National Mortgage Settlement

Bills.com Team
Pro

By

Highlights


  • The settlement aids owners of upside-down homes.
  • Foreclosed homeowners will receive $2,000.
  • Homeowners with Fannie Mae or Freddie Mac loans do not qualify.
3.5
/5.0
(18 Votes)

$25 Billion National Mortgage Settlement Announced by 49 States & 5 Mortgage Servicers

Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and other federal and state officials announced a plan to provide about $25 billion in mortgage relief and aid to homeowners. The settlement is designed to help homeowners teetering on the brink of foreclosure, and former homeowners who were foreclosed upon contrary to their state’s laws.

Editor's note

In early January 2013, in a separate announcement, 10 mortgage servicers agreed to spend $3.3 billion in direct payments to eligible borrowers and $5.2 billion in loan modifications and forgiveness of deficiency judgments. The Independent Foreclosure Review is separate from the national Mortgage Settlement. The Federal Reserve estimates more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 will receive compensation ranging from hundreds of dollars up to $125,000. The servicers also agreed to speed up payments to eligible borrowers.

In a February 2012 press conference, Holder said the settlement “reflects our commitment at both the federal and state levels to ensure justice and to recover losses for victims of reckless and abusive mortgage practices.”

Note

The deadline to apply for the National Mortgage Settlement is January 18, 2013. Go to the National Mortgage Settlement Claim Filing Site to start the online process. (Editor’s note: Contact the National Mortgage Settlement Administrator at 1-866-430-8358 for claim information.) This is a no-cost service supervised by the Attorneys General who negotiated the settlement and the Federal Reserve.

The settlement will write down principal payments for homeowners who were not foreclosed upon when the mortgage bubble burst, but who struggle now. Banks will have targets they have to meet, in terms of what kinds of loans they must modify, but will still have a lot of discretion in choosing which homeowners qualify and for how much.

Editor's note

In early January 2013, Bank of America agreed to pay Fannie Mae $3.6 billion and repurchase $6.75 billion in residential mortgage loans it sold to Fannie Mae from 2000 through 2008. The company also sold the mortgage servicing of 2 million loans, 775,000 of which are 60+ days passed due.

Homeowners who have been wrongfully foreclosed will get up to $2,000.

Five mortgage servicers signed the 2012 deal, but more may follow.

Servicer Total Amount Serviced in 2011 Market Share Contribution to Settlement
Source: Inside Mortgage Finance, Bills.com, New York Times. The five banks signing the national mortgage settlement service about half of all US home loans.
Wells Fargo $1.82 trillion 17.7% $5.4 billion
Bank of America $1.77 trillion 17.2% $11.8 billion
JPMorgan Chase & Co $1.17 trillion 11.4% $5.3 billion
Citigroup $600 billion* 5%* $2.2 billion
GMAC/Ally Financial $300 billion* 3%* $310 million
* Bills.com estimate

These five are the largest mortgage servicers in the US, and service about half of all US home loans. A mortgage servicer collects monthly payments from homeowners on behalf of the investors who lent money for home loans. The New York Times reported that nine other major mortgage servicers may agree to the settlement, which would raise its total amount to $30 to $45 billion.

Quick Tip

Bills.com can help you find your best rate on a home loan refinance. With rates at historic lows, it pays to apply now with one of the members of our lending network.

The national mortgage settlement will cover the mortgage servicers against any lawsuits regarding the robo-signing issue, where mortgage companies signed false affidavits to speed up the foreclosure process.

The federal government and the 49 state attorneys general who signed the deal published a National Mortgage Settlement Web site that contains information about the agreement. Oklahoma did not join the settlement, and as a result its homeowners are not eligible.

Quick Tip

The financial stress of struggling with a mortgage can cause other money problems. If you need help to resolve your credit card or medical debt, speak with a Bills.com debt relief partner.

6 Key Points of the National Mortgage Settlement

The six points of the plan include principal reduction, refinancing, $2,000 to foreclosed homeowners, payments to the 49 states, promises to improve mortgage servicing, attorney general oversight of national banks.

1. Principal Reduction

The servicers are required to write down up to $17 billion in principal reduction and "other forms of loan modification relief." First and second loans are included in principal reduction. The National Mortgage Settlement Web site states that "principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay (their home loans)."

