Delawareans have received $57 million in relief; benefits in works for more homeowners
Wilmington – Delaware Attorney General Beau Biden announced Monday that 1,015 Delaware homeowners have received $57.4 million in financial benefits from the national mortgage foreclosure settlement that his office, other state Attorneys General, and the federal government reached last year with the country’s five largest mortgage-servicing banks.
In addition to the homeowners already receiving benefits as of December 30, 2012, another 346 homeowners are in the pipeline to receive $22.7 million in benefits – according to a report released Monday by the independent monitor overseeing the banks’ compliance with the national settlement. These homeowners have either already been offered mortgage modifications and are deciding whether to accept the terms, or have accepted the terms and are in a trial period.
The financial benefits come in several forms. Under the terms secured by Biden and other Attorneys General, the banks are required to reduce principal on mortgage loans, extinguish second lien mortgage loans, waive deficiencies in short sales, and provide refinancing to so-called “underwater” homeowners who, despite being current on their mortgages, are unable to refinance because they owe more than their homes are worth.
“The settlement has provided real relief to more than one thousand Delaware homeowners who have suffered during the housing crisis,” Biden said. “These benefits have enabled homeowners to avoid unnecessary foreclosures that would further damage home values and our economy.”
According to the monitor’s report, the most frequent benefits to Delaware homeowners were the forgiveness of debt upon a short-sale, forgiveness of second mortgages and refinancing of underwater mortgages.
The mortgage banks bound by the settlement are Ally (formerly known as GMAC), Bank of America, Citi, JPMorgan Chase and Wells Fargo. The settlement resolved allegations of widespread mortgage servicing misconduct, including “robo-signing” of foreclosure documents by those banks.
In addition to the financial components of the settlement, the banks were also required to implement hundreds of improvements to their operations, especially in customer service. Biden’s office insisted that protections for military members be included in those requirements. Those provisions include:
• Protections for servicemembers who are deployed to a new base, but are unable to sell a home near their former post because they owe more on the mortgage than the home is worth. Before the settlement, banks would not consider a servicemember’s orders to move to a new base as a “hardship” that would allow them to be eligible for relief programs. The settlement now requires the banks to make such personnel eligible for alternatives to foreclosure, such as loan modifications and short sales.
• An expansion of the federal Servicemembers Civil Relief Act (SCRA), a set of legal protections for military personnel whose origins date back to the Civil War. Career military personnel will benefit from key foreclosure protections that were previously only available primarily to reservists or members of the National Guard. Now, a servicemember stationed in a hostile fire zone and facing foreclosure by one of the settling banks will receive the benefit of the SCRA’s protections regardless of whether the mortgage loan was obtained before or after the beginning of the homeowner’s active duty service.
Additional detail about the mortgage relief provided by the 5 settling banks under the terms of the national mortgage settlement and Delaware-specific relief for each of the banks is posted on the independent monitor’s website at www.mortgageoversight.com/map/.
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