Do I Qualify for the National Mortgage Settlement?

February 9, 2012 16 Comments »
Do I Qualify for the National Mortgage Settlement?

In case you haven’t heard by now, the so-called “National Mortgage Settlement” was finalized today.

It’s the largest multi-state settlement since the Tobacco Settlement back in 1998, related to robosigning allegations that took place over the past several years.

Essentially, some of the nation’s largest loan servicers routinely signed off on foreclosure documents without doing their due diligence, and/or without the presence of a notary.

It will provide more than $25 billion in assistance to homeowners, participating states and the federal government.

For the record, all 50 states participated except for lonely old Oklahoma.

The offending parties in the National Mortgage Settlement include:

– Ally/GMAC
– Bank of America
– Citi
– JPMorgan Chase
– Wells Fargo

These are the nation’s five largest mortgage loan servicers.

Benefits will be provided to both borrowers whose loans are owned by the settling banks as well as to borrowers whose loans they service.

In other words, your mortgage may have been originated by another company and sold to one of these companies to be serviced. So be sure to check your loan documents if you think you may be eligible.

Where the Settlement Money Will Go

The bulk of the money, at least $10 billion, will go toward principal balance reductions. In other words, those who hold underwater mortgages will see their balances drop to get them above water.

But the assistance will only be directed toward those who are either delinquent or at imminent risk of default as of the date of the settlement.

The principal reduction will likely be facilitated via a loan modification, so borrowers will ideally end up with a smaller loan balance and a lower mortgage rate, which will certainly make mortgage payments much more affordable.

State attorneys general believe principal reductions will prove beneficial, and as a result, will be employed by other mortgage lenders not involved in the settlement.

Another $7 billion or more will be used for short sales and transitional services, forbearance of principal for unemployed borrowers, anti-blight programs, and benefits for service members forced to sell their homes at a loss as a result of a “Permanent Change in Station” order.

Loan servicers will also have at least another $3 billion at their fingertips to provide refinancing to borrowers who are current, but underwater on their mortgages.

These homeowners will be able to take advantage of the record low mortgage rates that were previously out of reach due to loan-to-value ratio restraints.

Additionally, $1.5 billion will be distributed to roughly 750,000 borrowers who have already lost their homes to foreclosure.

The states involved will also receive immediate payments of roughly $3.5 billion to help fund consumer protection and state foreclosure protection programs.

How and When Can You Get Help?

If you think you qualify for assistance, you can contact the offending mortgage servicer directly, although they should be contacting you…

For borrowers who lost their homes between January 1, 2008 and December 31, 2011, a claim form should be sent to you for one of those shiny checks.

You can also contact your individual Attorney General’s office to check eligibility, or to provide a current address assuming you moved and/or have been foreclosed on.

Unfortunately, relief won’t be immediate under the settlement. Over the next 30-60 days, settlement negotiators will be selecting an administrator to oversee the program.

And over the next six to nine months, this administrator will work with attorneys general and loan servicers to identify relief recipients.

It is expected to take three years to execute the entire settlement, so patience is a virtue here.

Who is Left Out of the National Mortgage Settlement?

Borrowers with Fannie Mae and Freddie Mac owned mortgages. And those with FHA loans.

This is more than half of the homeowners with mortgages in the United States.

So quite a few borrowers are missing out. But they can still get assistance via HARP 2.0, even if they are severely underwater. Or via the Broad Based Refinancing Plan currently in the works.

Additionally, those that have positive home equity likely won’t see any relief from this settlement.

Essentially, those that paid down their mortgages, or came up with a reasonable down payment, won’t qualify for assistance under this settlement.

While it seems like they’re losing out, they aren’t. This settlement is about shoddy foreclosure practices, so those that weren’t affected obviously wouldn’t receive any benefit.

However, they may receive the indirect benefit of a healthier housing market and higher home prices if the settlement works as it should.

It’s worth noting that the banks involved are still accountable for claims that may arise out of any other wrongdoings committed during the lead up to the mortgage crisis.

16 Comments

  1. David Noname February 10, 2012 at 3:55 pm -

    It’s not fair game. First, goverment rescued big banks and now they are saving borrower’s who took out home equity to buy expensive stuff….
    It’s still unfair game.
    I should have gotten home equity loan to buy another car and expect goverment to pay off my equity line.
    it is still not FAIR!!!!!

