Behind The Sound Bite: Mortgage Settlement
Five years after mortgages played a significant role in the greatest financial collapse since the Great Depression, attorneys general from 49 states reached a $25-billion settlement this month with five major lenders over unlawful foreclosure practices.
What will the settlement mean for Massachusetts?
Massachusetts Attorney General Martha Coakley announced that the settlement will bring an estimated $318 million in assistance to borrowers. Most of that — about $257 million — will come in the form of loan-term modifications and refinanced loans to “underwater” borrowers. Borrowers who lost their homes from 2008 to 2011 and suffered “servicing abuse” would qualify for $14.6 million in payments. The state will also receive $46.5 million to assist homeowners.
Which banks are involved in the settlement?
The agreement settles allegations of “widespread use of fraudulent documents” by Bank of America, Wells Fargo, JP Morgan Chase, Citi and GMAC. Coakley secured a carve-out in the settlement that will allow her to pursue further court action against banks over allegedly initiating foreclosure proceedings without holding the actual mortgages and allegedly corrupting the land recording system through a private electronic registry.
Which major lenders are not a part of the settlement?
Coakley has trained her sights on Fannie Mae and Freddie Mac, the government-sponsored enterprises that hold a majority of U.S. mortgages. The attorney general said the lenders have “expressed an unwillingness” to participate in federal loan modification programs.
How can borrowers find out if they qualify for loan relief?
Coakley said the agreement could take three years to implement. Borrowers from the five banks can call their lenders to find out if they’re eligible. Those with additional questions can contact the AG’s office at 617-963-2170 or email agocs@state.ma.us.
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