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 @CNNMoney February 20, 2012: 8:40 AM ET


NEW YORK (CNNMoney) -- Millions of borrowers who suffered financial losses because their mortgage lenders played fast and loose while processing their foreclosures now have two ways of getting a payback.

They can tap the $26 billion settlement between the state attorneys general and the nation's five biggest banks that was inked two weeks ago.


But there is also an earlier settlement that has been nearly forgotten -- and that could lead to an even bigger payoff, in some cases.

As part of a enforcement action by federal authorities last April, 14 mortgage servicers, including Bank of America , Chase, Citibank, HSBC, MetLife Bank, PNC Mortgage and Wells Fargo, agreed to hire independent consultants to investigate foreclosure abuses and compensate those who suffered financial harm.

As a result of the program, up to 4.3 million mortgage borrowers who were foreclosed on in 2009 and 2010 will have a chance to request an independent review of how their foreclosure was handled.

So far, only 90,000 eligible homeowners have submitted claims, prompting the feds to extend the deadline for applications by three months to July 31.

The exact amount of money borrowers will receive has yet to be determined. But if a review finds that "financial injury" occurred -- say a bank charged inappropriate fees or it went forward with a foreclosure without a valid claim to the property -- a homeowner could be repaid in full for job losses.


Borrowers who were improperly charged even just a single fee could be repaid for it, according to Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency, one of the federal regulatory agencies that negotiated the agreement.

And borrowers who suffered much larger losses could be in line for much bigger repayments than promised by the AG's settlement, which will pay up to $2,000 to the estimated 750,000 who lost their homes to foreclosure between 2008 and 2011.

The compensation could even repay the cost of regaining a wrongfully lost home if warranted by the facts of the case, according to Hubbard.

The Independent Foreclosure Review was sparked by the robo-signing scandal that exposed the bank's treatment of borrowers in the foreclosure process. The lenders lost documents and recreated them, had low-level employees with no knowledge of what they were attesting to sign legal papers and bent the rules requiring them to halt foreclosures if borrowers sought mortgage modifications.

What the $26B foreclosure settlement means for you

Unlike the $26 billion settlement with the state attorneys general, borrowers didn't have to lose their homes in order to receive compensation, according to Hubbard.

"It could be anyone who suffered financial loss because of errors made in the foreclosure process," he said.

Since the settlements are completely independent of one another, claimants can double-dip, filing for compensation under both settlements. (To seek compensation under the state attorneys general settlement, contact your lender or servicer and ask them to review your case).

To make a claim for the Independent Foreclosure Review, borrowers have to fill out a five-page form that identifies some examples of situations that may have led to financial injury. Borrowers do not have to provide documentation. That will be handled by an independent agency.

No reviews have been completed yet, according to Hubbard. And individual cases may take months to come to decision.

For more information on the forms, go to the website set up by the servicers. And for a full list of the mortgage services involved in the Independent Foreclosure Review, go to the Federal Reserve website.

Biggest mortgage deal could bring billions in relief

by Teamworks

@CNNMoney February 9, 2012: 12:40 PM ET
retrieved from

WASHINGTON (CNNMoney) -- In the largest deal to date aimed at addressing the housing meltdown, federal and state officials on Thursday announced a $26 billion foreclosure settlement with five of the largest home lenders.

The deal settles potential state charges about allegations of improper foreclosures based on robo-signing, seizures made without proper paperwork.

The settlement includes the Justice Department and the U.S. Department of Housing and Urban Development, as well as 49 state attorneys general -- all but Oklahoma.

"We are using this opportunity to fix a broken system," said U.S. Attorney General Eric Holder at the news conference announcing the settlement.

The settlement sets up a federal monitor to oversee the process and try to prevent the roadblocks and redtape that tripped up many homeowners seeking help in earlier programs designed to address the housing crisis.

Most of the relief will go to those who owe far more than their homes are worth, known as being underwater on the loans. That relief will come over the course of the next three years, with the banks having incentives to provide most of the relief in the next 12 months.

"This settlement is about homeowners, homeowners in distress," said Iowa Attorney General Tom Miller.

What the settlement means to you

Principal reduction: At least $17 billion will go to reducing the principal owed by homeowners who are both underwater and behind on their mortgages.

The agreement calls for principal reduction for as many as 1 million people. But it's unlikely the money will go that far, because many people need more than the $17,000 average reduction that would result if the money is split among 1 million homeowners.

At the same time, total principal reduction could go higher -- to as much as $34 billion -- since the agreement requires deeper principal reductions for the most troubled loans.

Refinancing: Officials say up to 750,000 other underwater homeowners who are current on their mortgages will be able to refinance their current loans at lower rates. They will not receive a reduction in principal, but with mortgage rates now near record lows, they could receive substantial savings on their monthly payments.