  2. Tania Hernandez February 10, 2012 at 11:16 pm -

    I agree with you David. It’s not fair to all the responsible borrowers out there who paid their mortgages and didn’t go out on lavish vacations and purchase fancy items. It’s allways the good consumers who get screwed! We always have to pay for those who are irresponsible!
    What about those whose loans were modified via Hamp due to declines in their incomes, but yet are still underwater…do they qualify?? Or once again is it for those who don’t pay their mortgage who get help…mmmm makes me wonder!

  3. Rudy February 13, 2012 at 10:52 am -

    In normal market circumstances I’m sure borrowers can go out and get ‘fair’ loans. But more than 95% of people who borrowed money during the Housing boom in the last decade, did it because they didn’t understand the terms of the fraudulent loans they were getting into. David and Tania, don’t be so selfish and think that everyone took advantage of the system. They didn’t because they wanted the American dream, not to take advantage of the system. It was the other way around, the system took advantage of them.

  4. virginia navarro February 13, 2012 at 12:52 pm -

    I would to know if Bank of America really help those troubled homeowners especially if they are underwater

  5. Jamie March 2, 2012 at 4:50 pm -

    March 1st update: Today, Wells Fargo stated the f loans serviced by Wells Fargo, and sold as mortgaged backed securities do NOT qualify for the Attorney General Settlement refinance program. This is very disturbing, because Wells Fargo’s website says “the vast majority of Wells Fargo customers can qualify…” Just Google “Wells Fargo Attorney General” and you’ll see the false advertisement.

  6. Mack May 8, 2012 at 8:24 pm -

    Thank you Rudy, well said. It’s sickening how many people feel like folks simply decided to overextend themselves and decided not to pay their mortgages. Most people fell victim to the economy and irresponsibility of banks and lenders. They preyed on these peoples hopes and dreams, many who actually put their 20% down and qualified for fixed rate mortgages but were told otherwise because commisions were higher and/or the hope that they would have to refi shortly. You see the lenders were gambling on the market to keep going up, they lost and we all have to pay for this, which is unfair in of itself, some people have paid more than others and should be made whole. I don’t disagree that there is some imbalance here but that’s just business between a bank/lender and their customer in most cases, in this case, it’s our legal system taking it’s natural course. Since the lawsuit was about shoddy foreclosure practices, naturally it’s only going to benefit those who were affected. It’s how things go, just like it was unfair when some got top tier rates and favorable terms and others didn’t. Like how many can refi to today’s ultra low rates on their own and others can’t to no fault of their own, due to lost equity that they had no part in, that’s not fair either. The gov’t does have a program for folks who are current but still underwater enough not able to refi to less and it’s good to see some accountability finally being demanded. It’s easy to be jealous but it’s better than the alternatives and there is a program out there for everyone, it’s a win for all on some level and the more fortunate so called responsible homeowners stand to gain much more when we finally get the market under control but it’s not going to happen until these types of things happen first. Be grateful they are happening even if it’s not you personally.

  7. Gary May 25, 2012 at 8:54 am -

    Wells Fargo is, in my opinion, not in compliance with the settlement. My loan is serviced by them but is owned by WFMBS, Wells Fargo Mortage Backed Securities. Wells Fargo’s position is that they service my note but do not own it and therefore I don’t qualify for refinancing under this program. It is my contention that WFMBS is a subsidiary of the parent company and therefore Wells Fargo both services and owns my loan. If I am correct then I certainly qualify to refinance. I have contacted the Virginia State Attorney General to seek his help.

    This housing market crash was not in any way my fault or responsibility. I moved from PA to VA during the height of the housing boom. About a year later the market crashed and my home was worth over $100,000 less than we paid for it. It should be noted that when we bought it, the house was valued at @ 8,000 more than we paid.

    I can not sell the house because we are so far underwater. I can not retire because I can’t make the mortage payments on a retirement income. My wife and I have always lived within our means and this house is a small 3 bedroom, 2 bath ranch home. So…even though we did nothing wrong, lived within our means, and paid all of our bills on time, our retirement dreams have been destroyed by Wells Fargo.

    Now, even though they agreed to participate in the State Attorneys General Refi Program they refuse to adhere to the intent of the law and continue to find loop holes to avoid compliance.

    I have come to distrust and even despise big banks!