2. Refinancing

The servicers will have to provide up to $3 billion in refinancing.

3. $2,000 to Foreclosed Homeowners

$1.5 billion will be distributed nationwide to 750,000 borrowers who lost their homes to foreclosure between January 1, 2008, and December 31, 2011. This equals $2,000 per foreclosed homeowner. Significantly, accepting the $2,000 will not release private claims against the servicers.

4. Payments to the 49 States

$5 billion will be paid to each of the 49 states participating in the deal. (Oklahoma is the lone holdout.) Under the agreement, $4.25 billion the states includes $1.5 billion for payments to borrowers who lost their home to foreclosure by one of the five servicers, as mentioned above. The payment to borrowers addresses servicing and foreclosure abuses from January 1, 2008 to December 31, 2011.

5. Promises to Improve Mortgage Servicing

According to the National Mortgage Settlement Web site, the five mortgage servicers promised to

  • Create a single point of contact for customers
  • Staff and train mortgage service departments adequately
  • Communicate better with borrowers
  • Set appropriate standards for executing documents in foreclosure cases
  • End improper fees
  • End dual-track foreclosures for many loans

These promises to improve servicing are outlined in a Servicing Standards Highlights (pdf) document.

6. Attorney General Oversight of National Banks

The servicers must:

  • Report compliance with the settlement to an independent, outside monitor
  • Pay penalties for non-compliance with the settlement, including missed deadlines

Editor's note: The January 2013 agreement between the Federal Reserve and the 10 largest mortgage servicers ceased the Independent Foreclosure Review. The Federal Reserve said the case-by-case review process was taking too long, and the 2013 agreement replaces it with a "broader framework" and, "Eligible borrowers will receive compensation whether or not they filed a request for review form, and borrowers do not need to take further action to be eligible for compensation."

How to Apply for the National Mortgage Settlement

Up to 2 million homeowners could benefit under the national mortgage settlement agreement. Are you one who qualifies? The National Mortgage Settlement Web site offers this disappointing answer:

Because of the complexity of the mortgage market and this agreement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief...

As mentioned, Oklahoma homeowners are not eligible. Neither are homeowners whose mortgages are held by Fannie Mae or Freddie Mac. To learn if your loan is owned by either, check the Fannie Mae or Freddie Mac mortgage look-up tools.

The five mortgage servicers say they will spend the next six to nine months deciding which homeowners are eligible, and say they will contact them with details. At present, the servicers are directing past and present homeowners who may benefit from the national mortgage settlement to their distressed borrower Web pages and telephone numbers. These are listed in the table below.

Servicer Telephone Distressed Home Loan Web Page
Mortgage servicers ask homeowners to contact their distressed home loan Web page.
Wells Fargo (800) 288-3212 Help for Homeowners
Bank of America (877) 488-7814 Home Loan Assistance
JPMorgan Chase & Co (866) 372-6901 Homeownership Center
Citigroup (866) 272-4749 Homeowner Assistance
GMAC/Ally Financial (800) 766-4622 Homeowner Assistance

Bills.com will continue to report on this settlement on this page.

3.5
/5.0
(18 Votes)

28 Comments

Recent Best
1500 characters remaining
  • 35x35
    May, 2013
    Brad
    The website nationalmortgagesettlement.com was updated again today May 8, 2013. This update removed the sentence that National Mortgage Settlement payments would be sent out mid to late May which was added with the April 22, 2013 update and now reads, the again vague expected to be mailed mid-2013. They have no idea when these payments will be sent.
    6 Votes

  • 35x35
    Apr, 2013
    ash
    Can you receive a payment from both programs?
    0 Votes

    • 35x35
      Apr, 2013
      Bill
      Yes, because these are separate settlements, it is possible a former homeowner can receive payments from either or both.
      0 Votes

  • 35x35
    Apr, 2013
    Nadia
    I believe is sad that people that got their houses foreclosed in 2008 or 2011 only have the National Settlement oportunity, but for people who lost their houses in 2009-2010 they have the National settlement (gives only 2k) plus the OCC/ IFR settlement (that can give from $300 to 125K) if you qualify. It is pathetic, considering the difficult situation we all were put through from being jobless to homeless and everything in between. Please if anyone knows of a collective lawsuit going on let me know. Thank you.
    2 Votes

