payment for injury a borrower suffered as a result of improper servicing or a defect in the foreclosure proceeding.
- Qualifying borrowers are expected to receive payments in the range of $1,800 to $2,000.
- To be eligible, borrowers must have had a loan serviced by the settling banks and must complete a simple application and screening process.
- Borrowers who receive a payment under this settlement may still be eligible for relief under the Office of the Comptroller of the Currency review process, which is currently ongoing (for more information, see www.IndependentForeclosureReview.com). However, any sums received in the OCC review process or under a separate settlement or legal action may be reduced by any payment received under the state-federal settlement.
Further, Florida will receive a payment of approximately $334 million to help fund housing-related and foreclosure prevention programs within the state and provide for civil penalties.
In addition to the significant dollar value of the settlement for Floridians, Florida was one of only two states to obtain a separately negotiated $4 billion guarantee from the top three servicers, which, if not met, subjects the banks to stiff penalties.
In summary, if your primary residence was foreclosed on between 2008 and 2011, you should be diligent in checking your mail for a Notice and Claim Form from the Claims Administrator. If you haven’t received anything as of yet, I would urge you to contact your lender at the numbers listed above. If you have any question or concerns, you should contact an attorney to discuss your options.
This is a generalized discussion and is not intended for any particular set of facts and should not be relied upon as such. By no means does this blog create an attorney-client relationship or attorney-client privilege between the Attorney and the readers. The law frequently changes as new cases are decided and published regularly. Anything relied upon in this or any blog, is done so at the readers own risk.
VERNON W. GUIRGUIS, ESQ.
The Guirguis Law Firm, PLLC
1423 S.E. 16th Place, STE 204
Cape Coral, Florida 33990
Posted on September 26, 2012, in Legal and tagged Ally, Attorney, Bank of America, Citibank, Claims Administrator, Deficiency Waiver, Distress, Federal Law, Florida, Florida Attorney General, Foreclosure, Fort Myers, GMAC, independentforeclosurereview.com, JPMorgan Chase, Lawyer, Legal Schmegal, Loan, loan modification, LTV, Mortgage, myfloridalegal.com, Office of the Comptroller of the Currency, Property Guiding, Robo-signing, Short Sale, State Law, SWFL Real Estate, The Guirguis Law Firm, Vernon Guirguis, Wells Fargo. Bookmark the permalink. 1 Comment.