AG settlement: What homeowners need to know

Friday, February 10, 2012

Homeowners struggling to make their mortgage payments will be eligible for loan modifications - including reductions to the principal loan amount. The settlement between 49 state Attorneys General (AG), federal government officials, and five of the country’s biggest mortgage servicers is to offer some relief to homeowners after fraudulent documentation (“robosigning”) exacerbated the foreclosure crisis.

Homeowners who have lost their home to foreclosure will receive a small cash payment, will retain the right to sue, and to participate in other settlements.

Here’s what homeowners can expect from the $25 Billion settlement:

Principal reduction – Some homeowners will have the amount that they originally borrowed reduced by an estimated $20,000 on average. Servicers are required to reduce principal loan amounts by up to $17 billion.

Restitution - Homeowners who have lost their home to foreclosure (between 2008 and 2011) will receive about a $2,000 payment. Forms will be sent to borrowers or contact your state A.G.

Rate reductions - Borrowers who are “underwater” and current on their mortgage payment will be able to refinance at lower interest rates. (Underwater homes are worth less than what's owed on the mortgage)

Dual track ban – Servicers may no longer foreclose on homeowners while they are being evaluated for a loan modification.

Single contact - Servicers will provide a particular contact for homeowners to deal with when they are in financial trouble.

Right to appeal - Homeowners who are denied a loan modification will have the right to appeal.

Borrowers will be contacted by servicers within the next 9 months but can reach them directly at:

Bank of America: 877-488-7814 Wells Fargo: 800-288-3212 Citi: 866-272-4749 JP Morgan Chase: 866-372-6901 Ally/GMAC: 800-766-4622

Mortgages owned by Fannie Mae and Freddie Mac are not covered by this settlement.

For more information visit: www.nationalmortgagesettlement.com/help

To find your State Attorney General click here