On February 9, 2012, the Montana Attorney General’s Office joined a landmark agreement with the nation’s five largest mortgage servicers that provides help for struggling homeowners and requires national standards to protect consumers from the abuses of these five large banks.
The settlement stems from a national investigation of the five biggest banks and the discovery that these institutions routinely violated state and federal laws by signing foreclosure documents outside the presence of a notary public – a practice commonly called “robo-signing” – and without knowing if the facts contained in the documents were even correct.
Under the agreement, the five banks – Bank of America, Citibank, JP Morgan Chase, Wells Fargo and GMAC – have agreed to a $25 billion package of benefits for homeowners and payments to the states. The settlement also provides benefits to borrowers whose loans are owned by the settling banks, as well as to many borrowers whose loans they service. It also provides modest payments to those who were foreclosed upon from 2008-2011.
Montana’s share of the settlement includes the following:
- Qualifying Montana borrowers may receive help from a “menu” of benefits, including principal reductions, deficiency waivers, and short sales.
- The State has received a direct payment of around $5.8 million. Almost all of this money is dedicated for use on direct services and staff in the Attorney General’s office and its nonprofit foreclosure mitigation and housing counseling partners. Our partners include NeighborWorks Montana and the Montana Legal Services Association. Staff with these organizations provide foreclosure counseling and direct legal services.
- Montana homeowners who are not in default, but “underwater” on their home loans may be eligible for over $4.5 million in available funds specifically for refinancing these underwater loans. “Underwater” means a person owes more on their mortgage than their home is currently worth.
- Montana borrowers who lost their homes to foreclosure by one of the five settling banks between January 1, 2008 and December 31, 2011 are eligible for direct cash payments from a pool of $2 million.
Home Foreclosure Specialist
The Keep My Montana Home Program
Ph: (406) 444-2556
The unprecedented joint state-federal settlement is the result of a massive civil law enforcement initiative that includes state attorneys general, state banking regulators across the country and nearly a dozen federal agencies. The settlement holds banks accountable for past mortgage servicing and foreclosure fraud and abuses, and provides relief to homeowners. With the backing of a federal court order and the oversight of an independent monitor, the settlement stops future fraud and abuse.
The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five banks. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.
Unfortunately, homeowners in desperate situations have been seen as easy targets by scammers who take advantage of people when they are vulnerable. Be wary of any unsolicited offers of assistance or advertisements—even if they look official. When in doubt, do your research or call our office.
Information on foreclosure rescue scams and mortgage fraud:
- The Federal Trade Commission’s scam page.
- The federal Financial Fraud Enforcement Task Force mortgage page.
As disrupting as the foreclosure crisis has been in Montana, the problem was much worse in other parts of the country. The national totals of what the large banks are paying through the settlement reflect the depth of the crisis. Nationally:
- Servicers will pay a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Given how the settlement is structured, up to $32 billion dollars in homeowner relief will be realized nationally.
- Servicers will pay a total of $3 billion to a mortgage refinancing program for borrowers who are current, but who owe more than their home is currently worth.
- Servicers will pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
- Homeowners will receive comprehensive protections under new mortgage loan servicing and foreclosure standards. These standards are comprehensive and include a required single point of contact for homeowners, adequate staffing levels and training, effective communication with homeowners, higher standards for the execution of documents in foreclosure cases, an end to improper fees, and significant controls over the confusing “dual track” process where homeowners find themselves in the modification application process and foreclosure at the same time.
- An independent monitor will ensure mortgage servicer compliance.
The final agreement will be filed in U.S. District Court in Washington, D.C. The agreement will be enforceable as a court order.
For more information on the Internet go to:
Additionally, the Center for Responsible Lending has produced two informative reports on the settlement. A summary of the settlement is here. A booklet aimed at helping citizens determine if they may be eligible for relief under the settlement is here.
How a foreclosure proceeds depends on the state laws where a home is located. Montana is a “non-judicial” foreclosure state. This means that, generally, Montana law allows a foreclosure to occur without a lender taking a homeowner to court. Instead, the lender or its agent (usually called a “Trustee”) can follow procedures set out in Montana law to foreclose on a property. However, under certain circumstances, homeowners may be able to file a court case to stop a wrongful foreclosure.
- Foreclosure is complicated. The Montana Legal Services Association explains the process in everyday language on its website.
- Consumer counseling can sometimes help avoid foreclosure.
- NeighborWorks Montana Foreclosure Intervention Services has helped thousands of people avoid foreclosure.
- Montana’s Credit Unions also have a list of tips to avoid foreclosure.
- Read it yourself! Montana law defines mortgages.
Other links that may be of help:
- The Federal Trade Commission has information about “freezes” on mortgage foreclosures.
- The FTC also has helpful information about the different kinds of mortgages and what they mean.
- Thinking about default? The FTC looks at what happens when people walk away from a mortgage or otherwise default.
- Who’s handling your mortgage payment, anyway?
- Here’s a good one-stop shop on the modern mortgage meltdown.