Struggling Homeowners Skeptical of Justice Department, Bank of America Deal
Relief from $13 billion JPMorgan Chase Settlement yet to materialize
Washington [June 16, 2014]— As recent news reports indicate that the U.S. Department of Justice (DOJ) is negotiating a potentially record-breaking settlement with Bank of America over the wrongdoing that led to the mortgage crisis, homeowners and advocates expressed skepticism that the billions of dollars of relief for homeowners reportedly included in the settlement will reach the families who need it.
“$17 billion is a lot of money. I wonder if there will really be any help for my family and families like mine, or will it be just another set of broken promises?” said Grace Alexander, a Newark, New Jersey homeowner with a mortgage from Bank of America.
Organizations representing struggling and “underwater” homeowners say that help from last year’s record $13 billion settlement with JPMorgan Chase has yet to arrive. While the bank has not announced any new relief programs, its website does offer information about the most recent settlement.
And housing counselors and homeowners have not noticed any new waive of modifications. Rather, they say, Chase and other major banks seem to be seeking to get such loans off their hands by transferring servicing rights to newer mortgage companies not covered by major mortgage settlements.
"Even with the landmark settlement, I have not received any principal reduction on my mortgage,” said Pina Orsillo Belgrano, a realtor and entrepreneur from Seattle, Washington. “JPMorgan Chase intentionally misled me, and the modifications they offered me never included principal reduction and only reduced my monthly payments by $40." Belgrano says she has struggled for years to get Chase to agree to a sustainable modification. Organizers from Washington Community Action Network and the national organization Home Defenders League forwarded her case along with other examples of the kind of borrower needing relief to officials at the U.S. Department of Housing and Urban Development (HUD) and DOJ, but her loan was instead sold from Chase to a new servicer.
“On paper, the Chase settlement had better consumer relief than the earlier National Mortgage Settlement, in that it requires the kinds of modifications that restore home equity and keep families in their homes, mostly principal reduction,” said Kevin Whelan, National Campaign Director of the Home Defenders League. The earlier settlement between the federal government, 49 state Attorneys General and five major banks allowed the banks to provide most of their relief in ways that still put families out of their homes—like short sales—or through business practices they would have engaged in anyway, like writing off second mortgages that are worthless if a first mortgage goes bad.
“There was public debate on whether the JPMorgan Chase settlement was too big or two small and anger over the fact that it was tax deducible,” Whelan said. “But now folks are wondering if it was simply a work of fiction.”
Years into the foreclosure crisis, many homeowners who suffered now well-documented abuses at the hands of major banks have lost their homes to foreclosure. The JPMorgan Chase settlement contained provisions that allowed the bank to get credit toward its settlement amount by helping such families through donating or selling properties at a discount and financing new mortgages for homeowners who had lost their homes.
Sergio Ceballos Aguilar hoped that such provisions would help him reclaim his home. A longtime Minneapolis resident, Ceballos says he was sold a predatory loan by JPMorgan Chase, a loan he attempted to have modified five times. He was foreclosed upon and evicted from his home while attempting to negotiate a modification—a practice, restricted under the National Mortgage Settlement and now illegal in Minnesota, called “dual-tracking.” Public pressure including dramatic protests by the group Occupy Homes Minnesota and support from his City Councilmember raised Sergio's case into the national spotlight around the time of the JPMorgan Chase settlement. In the midst of significant media exposure, bank officials began actively negotiating with Sergio—only to stop drop contact and stop responding before working out an agreement.
"I want to be able to support my children with stable housing on the street they grew up on,” Ceballos said. “All we ask for is a fair negotiation, to sell my home back to me so that I can continue to pay for my home. It is terrible that JPMorgan is pulling the same trick on our country that it is pulling on me! First they negotiate, then they retreat before sealing the deal.”
Last week, the California Reinvestment Coalition (CRC) publicly urged the DOJ to require Bank of America to disclose who is helped under the consumer relief provisions of a potential agreement with the bank and who is not. The CRC called on the DOJ to require Bank of America to publicly disclose homeowner race, ethnicity, and census tract level data for people who seek assistance under the reported $5 billion in homeowner relief that may be included in the settlement.
The Home Defenders League is a national organization fighting against foreclosures and for a just resolution to the mortgage crisis including mass principal reduction for underwater homeowners.