Landmark Settlement on Foreclosure, Mortgage Fraud
On February 9, 2012, the federal government and state attorneys general reached an agreement with the country’s largest loan servicers that will provide about $25 billion in relief to troubled homeowners. The loan servicers include Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo.
The goal of the settlement is to help distressed borrowers by requiring banks to:
- provide immediate aid to homeowners, such as reducing what they owe on their mortgages;
- allow borrowers who are current on their loans to refinance if their mortgages exceed their home’s value; and
- pay restitution to borrowers who were harmed by abusive foreclosure, loan servicing, loan origination and other practices.
The settlement also requires a review to determine whether servicemembers were charged interest in excess of 6 percent on their mortgage after a valid request to lower the interest rate—a violation of the Servicemembers Civil Relief Act (SCRA). Additional details can be found at www.servicemembers.gov.
Reforms to loan-servicing standards, such as requiring better communication with borrowers, and more oversight of national banks are also included as part of the settlement.
Consumers beware. Scammers are already using the settlement as a ruse to access your personal information, including bank account details.
To learn more—including whether you are affected by the settlement and how to identify a potential scam—visit the National Mortgage Settlement website.