On February 8th, 2012 the federal government announced that 49 states had reached a $26 billion settlement with five of the nation’s biggest banks to provide relief for current and former homeowners affected by the banks’ mortgage lending practices. In the long-term this should mean more fair standards in mortgage lending, but what does it mean for you in the here and now? Find out below.
Do I qualify?
Answer these questions to find out:
1. Did you formerly or do you currently have a mortgage serviced by one of the major servicers involved in the settlement - Bank of America, Wells Fargo, JP Morgan Chase, Citibank and Ally Financial (formerly GMAC)?
(Other servicers may be added to the list. To check if your servicer has been added, visit the National Mortgage Settlement’s website.) If you are not sure who your servicer is or was, you can look it up using this web database.
If you answered yes, that your mortgage is serviced by one of the servicers listed above, continue to question 2.
If you answered no, you are not eligible for this particular program at this time. Contact BALANCE at 1-888-456-2227 for more information on other types of assistance.
2. Does your mortgage situation fit one of these three descriptions:
- I am late on my mortgage payments or at risk of becoming late, am “underwater” (owe more than the property is worth) on the mortgage, and will need a loan modification to stay in my home.
- I am current on my mortgage payments, but am underwater.
- My home was foreclosed on between January 1, 2008 and December 31, 2011.
If you answered yes to any of these, continue to question 3.
If you answered no, you are not eligible for this particular program.
3. Do you live in Oklahoma?
If you answered yes, you will need to contact the Oklahoma Attorney General Office as that state reached a separate settlement and is not included in the national settlement.
If you answered no, you may be eligible for relief from this settlement. You will want to contact your mortgage servicer as soon as possible.
I think I might qualify. What do I do next?
If you are eligible to receive assistance, the settlement requires that the participating mortgage servicers contact you via mail. However, it is always a good practice to stay in touch with your mortgage servicer, so contact them directly if you think you might be eligible. You can reach the servicers at:
- Ally/GMAC: 800-766-4622
- Bank of America: 877-488-7814 (Available M-F 7am - 9pm CT and Saturdays 8am CT - 5pm CT
- Citi: 866-272-4749
- JPMorgan Chase: 866-372-6901
- Wells Fargo: 800-288-3212 (Available M-F 7 a.m. to 7 p.m. CST)
If I qualify, what can I expect to get from the settlement?
- If you need a loan modification to stay in the home:
You may be able to get a reduction in the loan principal or other modifications to the loan. This would apply to both first and second mortgage liens. Principal reductions and other modifications can be combined. These modifications will not be used to create positive equity in the home, but rather to decrease the amount by which the homeowner is underwater. Current estimates are that up to 1,000,000 homeowners could benefit from this portion of the settlement, with average principal reductions as much as $20,000.
- If you are current on your payments, but owe more on the mortgage than the home is worth:
You may be able to refinance your mortgage to the current lower interest rates, meaning big savings on your monthly mortgage payment. Projections are that up to 750,000 homeowners could qualify for this assistance.
- If your mortgage was foreclosed upon by one of the involved servicers:
You may be eligible to receive a cash payment of around $2,000 if your foreclosure was not conducted properly.
Other points to consider
- Assistance will be distributed over a three-year period, but servicers are incentivized to execute the settlement’s requirements as quickly as possible.
- To qualify for a principal reduction, loan modification or refinance, the property must be the borrower's primary residence and the loan balance has to be less than $417,000.
- Receiving assistance from this settlement does not preclude participants from taking part in or receiving compensation from other legal actions against mortgage services.
- Homeowners with FHA mortgages or mortgages backed by Fannie Mae or Freddie Mac are not eligible to receive help through the settlement.
- The settlement also sets aside help for borrowers who are unemployed, or who are members of the military. For more information on these programs, contact your servicer.
The bottom line
If it looks like you might qualify for assistance from the National Mortgage Settlement, contact your servicer as soon as possible. They may not have all the answers for you right now - or even be able to tell if you qualify yet - but in the coming months you may be able to get significant help on your mortgage. In the meantime, do your best to keep up on your mortgage payments.
For the latest information, visit www.nationalmortgagesettlement.com.