Tag Archives: Attorney General

According to documents filed in federal court Monday, Ally Financial formerly GMAC will offer principal reductions beyond what is required of the majority of the five banks in $25 billion the national mortgage settlement. While the general rule for principal reductions required through the settlement is to lower principal to no more than 120 percent of a home's value, Ally will offer reductions of as low as 85 percent in some cases where borrowers are considered likely to default. Other homeowners with high-risk loans may receive reductions bringing their loan to 105 percent or 100 percent of their homes' current values.

Some Bank of America borrowers may be in for principal reductions in amounts exceeding $100,000, according to the latest developments in the settlement the bank and four other large servicers made with state and federal regulators. While the other four servicers in the national settlement are being required to diminish principal so underwater borrowers have loan-to-value ratios of 120 percent or less, BofA will be reducing principal for about 200,000 homeowners to fall in line with current market values.

The first details on how mortgage servicers must fulfill their end of the $25 billion federal-state settlement can be found within the 233 pages of Wells Fargo's annual filing with the Securities and Exchange Commission. As expected, first-lien principal reductions carry the most weight in terms of credit towards each servicer's financial obligation. Forgiveness of past due payments for unemployed homeowners garner dollar-for-dollar credit, as do costs associated with demolishing vacant, foreclosed properties.

Principal reductions have been approached with some reluctance and much debate throughout the industry, but as part of the recent $25 billion settlement with the state attorneys general, the nation's largest servicers have agreed to administer the loss mitigation tactic. Fitch maintains the issue of principal reductions is not a simple ""yes"" or ""no"" question, and ""if not implemented carefully, a wide-ranging principal reduction program could potentially increase defaults among borrowers who would otherwise remain current.""

After more than a year of intense negotiations, 49 state attorneys general and the nation’s five largest mortgage servicers reached a $25 billion settlement on February 9. While the agreement allotted specific amounts to go towards certain areas of relief, many are wondering how the settlement will affect those represented. Moody's Analytics has released a report offering up an analysis of the settlement's expected impact on both banks and borrowers.

With more than 100,000 vacant properties in the state, Ohio Attorney General Mike DeWine designated part of Ohio’s $335 million from the national settlement with the nation’s largest servicers for property demolition. However, not everyone agrees with the decision. ""We would have much rather spent that money helping families and creating homes rather than knocking houses down that we believe are owned by some very well-resourced banks,"" said Chris Warren, Cleveland's chief of regional development, according to the Huffington Post.

Connecticut is set to receive more than $190 million from the multi-state settlement with the nation’s largest mortgage servicers. ""There are many reasons why I believe this settlement is good for Connecticut, but the most important reason is this: it provides immediate help to thousands of Connecticut homeowners at a time when they can still use that help to save their homes,"" said Connecticut Attorney General George Jepsen, who served on the negotiating committee that established the settlement with the banks.

Reluctant attorneys general for New York and Delaware both signed on to the multi-state $25 billion settlement last week with the nation's largest servicers, securing $740 million and $45 million for their states, respectively. The two attorneys general were lured back to the settlement in its final days when they were assured the settlement would not impede further investigation into additional civil and criminal claims at the five mortgage servicers – Bank of America, Citi, JPMorgan Chase, Wells Fargo, and GMAC.

The $25 billion, 49-state settlement awarded Ohio with $335 million to be used for recovery and prevention efforts. Through the creation of a grant program, the AG's office will set aside $75 million to fund the removal of vacant and abandoned properties, which decrease the value of surrounding homes. While the exact number in Ohio is unknown, the estimate is 100,000 properties.

The settlement reached last week between federal and state officials and the nation's five largest servicers includes specific provisions for U.S. military members wrongfully harmed by their mortgage servicer. Four of the five banks participating in the settlement - JPMorgan Chase, Wells Fargo, Citigroup, and Ally - will review foreclosures of military members since January 2006, identifying instances of violation of the Servicemembers Civil Relief Act, according to the Department of Justice.