National Mortgage Settlement
In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country's five largest mortgage servicers.
This bipartisan settlement will provide as much as $25 billion in:
• Relief to distressed borrowers; and
• Direct payments to signing states and the federal government.
Washington state received $43.8 million of this settlement for foreclosure relief programs.
This is the first ever nationwide reforms to servicing standards; something that no other federal or state agency has been able to achieve. These servicing standards require single point of contact, adequate staffing levels and training, better communication with borrowers, and appropriate standards for executing documents in foreclosure cases, ending improper fees, and ending dual-track foreclosures for many loans.
This includes state Attorney General oversight of national banks for the first time. Something no court could award. National banks will be required to regularly report compliance with the settlement to an independent, outside monitor that reports to state Attorneys General. Servicers will have to pay heavy penalties for non-compliance with the settlement, including missed deadlines.
Bain v. Metropolitan Mortgage
In August 2012, the Washington Supreme court said Mortgage Electronic Registration Systems, or MERS, cannot be a lawful beneficiary of a deed of trust in Washington state if the registry lacks real possession of the promissory note. This means lenders must initiate foreclosure process or formally appoint an agent. The Attorney General's Office participated in this court case.
In January 2013, the Washington Attorney General's Office reached a $120 million multi-state settlement with Lender Processing Services, Inc. (LPS) and its subsidiaries. The office also settled with LPS-subsidiary, LSI Title, for activities as a foreclosure trustee in Washington. Washington state recouped roughly $4 million.
LPS primarily provides technological support to banks and mortgage loan servicers, 'robo-signed' documents. LPS and its subsidiaries had to completely reform their business practices and correct documents.
In August 2012, the Attorney General's Office settled a case with ReconTrust, a subsidiary of Bank of America, for failing to comply with the state's laws governing foreclosure trustees. This included conducting illegal foreclosures on thousands of Washington homeowners.
It paid nearly $1.1 million to settle the Attorney General's Office case as part of the previous national multistate mortgage settlement with Bank of America, and according to the terms of the settlement filed in U.S. District Court in Seattle, it may only resume foreclosures here if it satisfies a long list of conditions imposed to protect borrowers.
Wells Fargo/Wachovia/Golden, West/World Savings Bank
In October 2010, Washington and seven other states reached a settlement with Wells Fargo Bank that provides loan modifications for residents in their states who obtained problematic mortgages from Wachovia Bank and Golden West Corp., which did business as World Savings Bank.
Between Dec.1, 2010, and June 30, 2013, Wells Fargo offered modifications to qualified borrowers who were either 60 days delinquent or facing imminent default.
The settlement also included $1.6 million for a foreclosure relief fund.
Bank of America/Countrywide Settlement
In October 2008, the Attorney General's Office settled an action against Countrywide for loan practices that pushed many Washington borrowers into or to the brink of foreclosure.
A significant part of that settlement was aimed at modifying many Washington loans in order that homeowners can avoid foreclosure. The settlement also provided more than $925,000 in restitution for Washington residents who lost their homes. In addition, Washington residents have received approximately $635,000 in relocation assistance.
The settlement included $930,000 towards local foreclosure prevention programs.
In January 2006, the Attorney General's Office took a leading role in a $325 million nationwide settlement with Ameriquest Mortgage Company.
The agreement resolved allegations of widespread fraud by the company as part of a high-pressure scheme to sell mortgages that trapped consumers into debt and put them at risk of losing their homes.
As a result, thousands of Washington homeowners shared approximately $6.5 million in restitution. The Attorney General's Office and DFI also received $2.5 million for legal and investigative costs - the majority was funneled to consumers.
In October 2002, the Attorney General's Office helped negotiate a landmark $484 million settlement with Household International. The agreement set a new standard of conduct for the sub-prime home lending industry.