The settlement sets aside $3 billion to account for the reduced interest payments the banks will receive after the refinancing.

Robo-signing payments: About $1.5 billion of the settlement will go to homeowners who had their homes foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. They will receive up to $2,000 each.

Accepting that payment does not preclude homeowners who lost their home in an improper foreclosure from suing the bank to recover damages, Donovan said.

Participating banks: The five mortgage servicers that are parties to the settlement -- Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial -- will pay a total of $5 billion to the states. Some of that money will go to foreclosed homeowners and the rest to the states.

Federal officials say negotiations are underway to expand the settlement to nine other major servicers, which would raise the overall value of the settlement to $30 billion.

Related settlements: The deal spurred pacts between the federal government and banks in similar cases.

The Federal Reserve said it had reached an agreement with the five banks to pay a $766.5 million in sanctions related to their servicing practices.

And Loretta Lynch, the U.S. Attorney in Brooklyn, N.Y., announced a $1 billion settlement with Bank of America to resolve claims of underwriting and mortgage origination fraud by BoA and mortgage lender Countrywide Financial, which BofA bought in 2008.

The $26 billion deal announced Thursday is the second biggest settlement ever involving states. It trails only the $206 billion pact in 1998 with the tobacco industry.

And it dwarfs any settlements that major Wall Street firms have reached to resolve other allegations of misdeeds related to the financial markets meltdown and the Great Recession.

Still it only will help a faction of those homeowners who are struggling with mortgages.

There are 1.5 million homeowners who are 90 days or more delinquent on their mortgages but not yet in foreclosure, according to the most recent estimate from the Mortgage Bankers Association. An additional 1.9 million are in the foreclosure process. And CoreLogic estimates that 11 million homeowners are underwater on their mortgages.

Obama proposes new home refinancing plan

The settlement does not preclude criminal prosecutions from being pursued. It also doesn't stop investigations into other allegations of misdoings, such as the process of bundling loans into mortgage-backed securities and selling them to investors.

"It wasn't the servicing practices that created the bubble nor caused the collapse," said Donovan. "It was the origination and the securitization of these horrendous products. We will be aggressive about going after those claims."

The deal is supposed to protect consumers when it comes to robosigning, and ensure that mortgage servicers agree to communicate better, avoid delays and give homeowners who are late on mortgage payments a fairer shake.

New York's participation had been shaky this week, because some of the banks involved in the multi-state deal had also been sued by Attorney General Eric Schneiderman last week. Those banks -- Bank of America, Wells Fargo and JPMorgan Chase -- had also asked for a legal pass from Schneiderman's lawsuit, which accuses them of deceptive foreclosure practices for relying on the Mortgage Electronic Registration System.

On Tuesday, Schneiderman's office organized a media briefing to talk about the deal and then canceled it minutes before it was supposed to begin.

The big question throughout the negotiations was how much money would be available to help homeowners, which depended on how many states agreed to the deal. California's participation raises the total settlement value by several billion dollars.

At least one consumer advocacy group, the Center for Responsible Lending, has said the deal -- while "no silver bullet" -- leaves room to hold banks accountable in other mortgage probes, said Kathleen Day, a spokeswoman for the nonprofit.

But other left-leaning groups, including Move On and the New Bottom Line, are continuing to urge states to hold out for a big criminal investigation and a $300 billion settlement award.

--CNN's Jessica Yellin contributed to this story.


Foreclosure deal: Closer, but not there yet

by Teamworks

@CNNMoney February 6, 2012: 4:01 PM ET
retrieved from

Housing Secretary Shaun Donovan is one of the participants in the foreclosure settlement talks that are expected to produce a mortgage settlement soon.WASHINGTON ( -- States have until the close of the business day to agree to the latest draft deal aimed at relieving homeowners struggling with mortgages bigger than their home's value.

Attorneys general from California and New York, who had been cold to the deal in past weeks, are now involved in talks that could signal their participation.

A source close to the talks told CNN that California Attorney General Kamala Harris is now inclined to sign on to the deal.

New York Attorney General Eric Schneiderman is also talking with negotiators, sources say.

Federal officials and state attorneys general could announce -- perhaps as early as this week -- a deal with some of the nation's largest banks that could yield up to $25 billion for those homeowners. That would be more than any housing relief program has produced since the financial crisis began.

Obama proposes new home refinancing plan

Under the latest draft, about 1 million U.S. homeowners who are "underwater" on their mortgages -- with principal exceeding the home's value -- could be eligible for as much as $20,000 in relief of principal owed, according to U.S. Housing and Urban Development Secretary Shaun Donovan.

