Robo Signing Mortgage Services Settlement 2012

On February 9th, 2012 the United States Department of Justice announced a settlement with five major banks accused of "Robo-signing" and other fraudulent foreclosure practices. Here are the major details of the settlement:

1)  The participating  banks are Bank of America, Chase, Citigroup, Wells Fargo, and Ally (GMAC).

2)  $25 billion dollars settlement (with additional $4 billion pending the sign-on of 9 other small banks)

     A)  $20 billion will be used towards foreclosure alternatives as follows:

•  $10 billion will go to the borrowers who are delinquent on their mortgage
• $7 billion towards assisting homeowners through short sales, forbearance, relocation, assistance, or other alternatives.
• $3 billion will be spent helping borrowers who owe more than the value of their home to refinance.
  

      B)   he other $5 Billion consisting of $2,000 payments to borrowers who were foreclosed on between Jan 1st, 2008 and Dec 31st, 2011 and who were subject to the fraudulent practices. 

3)  The time line for this settlement is as follows:

• Goes into effect March 1st, 2012
• First 30 to 90 days: Negotiators will select administrator to handle logistics of the settlement and monitor compliance.
• 6 to 9 months: The settlement administrator and attorneys general will identify homeowners eligible for immediate cash payments and notify via mail.
• 3 years: The settlement should be completed by the banks.

4)  Fannie Mae and Freddie Mac insured loans are not impacted by this settlement, so it rough affects 1.8 million loans.

5)  Dual-track foreclosures (working with homeowners on a modification of the loan while simultaneously pursing foreclosure) is forbidden.

6)  "Robo-signing" practices are forbidden.

7)  Special recourse is in place for Service members  who were charged over 6% interest rates after a valid request to  lower their rates under the Service Members Civil Relief Act (SPCA) or who were wrongly foreclosed on.  *Note, that any compensation by banks to Service Members will be in addition to the core $25 billion.

I know this can be very overwhelming an you might not understand everything. Please feel free to contact me and ask any questions that you might have and how this will affect you.  Thank you.

 Official Site for the Mortgage Services Settlement: http://www.nationalmortgagesettlement.com

Settlement Documents

Settlement Executive Summary (pdf)

Settlement Fact Sheet (pdf)

Servicing Standards Highlights (pdf)