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Where's My National Mortgage Settlement Check?

You have probably heard of the landmark National Mortgage Settlement, where the largest U.S. banks reached a deal with state attorneys general and agreed to pay money to certain homeowners.  So what’s the big deal?  How does it affect you?

The National Mortgage Settlement came about after the exposure of “robo-signing” in the mortgage foreclosure process at some servicers.  Robo-signing has become part of our vernacular, defined as when an employee of a mortgage servicing company signs foreclosure documents without reviewing them.  It also includes the practice of one reviewer’s name being signed by many different individuals so that the signature varies greatly (this was how it was caught).  Some of the robo-signers were actually temporary workers with no understanding of the work they were doing.  Yet they were signing documents, with someone else’s name, that would take away someone’s home.  Not good!

When some of these questionable practices came to light, the United States and 49 state attorneys general filed a law suit against Bank of America, Citi Mortgage Group, J.P. Morgan Chase, Ally Financial (which includes GMAC) and Wells Fargo in federal court.  This led to the National Mortgage Settlement.  Oklahoma, the only state not included, came to a separate and similar agreement with the same mortgage companies. The servicers have three years to complete all of the actions required in this settlement. 

So why is this a landmark settlement?  It is the second largest settlement ever obtained by state attorneys general in a joint action (second only to the tobacco settlement), includes the first ever nationwide reforms to mortgage servicing standards, and is the largest consumer financial protection settlement in U.S. history --- approximately $25 billion.

How the National Mortgage Settlement May Impact You

With so many layers to this settlement, it can be difficult to understand.  Here are some of the provisions that directly affect homeowners or former homeowners.

  • Immediate aid to homeowners needing loan modifications or other workouts.  Servicers were to spend up to $17 billion in principal reduction and other forms of loan modification, and another $3 billion in refinancing relief nationwide.  Servicers do not receive dollar for dollar credit, but will be credited according to a complicated formula.   If you have not already received a letter from your mortgage servicer offering you a modification, principal reduction or refinancing offer, it's likely that the investor that owns your loan will  not allow your servicer to make such an offer.
  • Cash payments to people who lost their homes to foreclosure between January 1, 2009, and December 31, 2010.  Just under $1.5 billion has already been distributed to the state attorneys general for this purpose.  Homeowners who qualified had to register with their state’s attorney general, and the checks have been disbursed. Payment amounts are approximately $1,480, but may vary by state.

Visit these websites for more information on the settlement, the monitoring process, or to report any mortgage loan issues:

Housing Counselors Can Help

If you are struggling with your mortgage, whether current or behind on payments, it is a good idea to talk to a housing counselor from a governement-approved counseling agency such as GreenPath.  The housing counselor can assist you in exploring your options and  communicating with your mortgage servicer.

Beware:  Scammers will try to charge you a fee to help you receive a payment through the mortgage settlement.  You should not pay a fee to receive payment.  If you have questions, contact your state attorney general, Rust Consulting (866-430-8358) or GreenPath.