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Geoff Greenwood, Communications Director
515-281-6699, geoff.greenwood@iowa.gov
FOR IMMEDIATE RELEASE, November 19, 2012

Banks Report $19.2 Million in Mortgage Settlement Relief to Iowans

579 Iowa borrowers helped since March, $33,171 average assistance

(DES MOINES, Iowa) The nation’s five largest mortgage servicers reported providing more than $19 million in direct relief to Iowa homeowners since March, as part of the $25 billion national mortgage settlement announced in February. (Click here for an audio of the November 19th news conference.)

According to a progress report released today by independent settlement monitor Joseph A. Smith, Jr. of the Office of Mortgage Settlement Oversight (a breakdown of Iowa relief is attached):

  • The five servicers provided $19,205,972 in relief to 579 Iowa homeowners.
  • The average relief in Iowa was $33,171 per borrower.
  • The servicers reported offering approximately $3.1 million in principal reductions that 87 Iowa homeowners had accepted.  Of those, 65 borrowers had begun trial modifications.
  • 46 Iowa homeowners received a total of $1,553,991 in principal reductions, for an average of $33,782 per borrower.

Nationally, the report found that more than 300,000 homeowners benefited from some type of settlement-related relief, which topped $26 billion.  On average, the relief averaged more than $84,000 per borrower.

“I’m elated that we’re seeing real results here in Iowa, and the homeowner relief is coming at a very rapid pace,” said Attorney General Tom Miller.  “This is great for homeowners and it’s excellent news for Iowa’s housing market.  Every home we can save through this settlement means one less foreclosure in our neighborhoods.  And that’s a win for everyone.”

Miller was the lead state attorney general in the joint state-federal investigation and $25 billion landmark settlement into mortgage servicing practices by the nation’s five biggest mortgage servicers.  The servicers include JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial (formerly GMAC).

The investigation began in October of 2010 over reports of widespread “robo-signing” of foreclosure documents, and broadened into other troubling mortgage servicing practices.

In Iowa, the state received a direct payment of $17,051,922.  When the settlement was announced Iowa homeowners were expected to receive an estimated $17.5 million in direct relief, which the servicers now report exceeding.  The direct relief is provided largely through an array of loan modifications, including principal reductions and refinancing.  Other forms of relief include short sales and transitional assistance, forbearance of principal for unemployed borrowers, benefits for service members who are forced to sell their home at a loss as a result of a permanent change in station order, and other programs.   Another $7 million is expected to be paid to Iowa borrowers who lost their home to foreclosure between January 1, 2008 and December 31, 2011, and their loan was serviced by one of the settling servicers.

Miller noted that the figures provided in the monitor’s report are self-reported by the servicers.  The amounts do not reflect credits the servicers will receive against their obligations under terms of the settlement, which are issued by the monitor.  Because the servicers do not receive dollar-for-dollar credit for most forms of homeowner relief, they will actually provide significantly more relief than the $20 billion required by the settlement.

In addition to providing the direct borrower relief, the settlement also required servicers to adopt more than 300 new servicing standards.  The new standards are designed to address the issues that led to the settlement, including the fraudulent robo-signing of foreclosure documents.  The servicing standards are also expected to improve how servicers treat borrowers.  For example, the standards require single points of contact, establish deadlines for responding to customers, and mortgage servicers can no longer foreclose on a borrower while simultaneously negotiating a loan modification, a practice known as “dual tracking.”

Iowans Seeking Help or Answers Should Contact Iowa Mortgage Help or Mortgage Servicer

Miller urges Iowans who are currently behind on their monthly mortgage payment, or may soon experience financial trouble, to contact the Iowa Mortgage Help Hotline, toll-free, at 1-877-622-4866 or www.IowaMortgageHelp.com.  The hotline is free, confidential, and its counselors can help Iowa homeowners identify their most appropriate course of action.

Because of the complexity of the mortgage market and terms of this three-year agreement, borrowers in some cases may be contacted directly by one of the five included mortgage servicers regarding loan modification offers, or may need to contact their mortgage servicer to obtain more information about specific programs and whether their loan qualifies.

For more information on the agreement:

www.IowaAttorneyGeneral.gov (Phone: 515-281-5926 or 1-888-777-4590)

www.NationalMortgageSettlement.com

 

# # #


Background on Settlement

 

Iowa’s estimated share of the settlement: More than $40 million

  • Iowa borrowers will receive an estimated $5,899,449 in direct benefits from loan term changes from the five servicers.  This type of financial relief 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.
  • Iowa borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and encountered servicing abuse could qualify for an estimated $7,402,512 in payments to borrowers.  Potentially qualified borrowers should have recently received a written joint notification from Miller’s office and a settlement administrator.
  • The value of refinanced loans to Iowa’s current, underwater borrowers is an estimated $11,602,880.  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 has received a direct payment of $17,051,922.  This payment is helping fund the Iowa Mortgage Help hotline, housing counseling services, Iowa Legal Aid, future enforcement, as well as settlement implementation and monitoring, and future enforcement efforts.

 

National settlement: $25 billion

  • Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction.  Servicers will likely provide up to an estimated $32 billion in direct homeowner relief, if not more.
  • Under an enhanced agreement with Bank of America, the company will write down principal on more than 200,000 underwater homeowners to market value.  (A potentially eligible borrower must have a home that is underwater, must be delinquent by more than 60 days, and the mortgage payment must account for more than 25% of their income.)
  • Servicers commit $3 billion to an underwater mortgage refinancing program for current, but underwater borrowers.
  • Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
  • Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards (see below).  
  • An independent monitor is ensuring mortgage servicer compliance.
  • States preserve the right to pursue all criminal prosecutions and many civil claims, including claims regarding the packaging of mortgage loans into securities.
  • Borrowers and mortgage investors can pursue individual, institutional or class action cases without restriction.

 

New Mortgage Servicing Standards

The five mortgage servicers were required to implement extensive new servicing standards, which took effect in three phases over the first six months of the settlement’s April 4, 2012 effective date.  The standards:

  • 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

Click here for the Monitor's Report on Iowa. (PDF)