Massachusetts joins national agreement with mortgage giants
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(Massachusetts) Today Massachusetts Attorney General Martha Coakley's office announced that the state would be joining in with 48 other states in a settlement with major mortgage lenders. The agreement is expected to provide approximately $318 million in state and federal relief to Massachusetts homeowners. The agreement signed also has provisions to allow Massachusetts to continue to pursue legislation and investigations and future prosecution on two Mass-specific issues: Those claims include initiating foreclosures without holding the actual mortgages (so-called “Ibanez” violations) and allegedly corrupting the land recording system through the use of the Mortgage Electronic Registration System (MERS). The agreement will settle all other claims made as part of AG Coakley’s lawsuit against the five banks filed on December 1, 2011.
From the AG's Press Release:
NATIONAL STATE-FEDERAL SETTLEMENTThrough this national state-federal agreement, five major lenders are expected to provide approximately $14.6 million in cash payments to Massachusetts borrowers, $257 million worth of mortgage relief, and a direct payment of more than $46.5 million to the Commonwealth that will be used to assist homeowners. The agreement settles allegations of widespread use of fraudulent documents by Bank of America, Wells Fargo, JP Morgan Chase, Citi, and GMAC.
Massachusetts’ estimated total share of the settlement is $317,915,272:
- Massachusetts borrowers will receive an estimated $224,000,819 in benefits from loan term modifications and other direct relief.
- Massachusetts borrowers who lost their homes to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse would qualify for $14,625,790 in cash payments to borrowers.
- The value of refinanced loans to Massachusetts underwater borrowers would be an estimated $32,729,601.
- The state will receive a direct payment of $46,559,061 that will be used to assist homeowners.
- Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Given how the settlement is structured, servicers will actually provide up to an estimated $32 billion in direct homeowner relief.
- Servicers commit $3 billion to a mortgage refinancing program for borrowers who are current, but owe more than their home is currently worth.
- Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government). The state payments include funding for payments to borrowers for mortgage servicing abuse.
- Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
- An independent monitor will ensure mortgage servicer compliance.
- Government can pursue civil claims outside of the agreement, and any criminal case; borrowers and investors can pursue individual, institutional or class action cases regardless of agreement.