Aid for California's Foreclosed Homeowners

If you are one of the many Californians who were affected by the state's foreclosure crisis, help may be on the way! California Attorney General Kamala D. Harris has awarded $9.4 million to 21 different organizations that will assist homeowners through California's National Mortgage Settlement Grant Program. These grants will benefit the neediest homeowners by providing better access to free legal assistance and representation. Homeowners will also have access to foreclosure intervention aid, education and financial literacy clinics, employment support and more.

“The foreclosure crisis has inflicted wide-ranging and deep harm to California homeowners and communities,” said Attorney General Harris. “These grants will give homeowners and families the financial and legal tools they need to recover.”

Organizations that receive this grant will begin implementing programs immediately in more than a dozen languages that will focus on the under-served and disproportionately impacted populations.

As of March, Attorney General Harris also announced that there will be an additional $1 million grant implemented into the National Housing Law Project called the California Homeowner Bill of Rights. All these funds are secured through the National Mortgage Settlement.  It is believed that these grants and programs will greatly benefit hard-working families who need that extra push to get back on track financially.

We previously blogged about the Homeowner Bill of Rights here.

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Payout to 4.2 Million Borrowers Beginning April 12th

There was an agreement between the Office of the Comptroller of the Currency (OCC),  the Federal Reserve Board, and 13 mortgage servicers that will make payments to 4.2 million borrowers starting April 12th. This agreement will provide $3.6 billion in cash payments to homeowners that have found themselves in any stage of foreclosure in 2009 or 2010. Those defaulted loans must have been serviced by by one of the following companies or their subsidiaries  Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The checks will be sent in several waves starting with 1.4 million checks being sent out on April 12th, and ending sometime in mid-July 2013.  The payments are expected to range from $300 to $125,000. There will be a bit of a delay for borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley, but information regarding this is not yet available.

Borrowers who qualify to receive this servicing settlement payout can expect a letter with an enclosed check sent by the paying agent, Rust Consulting, Inc. Rust previously sent postcards to the 4.2 million borrowers to notify them about their eligibility. If you received a postcard but need to update your contact information, call Rust at (888) 952-9105. Any information that you provide to Rust will only be used in regards to the agreement, at the direction of the OCC and the Federal Reserve.  However, you should beware of scams. If anyone asks you to call a different phone number or to pay a fee in order to receive your payment, do not do so. Stop and call the number above. Remember, servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting a payment.

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$1 billion False Claims Settlement Against Bank of America

The government has been investigating the lending practices of Bank of America since 2009. The bank, and Countrywide Financial Corporation which it acquired in 2008, had knowingly been giving FHA-insured loans out to unqualified home-buyers. This has resulted in hundreds of millions of dollars in damages to the FHA. The investigation also looked into whether or not BofA and Countrywide had been defrauding the FHA insurance fund with mortgage loans that were based on inflated appraisals.

Finally a settlement has been reached. Bank of America will have to pay $1 billion to correct this wrongdoing. They must pay $500 million upfront to provide a recovery fund for the damages done to the FHA. The second $500 million will be used to fund a loan modification program for Countrywide borrowers with underwater mortgages. Bank of America is expected to modify the loans of anyone who is eligible and who accepts this offer. The bank has 3 years to apply the full $500 million toward this relief effort, and if they fail to meet this obligation, any remainder must be paid directly to the U.S. government.

This goes down as the largest ever False Claims Act settlement relating to mortgage fraud. Because they abused the FHA, Bank of America, Countrywide Financial and their subsidiaries are mainly to blame for the country's financial crisis. It goes to show that lenders need to be careful about following the FHA's rules, or else they too will face serious financial consequences for any violations.

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