Uncategorized$25 Billion Mortgage Servicer Settlement Announced

March 14, 2012by George Danneman

In collaboration with 49 of the nation’s 50 state attorneys general, the Obama Administration has reached a landmark settlement with the five largest mortgage servicers—JP Morgan Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial. In the aggregate, the settlement will cost the five servicers approximately $25 billion. Proceeds from the settlement will largely be used for foreclosure prevention activities such as principal reductions. Set-asides include $1.5 billion to provide direct payments to borrowers who have been unfairly foreclosed upon, $3 billion to help homeowners refinance mortgages that are greater than the current value of their homes, $2.5 billion to the federal and state governments to fund foreclosure-related initiatives and $1 billion to enhance the Federal Housing Administration (FHA) capital reserve fund. As part of the financial settlement, servicers have agreed to a new set of mortgage servicing standards. In addition, servicers must now develop policies to participate in state and local anti-blight programs and have been directed to cease the practice of “bank walkaways”, whereby banks fail to finalize the foreclosure process and fully assume responsibility for the property. For more information on the settlement, visit the National Mortgage Settlement website or read the Enterprise summary.

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