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Getting Paid from the Recent National Mortgage Fraud Settlement

The "largest consumer financial protection settlement in US history" is in the middle of going into effect. One relatively small part of it-about $1.5 billion-is earmarked for about 750,000 prior homeowners whose homes foreclosed on from 2008 through 2011.  Depending on a number of factors, qualified people will get likely between $1,500 and $2,000. Here are the answers to the most pressing questions about getting this cash.

1. How can a foreclosed-on homeowner know whether this settlement includes them?

This cash payment only applies to mortgages of five home mortgage lenders (as well as their subsidiaries): Bank of America, Wells Fargo, JP Morgan Chase, Ally/GMAC and CitiGroup.  Go to the special website for this settlement to find out if your foreclosed mortgage is included. You will see a list of phone numbers and websites for these banks.

  • Foreclosures include only ones on "owner-occupied, one-to-four unit" residences, which were "finally sold or taken in foreclosure between and including January 1, 2008 and December 31, 2011."
  • You had to have made at least 3 payments on the mortgage.
  • The property could not have been "abandoned by the homeowner or condemned prior to the time of the foreclosure sale," although what is meant by "abandoned" is not clear, because for practical reasons many homeowners move out of their homes shortly before the foreclosure date itself.
    • Oklahoma did not join this settlement-so foreclosures there do not qualify.
2. What do you have to do to get the settlement money?
  • You will need to fill out a "claim certification form" stating that:
    • You "lost the home to foreclosure while attempting to save the home through a loan modification or other loss mitigation effort;" and
    • "Servicer errors or misconduct in the loss mitigation or foreclosure processes affected the borrower's ability to save the home."
  • What these conditions mean is not yet clear, but presumably will be clarified on the instructions that will come with the form. That's important because you will need to sign this form under penalty of perjury!
  • You will NOT need to release any possible claims you might have against the bank in order to get the money.
3. What's the procedure and timing?
  • A Settlement Administrator is being selected right now by the "Monitoring Committee" of state Attorney Generals. (The deadline for Administrator applicants to submit proposals was April 30.) The job of the Administrator is "to administer the distribution of cash to individual borrowers."
  • The Administrator, with the help of data sent by the banks, will identify the foreclosed homeowners and send them the claim form. Also, information about filing a claim will be put on the national settlement website .  The deadline for filing these claims has not yet been set.
  • To make it easier for the Administrator to have your accurate current address, you should provide it to your state's Attorney General's Office .
4. What will determine the exact amount to be distributed to each former homeowner?
  • That will depend on how many people apply and are found to qualify. It will also depend on how much it costs for the Administrator to do its job, because those costs and fees come off the top.  Since the rules for qualifying aren't completely clear, no one yet knows how many people will receive the payments.
5. When will the money be paid out?
  • Based on the most recent information , the current "goal is that checks will be distributed sometime during the first three months of 2013."

 

Categories: Foreclosure, Mortgages

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