When it was announced in February, the nationwide mortgage settlement was historic: $25 billion from five major banks to help struggling homeowners, including hundreds of thousands in California.
That money primarily in the form of loan modifications or cash payments for wrongful foreclosures is now being doled out by the five lenders: Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo.
Nine months into the three-year process, how's the mortgage settlement working out?
"My overall sense is that we're at a place where all pistons are firing," said Katherine Porter, a UC Irvine law professor appointed by California Attorney General Kamala Harris to oversee California's $18 billion share of the settlement.
"The cash payments are coming, loan modifications are starting to flow and servicing standards (340 new rules for handling existing mortgage loans) are in effect."
Porter did not disclose specific numbers on how many Californians have been helped so far, but said they'd be available in an upcoming report.
The settlement has also had an impact on other struggling homeowners who weren't included.
"Four years ago, it was frantic and no one understood what was going on with foreclosures. It was the wild unknown," said Pam Canada, CEO of NeighborWorks HomeOwnership Center in Sacramento.
But today, thanks to the settlement's influence, she says, more homeowners are succeeding in getting "more aggressive" loan modifications from their banks, in some cases landing interest rates as low as 2 percent.
"We're seeing some very favorable terms that really do allow people to stay in their homes," said Canada, whose staff includes four trained housing counselors.
Last year, the center counseled about 2,200 homeowners at risk of losing their homes. This year, she estimates it'll be slightly below 2,000.
"We're still getting a lot of people who need help," said Canada. "They're not in denial but want help navigating their current problem, whether it's a bad loan or reduced income due to a job layoff or part-time hours."
In its first quarterly report in August, the National Mortgage Settlement office said 137,846 U.S. borrowers received some type of consumer relief from the five banks, totaling $10.56 billion, averaging about $76,615 per borrower. Those numbers are not considered entirely reliable due to accounting anomalies, Porter said.
A new quarterly report will be issued next week.
The nationwide mortgage settlement was sparked by the discovery in 2010 that banks had been routinely "robo-signing" documents, essentially rubber-stamping foreclosures on thousands of home loans without review or verifying accuracy. The practice led to a temporary halt in foreclosures as banks and regulators sorted out the sloppy paperwork and fraudulent loan documents.
Several key deadlines for those caught up in foreclosures are coming soon.
The first, under the national settlement, is for cash payments estimated at between $1,500 to $2,000 in California for those who lost their homes to foreclosure by one of the five banks between January 2008 and December 2011.
Notices were mailed to more than 432,500 affected homeowners, but Porter said not everyone may have been located. "We don't want to miss anyone," she said. The deadline to apply is Jan. 18.
While a $1,500 payment will not make anyone whole, it's still a "chunk of change," said Porter.
"For a family who believes their home was wrongly taken, it's not full compensation. But it's real money to those who've fallen on hard times," she said.
Another foreclosure deadline is for those who lost their homes between January 2009 and December 2010. Under a federal agreement with some 25 mortgage servicers, the Independent Foreclosure Review is reviewing individual homeowners to see if they're eligible for financial payments. The deadline to submit applications is Dec. 31.
(For details on both programs, see box at right.)
Get in touch
The first route to getting mortgage help is to contact your loan servicer, the name on your monthly mortgage payment.
"Start there. It may not be the bank or financial mortgage company where you got your loan, but it's whomever you're now making payments to," said NeighborWorks' Canada. "Contact them and say 'I need to talk about my loan payment. I'm in jeopardy of losing my home. I can no longer afford my mortgage payment. Who can help me?' "
If you don't get enough information back or can't understand it, make an appointment with a trained mortgage counselor, such as at NeighborWorks, to help you through the process.
(See contact details in accompanying box.)
The national mortgage settlement is also concerned with military vets and active-duty service members who lost their homes to foreclosure during 2008 to 2011.
U.S. Settlement Monitor Joseph A. Smith, an attorney and former North Carolina banking commissioner, made a special appeal this week to military families, urging them to report any trouble with their lenders.
Under the settlement's terms, service members may be eligible for special relief: repayments ($116,000, plus lost equity payments) for wrongful home foreclosures after Jan. 1, 2006; refunds (of at least $500) if charged more than 6 percent interest on loans after Jan. 1, 2008.
Porter urged California military members who think they were treated unfairly by the five banks to contact her office at: firstname.lastname@example.org. Those complaints will be forwarded to federal mortgage investigators for review.
In recent weeks, consumers have been reminded to be wary of mortgage fraud perpetrated by "foreclosure-rescue" consultants or firms offering mortgage relief services. Under state and federal law, it's illegal to require an upfront fee for such services.
Last month, the U.S. attorney's office for Eastern California announced the arrest of 17 individuals, including two in Roseville, accused of defrauding thousands of distressed homeowners, whose combined losses were estimated at more than $9 million.
Reliable sources of mortgage help are available through HUD-approved counseling agencies, such as NeighborWorks.
"We still have a steady, daily list of appointments for people coming in who are in jeopardy of losing their homes," said Canada, whose office sees 12 to 15 cases a day.
"I wouldn't say the worst is over. We're gonna be in this for another few years."
GETTING MORTGAGE RELIEF
Under the national mortgage settlement announced in February, five banks and 49 states agreed to a $25 billion program to help struggling homeowners.
The participating banks are: Ally/GMAC, Bank of America, Citibank, JPMorgan Chase and Wells Fargo.
Key provisions: Loan modifications for those with loans carried by the five banks, including lower interest rates and reduced principal amounts.
Also offered: Special restitution for military service members.
In addition: Cash payments to those who lost homes to foreclosure by one of the five banks between Jan. 1, 2008, and Dec. 31, 2011. If you didn't receive a claim notice from your state or the national mortgage settlement program by Oct. 31, call (866) 430-8358 or email: email@example.com. Claim forms must be submitted by Jan. 18.
For more details:
California attorney general's office: www.oag.ca.gov/nationalmortgagesettlement
If you don't qualify under the federal settlement, mortgage help is available through other sources.
Free counseling: To find a HUD-sponsored mortgage counseling agency, call (800) 569-4287.
Designed for those foreclosed on between January 2009 and December 2010, it provides a free review of individual cases to assess financial injury. Overseen by a group of U.S. financial agencies, in conjunction with more than 25 mortgage servicers. Visit the website or call (888) 952-9105.
The federal Home Affordable Refinance Program, called HARP, helps struggling homeowners and military families avoid foreclosure and reduce or refinance their mortgage payments. Sponsored by the U.S. Treasury and the Department of Housing and Urban Development. Visit the website or call (888) 995-4673.
Backed by $2 billion in federal funding, it offers principal reduction and other mortgage assistance for low- to moderate-income homeowners facing hardships. Visit the website or call (888) 954-5337.
For those with Fannie Mae or Freddie Mac loans:
Fannie Mae: www.KnowYourOptions.com
Freddie Mac: www.freddiemac.com/avoidforeclosure