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How foreclosure settlement affects borrowers

Foreclosure Bankruptcy in Illinois

Foreclosure in Illinois


Foreclosure Settlement: 10 Banks settle foreclosure charges for $8.5 billion!



Foreclosure Settlement Highlights

  • Banks, mortgage companies will pay $3.3 billion to borrowers, $5.2 billion in mortgage relief
  • Eligible? You should be contacted by the end of March 2013
  • Didn’t suffer a foreclosure abuse? You’ll still be paid

Q: How much money is in it?

A: Ten banks and mortgage companies will pay $3.3 billion in foreclosure settlement cash to borrowers and $5.2 billion in mortgage relief to settle federal regulators’ investigations into alleged foreclosure abuses. This settlement largely replaces a 2011 settlement between the same regulators and leading home loan servicers.

STORY: Ten banks settle foreclosure charges for $8.5 billion

Q: Who’s eligible for compensation?

A: That hasn’t changed. You’re eligible if your primary home was in some stage of foreclosure in 2009 or 2010 and your loan was handled by one of the participating servicers. Those are Bank of America, Citigroup, Wells Fargo, JPMorgan Chase, MetLife Bank, PNC, Sovereign, Sun Trust, U.S. Bank and Aurora. Others may join later.

Q: If I think I’m eligible, what should I do now?

A: Nothing. If you’re eligible, regulators say you’ll be contacted by the end of March by a company that will function like a claims administrator.

Q: Must I prove that I was harmed?

A: Probably not. Your servicer will place your case in one of 11 categories representing different kinds of harm. Regulators will spot check those placements.

Q: What’s the purpose of that?

A: The categories will be used to decide how much you get. Servicers are supposed to place you in the category that would net you the highest payment, based on your case.

Everybody in the same category will get the same compensation. For bigger payouts, expected to be up to $125,000, “some verification” may be required, says OCC spokesman Bryan Hubbard. Few are likely to get that much.

Q: I asked for a review of my case under the 2011 settlement. What happens now?

A: About 495,000 people did that. If you did, you’ll likely get an extra, undetermined payment, regulators say.

Q: What if I didn’t suffer a foreclosure abuse? Are you entitles to part of the foreclosure settlement?

A: You’ll still be paid. But it will may be a small amount.

Q: What if I think I should get more than what I do?

A: No appeals allowed. You could still sue the servicer.

Q: How do I get a piece of the $5.2 billion in mortgage relief?

A: Servicers will decide that. The kind of help they provide will earn them different levels of credit toward meeting their obligations under the settlement. For instance, if they reduce your home loan balance, they’ll get $1 in credit for every dollar in debt forgiven, regulators say.

Other types of relief will not be dollar for dollar. Those formulas are still being worked out.

Q: How is this settlement different from the $25 billion national mortgage settlement reached last year?

A: Under that settlement, just five servicers are participating. They are Bank of America, Chase, Citibank, Ally/GMAC and Wells Fargo. They’re paying out $1.5 billion to borrowers who actually lost a home to foreclosure from 2008 through 2011 and meet other requirements. They’re also extending more money in mortgage relief. The settlements are more similar now in that actual errors won’t have to be discovered for borrowers to be compensated.

Q: Can servicers get credit for both programs by helping the same homeowner?

A: No, the OCC says.

Q: What if my servicer was part of the first settlement but not the new one?

A: Talks are continuing with them, the OCC says. If they never sign on, their old foreclosure reviews will continue. Those servicers are HSBC, Ally (formerly GMAC), EverBank and IndyMac, part of OneWest Bank.

Source: USA Today click here to read original article and watch White House Briefing

by Bradley Covey

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About Bradley Covey

Bradley Covey is an Illinois bankruptcy attorney helping individuals and businesses file Chapter 7 bankruptcy and Chapter 13 bankruptcy in Kane County, DuPage County, Kendall County and Will County, Illinois. Brad attended SIU undergrad and NIU College of Law. Brad served in the military at Ft. Stewart, Georgia and Ft. Sill, Ok as a Field Artillery Officer. Brad later served in the Illinois National Guard as a Major.

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