From questionable lending decisions to shady foreclosure practices, the mortgage industry has been under something of a cloud for the last several years. A recent settlement between the state attorneys general and the five leading bank mortgage servicers, along with mortgage loan service reforms, is a positive sign that progress is being made.
The Settlement Agreement will result in monetary sanctions and relief to the tune of approximately $25 billion dollars. A portion of these funds will be dedicated to reducing principal for borrows who are behind on their mortgage payments and owe more than their homes are worth. Additionally, a refinancing program will be created for those homeowners current on their payments but whose mortgage is for more than their homes’ current value. The settlement also dedicates funding for other forms of relief, including for unemployed borrowers, some service members, and other programs.
The settlement also created a Borrower Payment fund to provide cash payments to certain borrowers whose homes were foreclosed between January 1, 2008 and December 31, 2011.
New servicing standards have been agreed to in an attempt to protect consumers from unfair foreclosure practices. Strict oversight, elimination of robo-signing, a defined appeals process, adequate staffing to handle customer inquiries, and restrictions on foreclosure are among the new standards defined in the settlement.
While the foreclosure crisis isn’t over yet, these reforms should help protect homeowners while the market works towards recovery.
Shawn Buryska ABR, CRS, GRI
Coldwell Banker Burnet Realty
Shawn Buryska, Coldwell Banker Burnet Realty, Licensed in the state of Minnesota