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Chris Sorensen's Blog

By Chris Sorensen | Real Estate Pro in California

Chris’ Summary On The Robo-Signing/AG $26 Billion Deal & Military Relief

I just updated this post on my HELP Blog.  It has additional information that came out Tuesday Feb 14 in the afternoon from teh attorney Generals themselves.

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Here is the original post on the HELP Blog; http://www.help.freehomeownershiphelp.org/?p=2063

*Please forward this information and give credit to USA HELP, Inc. Do not cut and paste any portion.*

If your bank improperly or illegally foreclosed on your home between January 1, 2008 and December 31, 2011, you may qualify for assistance. The details still need to be filed and approved by the Court. This is reported to occur by months end.

What type of relief might you get?  Approximately $2,000 if one of the top five national banks foreclosed on you using, well, not sure how to put this nicely, fraudulent means.

The deal estimates 750,000 American homeowners were illegally foreclosed on using forgery or other methods to take homes that they were not legally entitled to take, at least at the time they took them.

I know there are plenty who bought more than they should, never qualified based on traditional underwriting standards in the first place and would have likely lost their home regardless. But, there are also a huge number of people out there who had a onetime hardship, followed the advice from the President and so called experts and went directly to their bank, followed their instructions perfectly and then lost their home while they were making the very trial payments the banks put in writing for them to make. For the hundreds of thousands of people I’m referring to, to offer them 2K is mindboggling.

This was their home. This is where they were raising their family. They had a setback, drained their savings and retirement, did everything they were told to do by their bank and then learned the hard way about “dual tracking” and how the bank can pick up where they left off in the foreclosure process and foreclose on you with virtually no advance warning or notice.

*Please forward this information and give credit to USA HELP, Inc. Do not cut and paste any portion.*

Borrowers around the country owe more than $700 billion more on their homes than the homes are worth; the settlement offers $26 billion in fines and relief to homeowners. Supposedly, approximately 17 billion is being set aside for principle write downs. Let’s do the math together; 700 minus 17 equals 683 billion in remaining negative equity.

Negative equity is the irrefutable number one cause for defaults at the moment. Why? Because if you’re suffering financially and you cannot move due to a lack of equity, or you have done the math yourself and decided that you had better focus on your retirement rather than martyrdom, you chose.

Approximately one million homeowners will have their mortgage debt reduced or loans refinanced at a lower interest rate. Experts estimate that 11 million U.S. homeowners are underwater. Currently 4 million are in foreclosure or seriously delinquent. Let’s see, what is the math here… 11 plus 4 equals 15, minus the 1 that may be helped, that leaves, wait, let me check…yep, 14 million out in the cold.

I believe this is why the settlement is receiving criticism.

The settlement is limited to five big banks that own the mortgages directly. It excludes private investors, other banks and Fannie Mae and Freddie Mac, as well as FHA. These agencies account for about 56% of all existing loans. This makes the relief pie even smaller.

The settlement suppossedly states that for every dollar a servicer writes off, it will get around 50 cents of the $17 billion in settlement “credits.”

Officials were quick to point out last week that the settlement would result in roughly $34 billion in total principal forgiveness over the next three years, assuming the banks can hire the number of people necessary to meet this obligation.

I have yet to read about any penalties if this three year time frame is not met. Therefore I am concluding one does not exist and I do not believe it is too much of a stretch to believe this time frame may get extended so long as a “good faith effort” has been demonstrated.

California AG Kamala Harris said she expects roughly 250,000 homeowners in the state to get a write down over the next three years because of the deal. Another 140,000 could get the $2,000 restitution.

David Stevens, president at the Mortgage Bankers Association made this statement: “NPV (Net Present Value Test) tests and current investor consent requirements mean that the vast majority of principal reductions agreed to in the settlement will come from whole loans held on participating banks’ existing books”. This means the five banks actually own the mortgage and are not simply servicing them for other investors. This typically accounts for approximately 15% or less of a banks servicing portfolio.

*Please forward this information and give credit to USA HELP, Inc. Do not cut and paste any portion.*

With respect to our military that was illegally foreclosed on while protecting the banker’s freedoms…

This is better and I like it. However, regular Americans also deserve similar protection. How many of the estimated 750,000 the settlement refers to were veterans?

Four of the five banks participating in the settlement ; JPMorgan Chase, Wells Fargo, Citigroup, and Ally/GMAC will review foreclosures of military members since January 2006, identifying instances of violation of the Service members Civil Relief Act, according to the Department of Justice (DOJ).

Wells Fargo, Citigroup, and Ally agreed to compensate service members a minimum of $116,785 in instances of wrongful foreclosure. They will also reimburse the service members for lost equity.
In instances of wrongful foreclosure, JPMorgan Chase will allow service members to return to their homes and eliminate any debt on the homeowner’s record, or the service member will be paid the full value of his or her home at the time of sale.

All relief provided to service members through the provisions stated in the settlement are in addition to the $25 billion the banks will pay in penalties and borrower relief.

Bank of America, the fifth bank in the national settlement, worked out a $20 million settlement with the DOJ in May 2011 regarding some instances of wrongful foreclosure on military members.
The federal and multi-state settlement does not require BofA to review military foreclosures or interest rates, according to the DOJ.

And there you have it. After reading countless articles this is my summary. As more details emerge I of course will write about them.

Chris Sorensen *Please forward this information and give credit to USA HELP, Inc. Do not cut and paste any portion.*

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