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The National Mortgage Foreclosure Settlement of 2011
The American economy and the real estate market have been in turmoil in recent years—and many people have lost their homes to foreclosure. Unfortunately, some of those homeowners didn't deserve to lose their homes.
A number of major lenders were accused of taking legal shortcuts and following sloppy procedures when processing foreclosure paperwork. The banks didn't do the appropriate due diligence and may have inappropriately foreclosed on some homes.
In February 2012, the federal government and attorneys general from every state (except Oklahoma) announced a landmark settlement with five of the biggest mortgage servicers: Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo. The banks agreed to pay up to $25 billion to certain homeowners and the government.
According to the National Mortgage Settlement:
"The agreement settles state and federal investigations finding that the country’s five largest mortgage 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 in the signing states whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service."
Benefits to Homeowners
The settlement provided a number of benefits to existing homeowners as well as homeowners who had already lost their homes to foreclosure. These benefits included:
- Loan modifications to homeowners who needed them, including people whose homes were underwater, who were locked into high interest rates and who couldn't afford their monthly mortgage payments
- Money for homeowners who lost their homes to foreclosure
Homeowners who lost their homes to foreclosure received claims forms in the fall of 2012. The deadline to submit claims has passed, and homeowners are expected to receive compensation checks in 2013. Homeowners who are entitled to mortgage modifications will have until at least 2015 to seek those.
If you lost your home to foreclosure and your loan was serviced by a lender who did not participate in the settlement, talk to a real estate lawyer today to understand your legal rights. An attorney can also assist homeowners who are seeking loan modifications from a lender who participated in the settlement as well as from other lenders.
Visit LawyerLocator to learn more about residential real estate law or to locate a real estate attorney in your area.