Jun 122013

72,000 Michigan homeowners may receive payout after deceptive mortgage settlement

By JC Reindl, Detroit Free Press, June 10, 2013

Nearly 72,000 Michigan residents who lost a home to foreclosure in recent years will soon find a check in the mail for about $1,480 as a result of last year’s $25-billion landmark settlement between 49 state attorneys general and the country’s five largest mortgage-servicing companies.

State Attorney General Bill Schuette announced Monday that the $107.2 million in restitution checks are being mailed this week to the foreclosed-upon borrowers who submitted claim forms.

To be eligible for the money, an individual had to lose a home to foreclosure between Jan. 1, 2008, and Dec. 31, 2011, on a mortgage that was serviced by one of the settlement’s five participating mortgage servicers: Ally Financial (formerly GMAC), Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.

The February 2012 national settlement followed allegations of deceptive foreclosure practices that took place after the real estate bubble burst.

Various state and federal investigations found that mortgage servicers failed to verify documents when processing foreclosures and engaged in “robo-signing” by having employees sign paperwork with erroneous signatures to speed the foreclosure process.

“These funds will help victims of mortgage services’ abuses rebuild their lives, and we will work to ensure devastating practices like these never happen again through enforcing new mortgage servicing standards,” Schuette said Monday in a statement.

“Borrowers should also note the payment does not limit them from seeking relief through a separate lawsuit or other claims,” the attorney general added.

Michigan is supposed to receive about $1.1 billion in benefits from the mortgage settlement. Just under $900 million of that amount is to come in the form of loan modifications, loan principal reductions, short sales or similar measures to help homeowners in the state, according to Schuette‘s office.

The mortgage servicers made a $97-million direct payment to the state last year that went into a Homeowner Protection Fund. That money goes to eight initiatives, including foreclosure prevention counseling, home-buying grants and blighted property demolition.

New York Attorney General Eric Schneiderman announced last month his intention to sue Bank of America and Wells Fargo on accusations of violating terms in the settlement, citing claims that the banks are too slow to respond to homeowners seeking loan modifications.

A Schuette spokeswoman declined to say Monday whether Michigan’s attorney general considers the mortgage servicers to be in full compliance with their remaining commitments to Michigan borrowers.

“We are monitoring it very closely, and if we feel additional action is required, we won’t hesitate to take it,” said spokeswoman Joy Yearout.

Bank of America and Wells Fargo have denied violating the settlement.

An unspecified but small number of foreclosed-upon borrowers will not receive a check in this initial round of mailing because their claim is still being verified, according to Schuette’s office. Recently divorced couples may receive split checks.

Those who missed a January deadline for making a claim can still apply by contacting the settlement administrator Rust Consulting at 866-430-8358.

Questions can be directed to the administrator or by visiting the state Attorney General’s website at www.michigan.gov/ag, click on “consumer protection” and then “mortgage settlement.”

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com, and follow on twitter @JCReindl

 June 12, 2013  Posted by at 1:51 am Uncategorized Tagged with:  Add comments