Recently, five banks that service nearly 60 percent of the mortgages in the United States have reached a $25 billion settlement with the federal government regarding their involvement in foreclosure abuses and mortgage fraud.
If you have a loan through Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup, Inc., and Ally Financial, Inc. (formerly GMAC) you may be eligible to have your loan modified either through an interest rate or principal reduction.
The settlement does not take away your individual rights to pursue your own course of legal action against these banks.
If your loan is owned by Fannie Mae or Freddie Mac and serviced through one of the above banks, this settlement does not apply to your mortgage and will be addressed through the Home Affordable Refinance Program (HARP2), which I discussed in a previous article.
The reality is it is an election year so we are already seeing a number of politicians posturing and taking credit for this action.
Don’t get too excited thinking your check is already in the mail.
The settlements will be processed over the next three years.
The first step in the next 60 days will be for the settlement negotiators to select an administrator to handle the settlement and monitor compliance.
Over the next six to nine months, administrator will work with mortgage servicers to identify homeowners who are eligible for a settlement.
If you are eligible you will receive a letter.
It is believed that this settlement will help reduce foreclosure rates by allowing loan modifications to those loans that are not going to be impacted by HARP 2.
For some, a 2 percent reduction in their mortgage interest rate could amount to a savings, —depending on the size of their loan — from $1,000 a year to as much as $8,000 a year.
What the settlement does not do is release any criminal liability for those who were involved in mortgage fraud or preclude any investigations by state attorney general office’s related to Wall Street’s involvement in financial fraud.
If you think you may be eligible for this program, log onto www.nationalmortgagesettlement .com for full details of the program.
Additionally, if your loan is owned by Fannie Mae or Freddie Mac, it may be a good time to contact your lender about the HARP 2 loan modification program that is expected to commence on March 15.
Home Affordable Refinance Program (HARP2)
HARP2 was enacted in late 2011 and should be implemented by March 2012.
HARP2 will allow underwater homeowners who have a mortgage backed by Fannie Mae or Freddie Mac to refinance at today’s interest rates.
To qualify, a homeowner must be current on their payments with no more than one missed payment in the last year and the current loan on the property must have been in place before May 31, 2009. Jumbo loans are not eligible.
Ray Pugel is a designated broker with Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.