Mortgage Settlement Announced - What it Means for Minnesota

On February 9th, 2012, the Minnesota Attorney General’s office and the Department of Commerce announced that the State of Minnesota would be participating in the Federal Foreclosure settlement with five major lenders/servicers.  These five servicers have agreed to a $26 Billion dollar settlement, through which Minnesota borrowers may be eligible for up to $280 million.


The five lenders are: Ally/GMAC, Bank of America, Citi, JP Morgan Chase and Wells Fargo.  (Nine other servicers may sign on to the settlement later, we’ll update that information as it becomes available.)    It is important to note that loans owned or backed by Fannie Mae and Freddie Mac are not part of the settlement.  However, there are other programs and assistance available to some of these borrowers.  Click here for more information.


Additional information for homeowners interested in learning more about the settlement is available here: http://www.nationalmortgagesettlement.com/.  


REMEMBER:  DO NOT PAY FOR HELP.  No ‘agent’, ‘specialist’ or ANYONE should be charging you to ‘get access’ to the settlement.


WHAT DOES THE SETTLEMENT PROVIDE FOR MINNESOTA?  
Direct Payments to Borrowers.  Minnesota borrowers may qualify for financial compensation:

• Certain borrowers who lost their home to Sheriff’s Sale between the beginning of 2008 and the end of 2011, may be eligible for financial compensation of approximately $2,000* if they lost their home due to financial hardship AND 
• They were in the process of seeking a loan modification and the bank proceeded with the foreclosure anyway OR
• There were documented errors committed by the lender in the foreclosure process.

*The exact amount paid to homeowners will depend on the number of eligible borrowers who file a claim.


Refinancing Benefits. This part of the settlement allows underwater borrowers of mortgages owned by the five banks (as long as they are not backed by Fannie/Freddie) to refinance to a lower interest rate if they are current on their mortgage and have not had any late payments in the last 12 months.  The loan must have been originated prior to January 1, 2009, and have an interest rate of 5.25 percent or more. 


Principal Reductions and Other Relief. This part of the settlement will allow certain borrowers of loans owned, or in some cases serviced, by the five banks to qualify for:

• a principal reduction of their underwater mortgage and either 30 days late on the mortgage or who face ‘imminent default’;
• a forbearance  (set period of time with no mortgage payments) for unemployed borrowers, 
• short-sale assistance, 
• transitional housing assistance, 
• and other relief (details to be determined)

Beyond the financial relief and compensation outlined in the settlement, the five banks have also agreed to make substantial changes to their mortgaging and servicing standards including:

• Processing loan modification requests in less than 30 days
• Stopping the foreclosure process for homeowners who have a loan modification application pending (as long as the application is processed more than 15 days before the Sheriffs sale)
• Stopping the  foreclosure process completely for homeowners who are complying with a trial modification (either HAMP or the lenders’ in-house modification)
• Lenders must process requests for short sales (permission to sell the home for less than the outstanding mortgage loan amount) in less than 30 days.
• Lenders must assign a single point of contact to homeowners, or their foreclosure prevention counselor, who will be responsible for keeping the homeowner up to date with information about the loan, the modification process and any documentation needed.

WHAT HAPPENS NEXT?  HOW DO I APPLY?

• Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance. 
• Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters directly from their lender/servicer.
• This settlement will be executed over the next three years. 

The exact details of how homeowners access the settlement are still being worked out.  There are steps you can be taking to make sure that you keep up to date with the settlement:

1. Contact a non-profit member of the Homeownership Advisors Network.  Foreclosure Counselors will know, as the details become available, the exact steps to take AS WELL AS know if you might qualify for any additional assistance or be able to access other programs to help prevent the foreclosure of your home.
2. Contact your lender.  If your mortgage is with one of the five current participants in the settlement, visit the National Mortgage Settlement website for links to the banks’ websites and contact telephone numbers.  

Even if your bank is not participating in the settlement, or they are, but your loan is backed by one of the Government Sponsored Entities, it is important that you take steps right away if you are struggling with your mortgage.  Contact a foreclosure counselor TODAY to learn about the WIDE ARRAY of programs, helps and assistance that are available to Minnesota homeowners.  Counseling is FREE and non-biased.  The sooner you call, the more options you have available, and remember, NEVER PAY FOR HELP!