  8. Mehul May 29, 2012 at 11:20 am -

    Gary:

    I agree with you on the Wells Fargo dragging its feet from adhering to the Attorney General (AG)settlement. I have a Wells Fargo Home Equity Loan at a 30 year fixed term, originally done by Wachovia Bank. I have called Wells several times and was tossed from the AG help line to home mortgage specialist, than to home equity loan specialist and were not. Have been to branch and the home mortgage office everything in wain. My equity loan is owned by Wells Fargo Bank N.A (WFBNA) and everyone I talked to mentions that I do qualify under the AG re-finance reduced rate of interest as I meet all the criterion of the settlement, but have to wait until Wells Fargo writes me a letter, or keep calling the AG helpline. I get a standard answer that my loan account does not pull up on the computer and the list is being populated and have to wait until it pops up. My concern is what if it does not make it to the list? or Wells decides not to help people like me who has never been late (in fact ahead on payments by 3 months), 780 + FICO score, almost NIL revolving debt, can generate more employment if new reduced payments frees-up monthly obligation. I do not know which door to knock and ask for help!

    In a nut shell I have lost faith in this big banks and the banking system we are in!!

  9. Shelbi June 8, 2012 at 4:42 pm -

    Gary and Mehal,
    I am in the same boat as both of you. My loan is serviced by Wells Fargo but owned by Bank of America. Neither of them will help me. Wells says they only help loans that they own and service. Bank of America says I qualify but have to go through Wells. It is a never-ending circle of phone calls with no answers. I contacted the Attorney General of VA and they sent a complaint to Wells Fargo. The Wells Fargo rep told me that I don’t qualify case closed and relayed this to the Attorney General. I then got an email from the Attorney General saying they checked and I don’t qualify but thanks for asking. This whole settlement is a joke. I just want to refinance my underwater mortgage to a lower rate. I am not asking for anything else. This is whole thing is ridiculous!

  10. Donald June 11, 2012 at 1:34 pm -

    Gary,
    Wells Fargo told me the exact same thing, that my loan was owned by WFMBS and I therefore did not qualify. I contacted the California attorney general and did not get any help.

  11. raj July 16, 2012 at 8:59 am -

    Shelbi,

    Exact same situation as you. Loan serviced by Wells and owned by BOA. I got the same answers. I don’t understand why Wellsfargo’s implementation of the AG settlement is different from BOAs. Shouldn’t there be some standards enforced across the board?

  12. avram September 12, 2012 at 11:32 am -

    THEY JUST WHAT TO KEEP MAKE ADVANCE TO THERE BOND IN THE RMBS

  13. Tammie September 19, 2012 at 7:56 pm -

    Now I am very concerned… I have been working on trying to get a modification on our home with Chase for 4 years. I have had every run around you can imagine. Down to it taking 2 months to convince them I was alive and that is why I couldn’t give them my death certificate. Today I just found out that while Chase is the bank that services of our loan, the loan its self is owned by Wells Fargo. When I spoke to my so called dedicated loan specialist at Chase he claimed to know nothing of this National Settlement Deal. I made him go on line and look at Chase’s website regarding it and he told me, that we wouldn’t qualify for the program because our loan is actually owned by Wells Fargo. Now explain to me how 2 banks that signed this agreement can now point the fingers at one another, pretend they know nothing of this deal and still leave you hanging… It all feels hopeless!!!

  14. Amanda Odell October 16, 2012 at 5:29 am -

    Its not fair what crap is that? I did qualify for my home. I put down all the money for the down payment and closing cost. I was slapped with mortgage protection payment that was NOT in my mortgage paper work! . My payment went from 600$ a month to 900$ a month. Had I known that I would have never taken the mortgage! This law is to help people who were taken advantage of by mortgage companies! Get your facts before you start talking down about people taking out mortgages they can’t afford! !

  15. Kevin October 19, 2012 at 10:52 am -

    Aside from the nation mortgage settlement site and the wrongfully forclosed on toll free number, does anyone have information to whom I can talk to about this aside from the AG that just refers me to the NMS website? Chase rep said I would be receiving a letter from the national mortgage settlement not from Chase regarding if I quality for it. Same story, Chase rep said in past loan owned by WMMSC a whollyowned subsidiary of Jpm Chase. Then when i contested my NPV values they said B of A owns loan. And now a private investor.WTF. tried two separate QWR’s a joke in itself. Any info would be appreciated.

  16. James Guthrie February 15, 2013 at 8:11 pm -

    Who will refinance a double wide mobile home when you have fair credit

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