Your Guide to the National Mortgage Settlement
The National Mortgage Settlement Agreement was announced on February 9th by President Obama and various involved banks. It guarantees a sum of $25 billion dollars for “immediate aid to homeowners needing loan modifications now.” The amount could rise to $32 and $40 billion dollars if more banks decide to endorse the agreement. But what does the settlement mean for persons in Florida, and how can they receive aid?
The National Mortgage Settlement Agreement set funds aside to benefit qualifying homeowners. There are different ways for homeowners to qualify, and various terms of benefit. More than $8 billion in relief is available in Florida, in the form of loan modifications, refinancing, and restitutions for foreclosed homes. Only mortgages with Citi, Bank of America, Ally/GMAC, JP Morgan Chase, and Wells Fargo will qualify. No mortgages backed by Fannie Mae or Freddie Mac will be accepted. This may change from five banks to nine banks at a later undecided date, which would raise the amount available to states and homeowners. All states except for Oklahoma qualify.
Out of Florida’s $8.4 billion, $7.6 billion will be paid as loan modifications, including principal reductions. $309 million promised for refinancing underwater mortgages. Lenders will pay $170 million to people who lost their homes due to foreclosure from Jan. 1st 2008 through Dec. 31st, 2011, if they qualify. These payments will range from $1,500 to $2,000 on average.
The settlement promises immediate aid to homeowners needing loan modifications now but until more details are released, it isn’t clear how much banks will really help homeowners and when the help will come through.
People who lost their homes to foreclosure will be contacted by a national settlement administrator. They can receive up to $2,000. The exact amount will vary by qualifications and number of payments filed for. Over 750,000 are expected to file. These restitution payments will not require the person filing to waive the right to other possible claims against the servicer or lender.
The OCC (Office of the Comptroller of the Currency) supplies an independent review for foreclosures dated from January 1, 2009, to December 31, 2010. The exact amount of money borrowers can receive has not yet been determined. Again, it is possible to seek restitution from both the National Mortgage Settlement Agreement and the program described above through OCC. If you’d like to learn more, visit their website at here, or speak with your attorney.
Homeowners behind on mortgage payments may qualify for a principle reduction to their mortgages. They must owe more on their mortgage than their home is worth and be behind on payments or at risk of imminent default due to impending circumstances. The average payout for principle reduction is estimated to be around $20,000 per household.
Homeowners who are current, but struggling to make payments, may also qualify for a refinance if their home value is exceeded by the mortgage amount.
The first step has been completed, which was to choose an administrator for the settlement. President Obama selected Joseph Smith, formerly North Carolina’s bank commissioner. Over the next six to nine months he will work along with the various attorneys general and mortgage services to identify homeowners eligible for the immediate cash payments, principal reductions, and refinancing. Those eligible will receive letters. The settlement will be executed over the next three years, with penalties for banks who do not meet certain checkpoints.
Sadly, borrowers will still have to wait and see if they qualify. If they have not received a letter in the next year, their lending bank should be contacted and asked why they do not qualify. Anyone experiencing hardship and troubles with their mortgage should contact their attorney for expert advice. Losing one’s home to foreclosure is a