Biden: Hundreds of Homeowners Benefiting From Mortgage Settlement Funds
Average benefit is more than $55,000
Wilmington – Attorney General Beau Biden announced Monday that hundreds of Delaware homeowners have received financial benefits from the national mortgage foreclosure settlement, with many more expected in the coming months. The Delaware Attorney General’s Office, together with other state Attorneys General and the federal government, reached the settlement earlier this year with the country’s five largest mortgage-servicing banks.
“Delaware homeowners hurt by the housing crisis are beginning to receive real relief,” Biden said. “There is a lot more that needs to be done, but these benefits can make a critical difference in a homeowner’s financial life. Our housing market only works when everyone plays by the rules. The refinancing portion of these benefits is especially important to homeowners who paid their mortgages on time, but through no fault of their own could not refinance because they owe more than their homes are worth.”
As of September 30, 628 homeowners in Delaware already received direct benefits that total $35.2 million, according to a report released Monday by the independent monitor overseeing the banks’ compliance with the national settlement. 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. According to the monitor’s report, the most frequent benefits to Delaware homeowners were the forgiveness of debt upon a short-sale (192), forgiveness of second mortgages (127), and refinancing of underwater mortgages (122).
Additionally, another 225 Delaware homeowners are in the pipeline to benefit from the 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 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 “robosigning” of foreclosure documents by those banks.
Beyond the direct consumer relief, the settlement also requires the banks to improve their mortgage-servicing operations. As of October 2, the five banks were required to be in compliance with 304 standards to improve the way borrowers are treated. The standards cover areas such as customer service (including providing a single point of contact for borrowers), the integrity of documents, tenants’ rights, anti-blight activities, and protections for military personnel.
Biden’s office led the efforts to secure the settlement’s servicemember protections, which 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.
“Our men and women in uniform have been hit especially hard by the housing crisis, and I have seen that firsthand,” said Biden, who is an Iraq war veteran. “We should not require a servicemember who is transferred from one base to another to leave his or her family behind in order to be eligible for a loan modification. The settlement gives our soldiers and sailors – and their families – the financial protections they need and deserve.”
The settlement’s independent monitor will spend the coming months verifying the banks’ reports that they have met all 304 standards and confirming the amount of credit against the settlement that each bank will receive for the relief provided.
Additional detail about the mortgage relief provided by the 5 settling banks under the terms of the national mortgage settlement is provided in the attached Fact Sheet. Moreover, Delaware-specific relief for each of the banks is posted on the independent monitor’s website at https://www.mortgageoversight.com/map/.
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