President Obama has responded to the injustices and fraud enacted by banks upon mortgage borrowers with the negotiation of a massive, wide-spread assistance program for one of America’s greatest ills – the home foreclosure crisis. Visit the website National Mortgage Settlement which is maintained by Attorney Generals from every state in the country (except Oklahoma) to learn more about the $25 billion dollar settlement that America’s five largest banks will pay over the next three years.
Oklahoma is exempt from the settlement as it did not wish to participate. Fannie Mae and Freddie Mac loans are also exempt but other aid may be available to help borrowers with these types of loans. Find out if you are one of them at
Joseph A. Smith, Jr. was appointed for a three-and-a-half year term to monitor compliance of the joint state-federal agreement. The settlement calls for $20 billion to be paid directly to borrowers. An additional $1.5 billion will be paid to homeowners victimized during foreclosure that have already taken place and $3.5 billion more will fund the services of legal aid and housing counsellors; compliance oversight; and will reimburse government agencies for monies spent to date on addressing the foreclosure crisis. This demonstrates how committed the Obama Administration is to ensuring that the settlement is properly handled. Too often, programs which are intended to right an injustice fail to be properly implemented because funding is not allocated to facilitate public access to the programs and not enough oversight is provided to make sure the intended actions become reality. But not this time.
How borrowers have been affected by the market manipulation
Banks have foreclosed upon plenty of homeowners whose mortgages they did not own. It’s also been discovered that many homeowners were paying mortgage bills faithfully each month, but the financial institution billing them did not own their mortgage and years of payments were not being crediting to reduce their principal balance, so over time the balance grew instead of diminished.
Mortgage holders have faced what may be an even larger problem, though. Many of the houses purchased in the years before the mortgage crisis reached scandalous proportions, cost too much in the first place. And, that was entirely due to intentional market manipulation caused by the banks. This is why:
The mortgage lending bubble caused a buying frenzy when homeowners were indiscriminately approved for loans who did not have earnings sufficient to repay them. This reckless practice made the cost of property increase dramatically as it created an insatiable demand for homes that eventually inflated purchase prices and made homes cost way more than they were worth. Part of the $20 billion settlement requires banks to provide, “up to $17 billion in principal reduction and other forms of loan modification relief nationwide,” on the grounds that the banks who caused that artificial price inflation should not be allowed to collect payment on the unrealistically large mortgages people were saddled with as a direct result of the bank’s manipulation which drove home prices up to completely unjustifiable levels. The banks were happy when their scheme worked and they had thousands of buyers paying mega bucks for huge mortgages on homes that cost 40% more than they were worth. This settlement says, “The party’s over now and it’s time to give back that 40% of price padding you colluded with your financial industry colleagues to artificially create and stick borrowers with paying for.”
The settlement also requires banks to provide refinancing options at today’s historically low interest rates. Families with lower mortgage payments will naturally find it easier to pay their mortgages.
The reality of this truism can best be seen through the lens revealing the terrible toll that high mortgage rates have exacted in Black and Latino Communities. As if the various mortgage scandals so many American families have struggled with weren’t bad enough news, Black and Latinos have had an additional brand of abuse to contend with, one which bank employees admit was specifically targeted to members of these ethnic groups because of racial bias. They have been victims of a type of loan red-lining practice which caused them to pay substantially higher rates for their already overinflated mortgages than White borrowers paid. This in turn made their families and communities feel the economic pinch that much more. Several settlements in the past 9 months have addressed this issue, but those reparations do not make up for the great harm that has been done.
How the federal-state settlement program may benefit you
The program will be enacted over a three year period. For a comprehensive report about aid the program offers, visit http://nationalmortgagesettlement.com/help. Here’s an excerpt:
Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
WHERE YOU CAN GO FOR HELP
Keeping in mind the timeline above (a three year period), you may contact the banks directly if you need additional information:
Bank of America: 877-488-7814 (Available M-F 7am – 9pm CT and Saturdays 8am CT – 5pm CT
JPMorgan Chase: 866-372-6901
Wells Fargo: 800-288-3212 (Available M-F 7 a.m. to 7 p.m. CST)
You may qualify for a financial settlement if you’ve already lost your home. If you think it will be hard to find you, contact your state’s Attorney General and give them your current contact information.
If you experience a problem with your mortgage servicer, use this form to learn where in your state you can get help. Or, contact the national Consumer Financial Protection Bureau by visiting http://www.consumerfinance.gov or calling 855-411-2372.