$140 Million Allocated to Wisconsin in $25 Billion Mortgage Settlement
A national settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial related to loans issued between 2008 and 2011 that were foreclosed on will provide Wisconsin an estimated $140 million over the next three years.
Monetary benefits to Wisconsin will include:
- Up to an estimated $60 million in benefits from loan term modifications and other direct relief.
- Approximately $17.2 million in uniform payments of up to $2,000 for eligible Wisconsin borrowers who lost their home to foreclosure from January 1, 2008, through December 31, 2011, and suffered servicing abuses.
- Approximately $31.3 million in refinancing benefits for eligible borrowers who are currently making payments but owe more than their home is worth.
- Payment to the State of approximately $31.6 million that may be used for compensation to the State, future law enforcement efforts, additional relief to borrowers, civil penalties and/or funding of foreclosure relief and mitigation programs.
Governor Walker and Attorney General Van Hollen announced that $25.6 million of the state’s portion will go towards covering the projected budget shortfall.
The settlement involves more than payments. Under the Agreement, mortgage servicers will be required to follow comprehensive “servicing standards” that will significantly reform all aspects of post‐closing mortgage servicing. Among other things, the new standards will: (a) prevent robo‐signing and other improper foreclosure practices; (b) require banks to offer loss mitigation alternatives to borrowers before pursuing foreclosure; (c) increase the transparency of the loss mitigation process; (d) impose timelines for servicers to respond to borrowers; and (e) restrict the practice of “dual tracking,” where foreclosure is initiated despite the borrower’s engagement in a loss mitigation process.
Nothing in the agreement grants any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis.
This post was authored by Emily Kelchen.