LSS Financial Counseling Awards

One of the hardest hit areas of the state in the current housing (foreclosure) crisis is the area surrounding Isanti county (Mille Lacs, Sherburne, Chisago & Pine counties).  This area has some of the highest foreclosure rates in the state, and the number of pre-foreclosure notices continues unabated.

However, it's not all doom and gloom!  For several years, the MN Home Ownership Center has been working with LSS Financial Counseling and a roundtable group of engaged civic and business leaders in a multi-county area surrounding Isanti County. This working group of financial institutions, politicians, social workers, teachers, clergy, hospitals and other professionals have been working together to reach out to their community as it struggles with financial issues.

This working group was the brain-child of the president of Community Pride Bank in Isanti, Greg Owens.  He constantly updates the group on the foreclosure issue, convenes meetings and discussions on ways to stem the tide of foreclosures and is constantly looking for new and innovative ways to let homeowners in the area know about the availability of FREE Foreclosure Prevention Counseling services through LSS Financial Counseling.

On June 16th, LSS Financial Counseling will be hosting an event to recognize and celebrate just a few of the "financial advocates" who have made a difference in their communities over the last year and honor some of the people that have made a positive difference in the financial lives of Minnesota's residents.

Greg Owens is one of the recipients of this year's Financial Advocacy Awards!  Congratulations Greg!!

The other recipients are Mayor Don Ness, City of Duluth and AccountAbility Minnesota.

The awards ceremony will be hosted at the LSS Center for LSS Center for Changing Lives in Minneapolis, and Attorney General Lori Swanson will be the keynote speaker.

If you would like to attend, please RSVP to Marie Garmoe via email or by calling 218-529-2296 by Friday, June 11th.

What do I do if I've been scammed?

As homeowners continue to struggle with house payments… the Center and its network of non-profit Foreclosure Counselors continue to hear about homeowners who have paid companies (or "agents," / "brokers," / "representatives") to have their loan modified with no results.

While it seems as though the average fee is about $2,000 – $3,000, our counselors have encountered homeowners that have spent upwards of $12,000 (see our blog post here) all with little or no results.

For more information about avoiding these scams, the Center has produced a "Consumer Alert" fact sheet that you can view here. Bottom line: no struggling homeowner should have to pay to get help with their mortgage. It’s really that simple.

If you, or someone you know, has become a victim of a loan modification scam, there are a few steps that we encourages you to take:

1. Speak with one of Minnesota’s non-profit Foreclosure Counselors. They will be able to assess your situation and offer you the kind of help and assistance that the ‘fee-for-service’ organization promised, but couldn’t/didn’t deliver.
   
2. Gather as much supporting documentation as possible – name of company and agent/representative you spoke with, company address, details about when you talked to them, and especially: copies of anything you agreed to in writing, receipts of payment (cancelled checks, for example), etc.
   
   After reviewing your situation and documentation, your Foreclosure Prevention Counselor may decide to refer you to non-profit legal assistance teams for review.  Please note: there have been limited successes to date, especially due to the fact that many of these organizations are located outside of the state of Minnesota. Our legal partners have found that the company or its agents never reply to demands for repayment - they suspect they just sets up shop under another name. However, if the company is local and as homeowner you are willing to pursue further action, they may be able to do more, including actions with the MN Attorney General’s Office and even suing the organization or agent.
   
   
3. File a complaint with the Minnesota Attorney General’s Office. Minnesota’s "Foreclosure Consultant law" was updated last year to include loan modification services, and that law prohibits charging an up-front fee before services are performed. The AG is a central office for compiling complaints and has the most power to act. The AG has a complaint form on their website here.
   
4. Use the Minnesota Department of Commerce website to look up whether a company is licensed for mortgage loan origination (Follow the "License Look Up Tool" link on the right-hand side of this page). By law, companies that provide mortgage modification services must be licensed by the state and often times are not. If they are not licensed, the Commerce Department may be able to fine the company and force them to get licensed.

Remember: there is NO NEED to pay for foreclosure-prevention services in Minnesota. There is NOTHING a fee-for-service company can do that our network of Foreclosure Counselors can’t. And more often than not… these fee-for-service companies are SCAMS. Be careful out there!