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| The Road to Solutions |
The $25 billion proposed settlement with five major banks/servicers has not yet been approved by a judge. However, assuming it is as proposed, Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial will agree to stop the practice of robo-signing, to change their loan modification procedures, and to not foreclose on borrowers who are being considered for a loan modification. A single point of contact and adequate staff to handle consumers are also to be established by each bank. Approximately $20 billion is to go to those facing foreclosure--principal loan reduction and refinance--and $5 billion goes towards settling with consumers who lost their homes due to improper foreclosures between 2008 and 2011. Part of the settlement agreement will result in new requirements for short sales, which is supposed to speed them up and eliminate the often lengthy delays.
A
fact sheet describes cash payments to borrowers who went through foreclosure.
This settlement is not yet finally approved by a judge--a
4-page executive summary describes key points of the current proposed settlement.
It's important to know that FNMA and Freddie Mac loans
are not included in this settlement, and that over half the loans in California in recent years are held by them. To find out, go to their respective websites and use the Loan Lookup Tool.
California's Attorney General obtained
$18 billion specific to California for benefits, and amounts allocated to counties.
It will probably take another 6-9 months for banks to reach out to owners they believe fit into this settlement, and the banks are given 3 years to fully execute the settlement. As of March 16, Katherine Porter, a UCI Law professor, has been appointed to oversee the California settlement.
Borrowers may call the contact numbers below, but be aware information right now may be incomplete because the administration of this program has not yet begun.
If you or someone you know is unsure of your best option, the first thing to understand is that a refinance, loan modification, short sale, deed-in-lieu or foreclosure is a "waterfall" to be taken in sequence. The borrower, to be successful, must spend the considerable time required and be prepared to gather the necessary documentation regardless of which option you work with--this cannot be stressed enough. While contacting banks was a very frustrating and confusing process just 2 years ago, major servicers are much more streamlined, and now with this Settlement, face even more requirements to help borrowers. Each servicer now has information on their websites about short sales, deeds-in-lieu and foreclosure, and a very informative and useful one is found at
www.bankofamerica.com/hometransition . Think twice before choosing the ultimate option of foreclosure without checking out the others first, and do this at the earliest possible date. Additional resources are at
http://www.juliahuntsman.com/homeowner-property-assistance.html
The borrower is also strongly advised to reach out to an experienced Realtor professional, legal and/or tax advisor, to reduce the time spent in this process and to have an important resource to guide them.
Website on the Settlement:
http://www.nationalmortgagesettlement.com/help
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