Facing possible foreclosure?
If you're facing foreclosure or a financial hardship in paying your mortgage and need assistance in exploring your options call a certified housing counselor at 1.877.894.HOME (4663). Their services are free. We recommend you do this as soon as possible.
After many months of negotiation, Washington and 48 other state attorneys general and the federal government have reached agreement on a historic joint state-federal settlement with the country’s five largest loan servicers.
The settlement will provide as much as $25 billion in relief to distressed borrowers, including $648 million in benefits for Washington state homeowners, and direct payments to states and the federal government. It’s by far the largest multistate consumer financial protection settlement in U.S. history.
The agreement settles state and federal investigations finding that the country’s five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. The settlement provides benefits to borrowers whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.
The settlement provides assistance for:
- Homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.
State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay. - Borrowers who are current, but underwater. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.
- Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process. $1.5 billion will be distributed nationwide to some 750,000 borrowers.
Foreclosed Borrowers
Approximately $1.5 billion of the National Mortgage Settlement funds will be allocated to provide compensation to borrowers:
- With loans serviced by the five loan servicers affected by this settlement
- Who were foreclosed on after January 1, 2008 and before Dec. 31, 2011.
Borrowers who were not properly offered loss mitigation or who were otherwise improperly foreclosed on will be eligible for a uniform payment of approximately $2,000 per borrower depending on the level of response. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Borrowers may also be eligible for a separate restitution process administered by the federal banking regulators. The banks will be notifying eligible borrowers of their right to file a claim over the next six to nine months.
However, if you live in Washington state and are concerned your loan servicer may not be able to locate you, you may enter your information on our National Mortgage Settlement Foreclosed Borrower Form and we will help ensure your bank has your most current information.