AG Gansler: Federal Court Finalizes $25 Billion Mortgage Servicing Settlement
Nearly $1 Billion in direct relief for Maryland consumers is activated
Settlement creates new protections for customers of five mortgage servicers
Baltimore, MD (April 5, 2012) - Attorney General Douglas F. Gansler announced today that U.S. District Court Judge Rosemary M. Collyer has signed the consent judgments that order the nation's five largest mortgage servicers to comply with comprehensive new mortgage loan servicing standards, to provide substantial direct consumer relief and monetary payments, and to submit to an independent monitor, as part of a $25 billion national mortgage servicing joint state-federal settlement. It is the largest joint state-federal settlement ever obtained.
“With the force of law and the federal courts now behind this settlement we can get down to the business of helping distressed Maryland homeowners,” said Attorney General Gansler. “We urge any Marylander who has faced or is facing mortgage trouble to act now. Don't wait for the banks to contact you. Talk with a nonprofit housing counselor and get started regardless of whether you might be eligible for relief under this settlement or some other program.”
Maryland homeowners can learn more about the benefits available under the settlement by visiting Attorney General Gansler's website at http://www.oag.state.md.us/. Borrowers are also urged to call the Office of the Attorney General (410-576-6300, 1-888-743-0023) or find a nonprofit housing counselor through the Maryland HOPE Hotline (1-877-462-7555).
Judge Collyer approved and entered five separate court orders, called consent judgments, against Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly GMAC). The consent judgments follow a joint complaint, filed March 12, by the U.S. Department of Justice, Attorney General Gansler and 48 other attorneys general.
The complaint, based on a joint federal-state investigation, alleged that the servicers' misconduct "resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members' and other homeowners' rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds."
The consent judgments formalize the settlement that was first announced February 9 at the U.S. Department of Justice in Washington, D.C., which involves the state attorneys general, the U.S. Justice Department, and the U.S. Department of Housing and Urban Development.
"With the judge's signature in place, these mortgage servicers will have to start playing by a new set of rules,” added Attorney General Gansler. “These new tough servicing standards will provide significant new protections for homeowners."
Maryland's Estimated Settlement Share: $957 Million
- Maryland borrowers will receive an estimated $808 million in direct benefits in the form loan term modifications from the five mortgage servicers. This includes significant principal reduction, where borrowers owe more on their mortgages than their homes are worth and are either delinquent or at imminent risk of default, along with a variety of other types of relief.
- Maryland borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and encountered servicing abuse could qualify for an estimated $1500 to $2000 payment, part of an estimated $24 million available to eligible Maryland borrowers. Potentially qualified borrowers should receive a written notification in the coming months from the claims administrator. Borrowers are urged to open the letter and apply. Acceptance of this payment does not diminish a borrower's legal rights to any additional recourse against the bank or mortgage servicer.
- The value of refinanced loans to Maryland borrowers currently underwater is an estimated $64 million. This financial relief is for borrowers who are current on their mortgages but who owe more on their mortgages than their homes are worth, and whose loan is owned by one of the five banks.
- The state will receive an estimated direct payment of $59.7 million. This payment will help fund programs and initiatives that will assist distressed Maryland homeowners.
New Mortgage Servicing Standards
The five mortgage servicers will implement extensive new servicing standards, which take effect in three phases over the next two to six months:
- Stop many past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork through new mortgage servicing standards.
- Require strict oversight of foreclosure processing, including of third-party vendors.
- Impose new standards to ensure the accuracy of information provided in federal bankruptcy court, including pre-filing reviews of certain documents.
- Make foreclosure a last resort, by requiring servicers to evaluate homeowners for other loan mitigation options first.
- Restrict banks from foreclosing while the homeowner is being considered for a loan modification.
- Set procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials.
- Create a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.
National Monitor Begins Work
Independent settlement monitor Joseph A. Smith, Jr. will oversee the terms of the finalized agreement and will help ensure compliance. A monitoring committee comprised of state attorneys general, the U.S. Department of Justice and the U.S. Department of Housing and Urban Development, and to include Maryland's Commissioner of Financial Regulation, will oversee the monitor, who will prepare quarterly compliance reviews.
The U.S. Department of Justice and state attorneys general can enforce through the court process compliance with the servicing standards and the banks' financial obligations. A federal judge may assess civil penalties for violations of the consent judgments.
Distressed Borrowers Urged to Contact a Nonprofit Housing Counselor
Attorney General Gansler urges borrowers who are currently behind on their monthly mortgage payment, or may soon experience financial trouble, to call the Office of the Attorney General at 410-576-6300 or toll-free at 1-888-743-0023. To find a nonprofit housing counselor in your area distressed homeowners can also call the Maryland HOPE Hotline directly at 1-877-462-7555.
Consumers Should Also Contact Their Mortgage Servicer
For those borrowers who made their mortgage payments to one of the five participating mortgage servicers, consumer hotlines have been created to handle inquiries:
Bank of America (And Countrywide): 1-877-488-7814
JPMorgan Chase (And WaMu): 1-866-372-6901
Wells Fargo (And Wachovia): 1-800-288-3212
More information will be made available as settlement programs are implemented. The mortgage servicers are required to complete 75 percent of their consumer relief obligations within two years and 100 percent within three years.
For More Information:
Maryland Office of the Attorney General - The Mortgage Servicing Settlement
The Maryland HOPE Hotline