  • 35x35
    Apr, 2013
    mary
    We lost our home to foreclosure in 2008 and did receive a claim form from the National mortgage settlement which in turn sent us a claim number. I can not believe that we will only receive $2,000 for this tragic mistake by the bank. Also, how do I prove how harmful this has been to our family?
    0 Votes

    • 35x35
      Apr, 2013
      Bill
      Accepting the $2,000 settlement offered you does not, as far as we know, preclude you from filing your own action against the mortgage servicer or lender that caused you harm. Consult with a lawyer in your state who has experience litigating claims against home-loan lenders to learn how strong your case is against the party or parties who harmed you.
      0 Votes

  • 35x35
    Apr, 2013
    vince
    I was fighting for a modification of my mortgage for more than 3 years. Paid three different law groups in CA. ie companies promising a modification. Over time none of them fulfilled the promises made to me. They took my money and I was placed on the back burner with Countrywide and ultimately Bank Of America. All a waste of time. Lost home and awaiting outcome of lawsuits and funds that may come my way.
    1 Votes

  • 35x35
    Mar, 2013
    Steve
    What about those whom were in foreclosure proceedings but were able to save their homes from finalized forclosures?
    0 Votes

  • 35x35
    Mar, 2013
    Paul
    When applying on the net they didn't even send an acknowledgement they received my application so I also mailed the application I received in the mail. Still no acknowledgment. You say people can be paid up to $125,000 if they can prove they were caused a greater harm. How do you do that if no one ever contacts you?
    1 Votes

    • 35x35
      Mar, 2013
      Bill
      I recommend that you call the National Mortgage Settlement Administrator at 1-866-430-8358.
      0 Votes

    • 35x35
      Mar, 2013
      Judy
      I am trying to understand how the Banks will know the amount of compensation? If they never finished the review and when people like me would call and they had no answer on the status of my review be for they stopped. So how would they know?
      0 Votes

    • 35x35
      Mar, 2013
      cindy
      The $125,000 you mention is tied to the Independent Forclosure Review process and was recently scraped. The National Home Mortgage settlement is a totally different settlement. As of now, I don't believe you need to do anything to me compensated if you fall within each processes time requirements. Again, these are two different settlements with their own different compensations. Hope this helps.
      1 Votes

    • 35x35
      Apr, 2013
      leah
      there are actually two different things going on the independant foreclosure review which there is so much going on with its crazy but thats the one that you could be compensated from 300 to 125000 the 125000 is only going out to military members that were forclosed on illegally you can learn more info about this on the federal reserves website. then there is the national mortgage settlement which claim forms were sent out stating that the minimum would be 840.00 they said it could be more depending on how many people submitted claims and the independant foreclosure review is dealing with 4.2 million people checks are being mailed out for this one in 4 different waves. looks like 90 percent are getting between 300 and 500 dollars.
      0 Votes

  • 35x35
    Feb, 2013
    l
    When will we receive our settlement checks?
    0 Votes

    • 35x35
      Feb, 2013
      Bill
      I found the most up-to-date information at the nationalmortgagesettlement.com Web site.

      About $1.5 billion of the funds that were recovered in the national settlement are being used to compensate borrowers who lost their home to foreclosure during the period of January 1, 2008, to December 31, 2011.

      "Checks to borrowers who submitted claim forms are expected to be mailed mid-year in 2013. The exact amount of the payment to be made to each eligible claimant is not yet known but it will exceed the minimum payment of $840 that was indicated on the claim form."

