Written By: Glenn Michaels
The National Mortgage Settlement was against five (5) of nation’s largest banks. The banks and the amounts that they agreed to pay are below:
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1. Ally/GMAC - $610 million
2. Bank of America - $11.82 billion
3. Citigroup - $2.21 billion
4. JP Morgan/Chase - $5.29 billion
5. Wells Fargo - $5.35 billion
Collectively these banks settled for $41.33 billion for their mortgage practices.
What did these banks do wrong? In some cases it was things that the banks did not do for the homeowner.
There were many instances where a homeowner contacted their bank about the loss of their job and requested a mortgage loan modification. During the loan modification process the borrower(s) are asked to make temporary loan modification payments for the next five or six months. Then the loan modification application is denied. During the temporary loan modification period the bank filed foreclosure proceedings. Now the borrower(s) have been denied and they are foreclosed on. There are many other things that banks did that harmed the borrower(s),
As a result of the settlement “The Home Affordability Program” (HARP) took root for borrowers that had mortgages owned by Fannie Mae and by Freddie Mac. Borrowers that were foreclosed after January 1, 2008 and not given loss mitigation alternatives were to share $1.5 billion. State Attorney Generals received funds to assist homeowners in or about to go into foreclosure.
New York’s Attorney General just announced a new Home Owner’s Assistance Program that begins on Long Island as of September 15, 2014 and the remainder of the state as of October 15, 2014. The program will provide delinquent homeowners up to $40,000.00 to bring their mortgage current. This loan does not have to be repaid on a monthly basis. It is a silent mortgage that must be paid off when the home is sold.
The rules to obtain the loan are not too difficult. The rules are below:
Borrower must live in the home (owner occupied primary residence)
Demonstrate the hardship
Show they can afford the home once they receive the loan
Earn less than 120 percent of the area’s median income.
Loan becomes a silent mortgage that must be satisfied when the home is sold. There are no monthly repayments required.
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Hopefully other states will take New York State’s lead and develop their own programs to assist homeowners so they will not lose their homes due to a foreclosure action.
About The Author
Glenn Michaels - As an NAMP® staff writer, Glenn Michaels is a mortgage underwriting instructor for Mortgage Underwriter University (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years. If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org.
