In February 2012, the government settled claims for bad foreclosure practices with 5 of the biggest American mortgage lenders. The settlement will provide some help to certain people who have suffered from having their mortgages foreclosed between January 1, 2008 and December 31, 2011, and those with underwater homes.
The government and the banks still have not agreed to all the details, so I can’t tell you exactly what to expect and when to expect it, but I can tell you roughly who will be included, and what you will get.
To learn the most current information, you should visit the government’s website at www.nationalmortgagesettlement.com. Also be sure to watch the mail, as the settlement administrator will be contacting eligible people by letters.
WHO IS INCLUDED?
The settlement only covers people who had loans from Bank of America, Wells Fargo, Citimortgage, Chase, and GMAC, and any banks which have been bought by them: such as Countrywide and Wachovia. US Bank and TCF are not included.
It also does not cover people whose loans were bought by Fannie Mae or Freddie Mac, so you must find out if your mortgage was sold to them or not. To help people find out who owned their loans the government set up the website www.nationalmortgagesettlement.com. This website has a tool to find if you are included and has lots of information about administrative details and timing.
If you have a qualifying loan, then you must also have suffered in one of the following ways:
1. Your mortgage was foreclosed on between January 1, 2008 and December 31, 2011.
2. You are pursuing a mortgage modification right now.
3. You are current on your loan, but underwater. This means that the principal balance on your mortgages is more than the value of your house.
If you meet all of these requirements, then you might get some compensation from this settlement. Those who were foreclosed on are eligible for cash payments, and those who are trying to modify their mortgages or are underwater can get special refinance rates and maybe even principal reductions.
HOW DO I INCLUDE MYSELF IN THE SETTLEMENT?
At the moment (February 21, 2012), that question has not been answered. The best source of information is the government’s website at www.nationalmortgagesettlement.com. The attorney general for each state is supposed to locate and contact all borrowers who qualify for compensation within the next three years. Three years, however, is a long time, so I recommend that you contact your attorney general directly, and ask if you qualify. Give your contact info to your attorney general and watch the mail for the next few years.
In Minnesota, the attorney general is Lori Swanson. Visit her website at http://www.ag.state.mn.us for instructions and claim forms to make sure you are included in the settlement.
Filing for bankruptcy will not make you lose your rights under the settlement.
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