Attorney General urges homeowners to determine their eligibility and prepare to get in line
By Chris Levister –
Riverside and San Bernardino County homeowners hit hard by the housing bust will receive a collective $2.7 billion in financial relief as part of a historic $25 billion settlement with banks over alleged foreclosure abuses.
The pact announced last week between five large U.S. banks will provide assistance to an estimated one million at-risk borrowers, raising new hope for an economy still smarting from the mortgage bust.
County-specific payments are based on the number of homeowners and the depth of the foreclosure crisis. Los Angeles County will accrue $3.92 billion followed by Riverside County at $1.59 billion. San Bernardino County will receive $1.13 billion over the three-year life of the commitment.
Attorney General Kamala D. Harris played a key role in brokering the historic settlement which will yield California up to $18 billion in mortgage help.
"California families will finally see substantial relief after experiencing so much pain from the mortgage crisis," said Harris.
"Hundreds of thousands of homeowners will directly benefit from this California commitment."
The agreement comes after California departed from the multistate negotiations last September when the est imated relief to California was $4 billion. Harris insisted on more relief for the most distressed homeowners, meaningful enforcement, and the ability of California and other states to pursue investigations into misconduct.
California's participation in the settlement also increased the amount of relief other states will receive by approximately $6 billion.
Harris also obtained separate, enforceable guarantees to ensure that banks will be accountable for their commitments to California. As part of the separate California guarantee, banks must enact a minimum of $12 billion in principal reductions for California homeowners.
Unlike the larger multistate agreement, which is enforceable in a federal court in Washington, D.C. , this payment provision empowers the Attorney General to summon the banks to California state court.
California's separate guarantee also creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California's hardest-hit counties and that the principal reductions in these communities will occur within the first year of the settlement.
To speed investigations and strengthen prosecutions of these mortgage cases Harris said California will expand its Mortgage Fraud Strike Force, adding to the more than 42 members already working on the team.
The state will continue its investigative alliance with Nevada, that allows the sharing of resources, information and strategies, and will look to collaborate with additional states focused on a law enforcement response to the wave of mortgage fraud.
Harris will propose a comprehensive legislative agenda to protect homeowners in the mortgage market. The legislation will establish a single point of contact for mortgage-holders and an end to the unfair and confusing system of dual-track foreclosures.
"This is an historic amount of relief for California homeowners, but it is one piece of a broader focus. We will continue our crackdown on mortgage fraud and quickly move to pass legislation that will simplify reform and upgrade our broken mortgage system," Harris added.
The massive mortgage settlement may be setting new national standards for loan servicing, but it may be too little and too late to help many troubled Inland homeowners.
Some who suffered foreclosures say the payouts are a pittance, and many homeowners in trouble won't qualify for help. “It is too little, too late,” Cassie Lee Davis said. “What about the people who have already lost their homes due to fraudulent documents?
They are giving people $1,800 to $2,000, which is not anything compared to the cost of losing your house.” Davis lost her Riverside home to foreclosure in 2010 after years of fighting her mortgage lender.
The settlement will apply to privately held mortgages issued between 2008 and 2011. During that time, many companies processed foreclosures without verifying documents. The states also alleged that some employees signed papers they hadn't read or used fake signatures to speed foreclosures — an action known as robo-signing.
Inland housing officials are waiting for more details on the agreement and anticipate it will be a couple of months before banks begin the screening process.
The Attorney General’s office is encouraging homeowners to contact mortgage assistance counseling agencies as soon as possible to determine their eligibility and prepare to get in line.
Housing and legal counseling agencies will receive some of the settlement money to advise homeowners on how to apply for the assistance that includes refinancing and principal reductions for people who owe more on their homes than their homes are worth and meet other qualifications.
There is also some compensation, about $2,000 per homeowner, for those whose homes were wrongfully seized in foreclosure.
And there is opportunity for short sales and relocation assistance.
Harris said at a conference Thursday that it could take about 120 days for the homeowner assistance programs to ramp up. But she said someone needing help should not wait to contact the company that services his mortgage.
She said those wanting advice from a third party should call one of the free, federally approved counseling agencies rather than a private consultant who charges a fee and may not be honest. The number to receive the name of a HUD-approved counseling organization is 800-569-4287.
The new assistance is available only to qualified homeowners whose mortgages are owned or serviced by the five banks involved in the settlement: Bank of America/Countrywide, Citibank, JP Morgan Chase/Washington Mutual, Wells Fargo/Wachovia and Al ly Financial, formerly GMAC.
The first step for a homeowner is to find out who owns his mortgage by calling the bank that services his mortgage.
The phone numbers the banks have provided for mortgage settlement inquiries are listed on the California attorney general website.
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