      If you have further questions, you can contact the National Mortgage Settlement Administrator at 1-866-430-8358.
      0 Votes

  • 35x35
    Feb, 2013
    T
    According to the editor notes "...3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 will receive compensation ranging from hundreds of dollars up to $125,000. The servicers also agreed to speed up payments to eligible borrowers." but it also reads that those whose homes were foreclosed on will only receive $2,000. Is the $2,000 just a minimum? Please clarify.
    0 Votes

    • 35x35
      Feb, 2013
      Bill
      The settlement amount is $1.5 billion, and the number of eligible homeowners is thought to be 750,000. The $2,000 number is the result of dividing $1.5 billion by 750,000 (1,500,000,000÷750,000=2,000). The processors are supposed to rank the harm caused to each eligible former homeowner. Those who can demonstrate they suffered the greatest financial harm will receive up to $125,000, and those who demonstrate they suffered less harm will receive less.
      0 Votes

    • 35x35
      Mar, 2013
      Oscar
      You said those who can "demonstrate they suffered the greatest financial harm..." how do you go about demonstrating you suffered financial harm?
      0 Votes

    • 35x35
      Mar, 2013
      Bill
      Excellent question. Short answer: We don't know.

      Long answer: In the early documentation published by The Office of the Comptroller of the Currency and the Federal Reserve Board, which are overseeing an Independent Foreclosure Review, there was "harm" language included in the public statements and on the National Mortgage Settlement Web site. However, that was later removed from the Web site.

      How the Independent Foreclosure Review staff can determine the amount to reimburse former homeowners harmed by the mortgage servicers without the homeowner showing how much they were harmed is a mystery.
      0 Votes

    • 35x35
      Mar, 2013
      Sandra
      Since we dont' know that the "greater harm" factors are, is it safe to assume that the errors that were made on each loan are coded to sum up a "greater harm" or is the majority of the $125k settlements for military persons that were foreclosed on in error? I reviewed the Remediation Framework and this seems to be the area with the biggest payout. Also, during this "review" process, is there a database that details the errors that were made on each foreclosure? Even though I know there were errors, I would like to know exactly what errors were made. How can I find out? Thanks
      0 Votes

  • 35x35
    Oct, 2012
    Charlotte
    I think it is wonderful that the major banks are being forced to return a portion of our money back to us for homes we lost. It would also be great if something could be done to repair that nasty foreclosure credit hit on our consumer credit report which affects current credit ability.
    15 Votes

  • 35x35
    Jul, 2012
    Tony
    Are the servicing standards being applied to all mortgages serviced by the big five banks in the consent judgement or just the ones not owned by Fannie Mae or Freddie Mac?
    0 Votes

    • 35x35
      Jul, 2012
      Bill
      The answer to your question is unclear. What is clear is the Federal Housing Finance Administrator (FHFA)-operated Fannie Mae and Freddie Mac are not participating in the financial aspect of the settlement. The expectation is the mortgage servicers will implement the non-financial, service-oriented part of the agreement across all of their customers equally. However, that is really our speculation. It is certainly possible the bank servicers could create two-class systems where customers with loans subject to the agreement get better service than everyone else. We'll see.
      1 Votes

  • 35x35
    Mar, 2012
    Mark
    I have read the complaint and the Ally Bank Settlement and was wondering if I just missed something or they are not disclosing the Effective Date of the settlement. I did a mortgage mod about 22 months ago so the "2 years from the effective date" exclusion for modified mortgages is a critical point. Does anyone know what that date is?
    0 Votes

    • 35x35
      Mar, 2012
      Bill
      I have never seen so many undated signatures on one document as I did reading the Ally bank settlement, until I read all of the other settlements on NationalMortgageSettlement.com, which are also undated. I think you can assume for now that you should use the date of settlement as February 9, 2012. That was the date the attorneys general announced the settlement, sent out a press release, and made the NationalMortgageSettlement.com Web site go live with information about the settlement.
      0 Votes

    • 35x35
      Mar, 2012
      Mark
      Thanks, glad it wasn't just me.
      0 Votes

  • 35x35
    Feb, 2012
    Sun
    Our settlement date was prior to May 31, 2009, and our Service Provider did not submit our loan to Freddie Mac until after June 31, 2009? Now, it appears we are not eligible for Harp 2.0. It has been determined that Freddie Mac owns our mortgage. With the new Obama Plan you note that Homeowners with a Freddie Mac or Fannie Mae loan do not qualify. What are our options, if any?
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      As implied in your message, loans Freddie and Fannie buy after May 31, 2009 are not eligible for HARP 2.0. The loan closing date is not relevant. The national mortgage settlement does not apply to Fannie and Freddie loans. You asked about your options. I see two: Keep your present loan, or apply for a conventional refinance.
      0 Votes