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Greg Cowart - Mortgage Broker or Lender at The Securus Group
Greg Cowart - Roseville Loan Guy

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Just the facts Ma’am!

Some facts about the recent Mortgage Relief agreement between the banks and, well, us…

FACT#1: The main fact here is that mortgage servicers will be required to contribute $20 billion to various forms of relief to borrowers. 

FACT #2: Of said $20 billion no less than $10 billion will be dedicated to reducing homeowner’s mortgage balance that owe more on their mortgages than their homes are worth and are either currently delinquent or at imminent risk of default.

FACT #3: At least another $3 billion will be dedicated to a new refinancing program for borrowers who are current on their mortgages but are underwater. All borrowers who meet some basic eligibility criteria will be eligible for the new refinance program, which will reduce interest rates for borrowers who are currently paying much higher rates or whose adjustable rate loans are due to have their rates increase in the near-term.

roseville foreclosure reliefFACT #4: The servicers have also agreed to dedicate up to $7 billion in other forms of relief, including forbearance of principal for unemployed borrowers (something already given if your loan is backed by Fannie Mae or Freddie Mac), anti-neighborhood-blight projects, short sale assistance, and special programs for service members who are forced to sell their homes at a loss as a result of a permanent change in station…

FACT #5: As an enticement for servicers to provide relief more quickly, there are incentives for a tangible benefit provided within the first year, on top of that there are additional penalties for any servicer that fails to meet its obligation within three years.

FACT #6: Servicers will receive only partial credit for every dollar spent on some of the required activities, so the settlement will provide direct benefits to borrowers in excess of $20 billion.

FACT #7: In addition to the $20 billion for financial relief for homeowners servicers will make an additional $5 billion in cash payments to the Washington DC and all 50 participating states. That $5 billion will include…

  • A Borrower Payment Fund of $1.5 Billion providing cash payment to homeowners whose homes were foreclosed upon from 2008-2011 where the servicers did not follow proper procedures.
  • The remaining funds will go to state and federal governments to be used to refund taxpayer dollars lost as a result of servicer misconduct, fund housing counselors and legal aid, and other similar purposes to be determined by each state’s attorneys general. The funds coming to the federal government will mostly go to the FHA Mortgage Insurance Fund, with portions also going to the Veterans Housing Benefit Program Fund and to the Rural Housing Service (USDA).

FACT #8: As part of the deal servicers are agreeing to implement extensive new servicing standards, designed to correct the kinds of conduct that caused a need for this settlement in the first place.

  •  Cease past foreclosure abuses such as robo-signing, improper documentation, and lost paperwork through new mortgage servicing standards.
  • Require strict oversight of foreclosure processing, including of third-party vendors.
  • Impose new standards to ensure the accuracy of information provided in federal bankruptcy court, including pre-filing reviews of certain documents.
  • Make foreclosure a last resort, by requiring servicers to evaluate homeowners for other loan mitigation options first.
  • Restrict banks from foreclosing while the homeowner is being considered for a loan modification.
  • Set procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials.
  • Create a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.

FACT#9: You probably are tired of all these facts! But it’s important to know that Californians are to receive the lion’s share of the relief, $18 billion of the $25 billion!

3 comments to Just the facts Ma’am!

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