Mass. AG Joins Settlement with Lenders over Foreclosure Abuses
In the wake of last week’s major announcement of a settlement reached between state attorneys general and five of the largest U.S. mortgage lenders over alleged foreclosure abuses, here are a few key details to help you better understand the deal. The $25 billion settlement, which was joined by 49 states including all six New England states, will provide financial relief in the form of reductions in loan principal, a lower interest rate, or cash payments to borrowers who were foreclosed on from 2008 – 2011. Only mortgages privately held by lenders are affected, loans owned or back by Fannie Mae or Freddie Mac are not covered in the settlement.
The deal – with Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo – requires the banks to reduce loans to up to one million current homeowners at risk of foreclosure. The institutions also are prohibited from foreclosing on a homeowner who is being considered for a loan modification. Additionally, under terms of the settlement, the five lenders will send a payment of up to $2,000 to about 750,000 former homeowners who were improperly foreclosed on over the past four years. Notably, homeowners can still sue lenders on their own over robo-signing and other abusive practices covered in the settlement. Lenders will have up to three years to fulfill terms of the deal.
For more information, see the AP story or an informative Q&A entitled “What Homeowners Need to Know on the Deal” published by the Wall Street Journal.