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February 9, 2012

Montana Joins Landmark Mortgage Abuse Settlement

Montana Attorney General Steve Bullock has joined a landmark agreement with the nation’s five largest mortgage servicers that has secured help for struggling homeowners and requires national standards to protect consumers from the abuses of these banks.

The settlement stems from a national investigation of the country’s five largest 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 of the borrowers whose loans they service.  It also provides modest payments to those who were foreclosed upon from 2008-2011.

“The abuses of the so-called ‘too big to fail’ banks brought the American financial system to the brink of collapse and left millions of Americans and thousands of Montana homeowners foreclosed upon – and thousands more struggling to stay in their homes,” Bullock said.  “This settlement puts in place new, national protections for homeowners from the abuses of these banks, while also providing direct assistance to those struggling to stay in their homes and those who have already lost their homes.”

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 landmark settlement announced today provides:

  • New National Protections for Homeowners – New 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.
  • Loan Modification Services to Struggling Homeowners – Services will be provided to homeowners struggling to stay in their homes, including the possibility of refinancing at historically low interest rates.
  • Payments to Homeowners Who Lost Their Home to Foreclosure – Modest direct payments will be made to homeowners who lost their homes to foreclosure from 2008 to 2011.  These payments will have no strings attached and homeowners who wrongfully lost their homes can still pursue private claims against the banks.
  • State Level Counseling Services – Dedicated staff in the Attorney General’s Office to work directly with homeowners and the housing counselors who work with homeowners throughout Montana facing foreclosure.

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.

Montana’s estimated share of the settlement is $20.4 million and will include resources for loan term modifications and other direct relief, direct payments to those foreclosed upon, refinancing options for underwater borrowers and a direct payment to fund state counseling services.

“I am pleased to join this national settlement and am particularly pleased that it is the result of a truly bi-partisan effort with my Republican and Democratic colleagues across the country,” Bullock said. “I am committed to putting the resources available through this settlement to work as soon as possible, to do all we can do in partnership with housing counselors throughout the state to reach out and help struggling homeowners. I will announce more specific information about these efforts in the near future.”

Further information will be made available at as the settlement programs are implemented. The Montana Attorney General’s website also provides information at