In return, mortgage servicers in states that agree to the deal would get immunity from future state servicing and originating claims -- although homeowners could pursue claims against banks and states could still pursue criminal investigations, according to reports.

Driving the deal originally were allegations that mortgage servicers cut corners and enlisted robo-signers that improperly foreclosed on homeowners. However, the deal under negotiation now wouldn't be able to return houses to those who have already been foreclosed on, according to reports.

What the deal would do is ensure that mortgage servicers agree to communicate better, avoid delays and give homeowners who are late on mortgage payments a fairer shake.

The big question is how much money would be available to help homeowners, but that depends on how many states agree to the deal. If all 50 states sign on, the mortgage servicing settlement has the potential to offer as much as $25 billion. But without California, the nation's largest state, the pot would be several billion dollars smaller.

Last week, California's Harris and Attorney General Beau Biden of Delaware said the deal, as drafted, wasn't good enough for their states.

New York's Schneiderman was tight-lipped about his participation when asked. Calls to his office on Monday weren't returned.

Generally, the attorneys general have said they're worried they if they agree to the deal it would cripple their own investigations into mortgage cases.

But California's Harris is more comfortable that the deal will leave her room to pursue her own investigations and lawsuits, a source close to the talks told CNN.

At least one consumer advocacy group, the Center for Responsible Lending, has said the deal -- while "no silver bullet" -- leaves room to hold banks accountable in other mortgage probes, said Kathleen Day, a spokeswoman for the nonprofit.

The negotiations are between federal agencies, including the U.S. Department of Justice and the U.S. Department of Housing and Urban Development, as well as the state attorneys general and the five largest mortgage servicers:Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial (GJM). A few other regional banks that service mortgages are reportedly considering signing on as well.

The big banks aren't as keen to sign off on a multi-state deal that doesn't include immunity from mortgage servicing claims from California's and New York's attorneys general, said a source familiar with the deals.

And left-leaning groups, including Move On and the New Bottom Line, are continuing to urge states to hold out for a big criminal investigation and a $300 billion settlement award.

-- CNN's Jessica Yellin and CNNMoney's Erica Fink contributed to this report.


Finally, Some Talk on Home Ownership; Will Action Follow?

by Teamworks

By: Gavin Mathis

Published: January 26, 2012

State of the UnionIn his third State of the Union address, President Barack Obama called on Congress to expand refinancing opportunities to millions of Americans.

It was nice to finally hear a politician talking about solving our housing market woes — the bull's-eye in terms of economic recovery.

Aiming to strike a populist chord with voters, President Barack Obama asked Congress Tuesday night during the State of the Union address to pass a mass refinancing effort that would help home owners take advantage of today’s lower mortgage rates.

“I’m sending this Congress a plan that gives every responsible home owner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates,” the president said. “No more red tape. No more runaround from the banks."

The proposal is an extension of the administration’s Home Affordable Refinance Program, which made it easier for home owners with loans owned or backed by Freddie Mac and Fannie Mae to refinance at record low interest rates. The proposal would broaden refinancing opportunities to home owners whose loans aren’t backed by the federal government.

To pay for the plan, Obama said that a small fee on the nation’s financial institutions would be implemented to ensure that the plan is deficit neutral.

Although Obama’s words were music to the ears of many home owners (especially since politicians on both sides of the aisle have been relatively mute on housing issues) — more needs to be done to help underwater home owners modify their loans and encourage banks to streamline the lending process. In the weeks ahead, Obama needs to leverage his refinancing proposal by emphasizing it on the campaign trail and letting every home owner know how easier rules and lower interest rates will help them.

Housing is a key driver of the economy. The NATIONAL ASSOCIATION OF REALTORS® estimates that for every two homes sold, one job is created. Plus, housing accounts for more than 15% of the U.S. gross domestic product. In past recessions, a rebound in housing has usually been one of the first signs that economic conditions are improving.

Besides stepping up refinancing efforts with banks, the president outlined the creation of a new mortgage fraud unit to investigate misconduct by lenders. “This new unit will hold accountable those who broke the law, speed assistance to home owners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said.

As we get closer to Election Day, the need for comprehensive housing solutions must not become just populist rhetoric in a speech. Effective housing policy is too important to too many Americans to be lost in election year jockeying.

In fact, housing and mortgage issues are make-or-break election issues for many voters and perilous territory for politicians. In a recent survey of voters, 60% believe dealing with mortgage and foreclosure issues is key to stabilizing the economy, including 57% of Republicans and 66% of Democrats.

The clearest way for Obama and his Republican opposition to prove to the American people that they’re fighting for the interests of their fellow Americans is to help home owners by making housing a priority. 

What did you think of the comments President Obama made about housing issues and mortgage lending?

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