Last week, 5 major banks reached a settlement with 49 states (Oklahoma excluded.) These lenders will give a collective $25 Billion to state and federal government, as well as individuals, to help revitalize the housing market and pay penance for their robo-signing scandals.
This particular settlement involves only the 5 biggest banks in the U.S.: Ally Financial Inc/GMAC Mortgage, Bank of America Corp, Citigroup Inc, J.P. Morgan Chase & Co, Wells Fargo & Co. These banks handle 55% of mortgages in the United States. The government is working on a settlement with 9 other banks, but for now, these are the only banks involved in the settlement.
In total, the banks will contribute at least $25 billion. Here’s how that breaks down.
$17 billion goes to foreclosure relief efforts including principal reduction, short sales and homeowner transition programs.
$3 billion goes to underwater mortgage refinancing.
$5 billion goes to the states and federal government. Of that, $1.5 billion will go to people who have already been foreclosed on. $750 million goes to the Federal government to resolve federal claims.
How to Qualify
Specific requirements for qualification are still not completely clear. However, it is clear that the settlement only affects borrowers with mortgages from the five banks. Mortgages backed by Fannie Mae, Freddie Mac or other private banks will not qualify for compensation.
If you have a mortgage with one of the five banks, the best thing to do is contact them to see if you qualify. Banks will be sending letters to homeowners to alert them of qualification, but you don’t have to wait for that. Visit www.nationalmortgagesettlement.com to find contact information for each of the banks as well as your state’s attorney general. The website also has specific guidelines for filing a claim.
What does this mean for California?
Last Thursday the Office of the Attorney General for California released a press release explaining California’s role in the settlement. Attorney General Kamala D. Harris secured $18 billion for struggling California homeowners. She also obtained separate guarantees to ensure that banks will be accountable for their commitments to California. These guarantees allow the Attorney General to summon the banks to the California state court if they do not pay. You can read more about California’s specific settlements on the Attorney General’s website.
Research for this article was taken from the Wall Street Journal and the KCM Blog. I pride myself in staying up to date on the latest real estate news, so feel free to ask me any questions you have about this or other real estate hot topics. Feel free to leave a comment, call me at 714-728-9018 or email firstname.lastname@example.org. If you found this article helpful, please share it with your friends.
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