Facing possible foreclosure?
If you're facing foreclosure or a financial hardship in paying your mortgage and need assistance in exploring your options call a certified housing counselor at 1.877.894.HOME (4663). Their services are free. We recommend you do this as soon as possible.
In February 2012, after many months of negotiation, Washington and 48 other state attorneys general and the federal government reached agreement on a historic joint state-federal settlement with the country’s five largest loan servicers.
The settlement will provide as much as $25 billion in relief to distressed borrowers, including $648 million in benefits for Washington state homeowners, and direct payments to states and the federal government. It’s by far the largest multistate consumer financial protection settlement in U.S. history.
The agreement settles state and federal investigations finding that the country’s five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. The settlement provides benefits to borrowers whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.
The settlement provides assistance for:
- Homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.
State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.
- Borrowers who are current, but underwater. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.
- Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process.
Approximately $1.5 billion of the funds recovered in the national settlement are being used to compensate borrowers who lost their home to foreclosure during the period of January 1, 2008, to December 31, 2011. The deadline to submit a claim form has now passed. If you have submitted a claim form, the Settlement Administrator will contact you if any additional information is needed to complete your claim.
Checks to borrowers who submitted claim forms are expected to be mailed in June of 2013, but that date is subject to change. The exact amount of the payment to be made to each eligible claimant is not yet known but it is anticipated it will exceed the minimum payment of $840 that was indicated on the claim form.
Please be aware that Rust Consulting is also the settlement Administrator for the Office of the Comptroller of the Currency’s (OCC) Independent’s Foreclosure Review Settlement (IFR). Our office did NOT participate in that settlement and it is completely separate from this settlement. The OCC’s settlement began making payments in mid-April of 2013, but again, it is a completely separate settlement. You can find additional information on the OCC Independent Foreclosure Review settlement at this website: http://occ.gov/topics/consumer-protection/foreclosure-prevention/correcting-foreclosure-practices.html
Accepting a payment from either settlement will not prevent borrowers from taking any action they may wish to pursue related to their foreclosure.
Homeowners should also be wary of scams. Unscrupulous companies are contacting homeowners with offers of assistance for a fee to receive the settlement payment. You should not pay a fee to receive a payment under either agreement.