National Mortgage Fraud Settlement

For Frequently Asked Questions, check out our Mortgage Fraud Settlements FAQ page here.

BACKGROUND

There is $25 billion available to help distressed borrowers from the five largest loan servicers. These servicers routinely signed foreclosure-related documents without the presence of a notary public and without verifying that the facts they contained were, in fact, correct. Both these practices broke the law and the settlement provides benefits to borrowers whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.

49 state attorneys general and the federal government have reached agreement on this joint state-federal settlement with these five loan servicers:

WHO MAY BE ELIGIBLE FOR ASSISTANCE

Because of the complexity of the mortgage market and this agreement, which will be executed over a three-year period, borrowers will not immediately know if they are eligible for relief. Borrowers from states who did not sign the settlement will not be eligible for any of the relief directly to homeowners. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.

The settlement provides assistance for:

  • Homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.
  • State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.
  • Borrowers who are current, but underwater. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.
  • Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process. $1.5 billion will be distributed nationwide to some 750,000 borrowers.

For more information you can go to the Mortgage Fraud Settlement Frequently Asked Questions page here.

TIMELINE

  • For the first six to nine months of the settlement (starting in March 2012), the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
  • This settlement will be executed over the next three years

WHERE YOU CAN GO FOR HELP

For loan modifications and refinance options, borrowers may be contacted directly by one of the five participating mortgage servicers. Keeping in mind the timeline above, you may contact the banks directly if you need additional information:

Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. You may visit Fannie Mae here and Freddie Mac here to learn if your loan is owned by either one of them.

These sites will also include links to information about mortgage and foreclosure programs you may be eligible to access. You may also call 1-888-995-HOPE (4673)

For borrowers who lost their home to foreclosure between Jan. 1, 2008 and Dec. 31, 2011, a settlement administrator designated by the attorneys general will send claim forms to persons eligible for cash restitution.

If you believe you are eligible for relief under this settlement but are concerned you will be difficult to locate, please contact your Attorney General’s Office. The settlement administration will collect and forward your information to the appropriate person to ensure you are contacted if you are eligible.

CONSUMER ALERT!

Scammers are already at work trying to capitalize on the national mortgage settlement to access your personal information—or worse, your money. The Attorneys General have already received reports of scammers in Alabama calling borrowers claiming to be one of the major banks involved in this settlement and offering a cash payment to consumers if they simply provide the routing number to access their bank account. If you receive an unsolicited call from one of the major banks, you can identify a scam in several ways:

  • Does the caller identify themselves as representing your loan servicer? Or do they ask you to provide the name of your loan servicer? If they ask you for the name of your servicer, they may be a scammer.
  • Does the caller offer to provide your personal information to assist you in identifying your account? Or do they ask you to provide that? If the caller is from your loan servicer, they will be able to tell YOU your personal information because they will have it. You should never provide your personal information (including bank account numbers, social security numbers, etc.) to an unsolicited caller—no matter what they promise you.
  • Does the caller offer to speed your settlement relief for a fee? They are definitely a scammer! Neither the banks nor the Attorneys General will charge a fee to speed your settlement.

If you think the caller may be legitimate, ask for their contact information, tell them you are going to call your bank’s hotline (located above) and confirm, then call them back. Chances are if they’re a scammer, they won’t want you to check on them and they won’t provide their contact information.