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$26B mortgage deal: Will it aid you?

Up to $17 billion of the mortgage settlement will be used to pay down the principal on eligible underwater home loans. How does it impact you?

By MSN Money Partner Feb 9, 2012 7:30PM

This post comes from Marilyn Lewis at MSN Money.

 

Today's the day. Homeowners have waited nearly a year for state attorneys general to wrestle with five big banks and come up with a settlement over mortgage-servicing abuses like robo-signing.

 

Finally, a deal: The banks will pay at least $26 billion over three years.

 

Here's a round-up of what it's likely to mean -- or not mean -- to you.

 

Will it turn your life around?

No. Don't expect a miracle to come from this deal. Reports The New York Times:

"I just don't think it's going to be a life-changing event for borrowers," said Gus Altuzarra, whose company, the Vertical Capital Markets Group, buys loans from banks at a discount.

Who's eligible?

The states: 49 of the 50 states took part. The holdout is Oklahoma. Unless Oklahoma signs on, borrowers there will be excluded.

 

How many people benefit varies by state. In Idaho, for example, borrowers will receive almost $100 million from the settlement, NPR reports. According to The New York Times:

In New York State, more than 46,000 borrowers will receive some form of benefit from the settlement, including an estimated 21,000 who are expected to owe less because their principal will be reduced, according to estimates by the Department of Housing and Urban Development.

The banks: You're possibly in the running for a piece of the settlement if your loan is "serviced" (mortgage payments are collected) by Wells Fargo, Ally Financial, Bank of America, JPMorgan Chase and Citigroup. They manage payments on 55% of American home loans.

 

It’s probably too soon to figure out if you'll qualify, but you can call your mortgage servicer to ask. (Remember to grab some paperwork with your loan number before you dial). Also, watch the official National Mortgage Settlement site for announcements and information.

 

The Wall Street Journal lists these contact numbers and hours:

  • Ally/GMAC: 800-766-4622
  • Bank of America: 877-488-7814 (Mon. - Fri. 7 a.m. - 9 p.m. and Sat. 8 a.m. - 5 p.m. CST)
  • Citigroup: 866-272-4749
  • JPMorgan Chase: 866-372-6901
  • Wells Fargo: 800-288-3212 (Mon. - Fri. 7 a.m. - 7 p.m. CST)

The homeowners: About a million homeowners will get a refinance or have their loan balance paid down somewhat. In addition, some people who have already lost a home to foreclosure will get small payments. Post continues below.

Who gets what: Here's the breakdown, according to The Times:

  • $5 billion in cash payments to states and federal agencies
  • $17 billion to help homeowners
  • $3 billion for refinancing
  • $1 billion for the Federal Housing Administration

You will definitely not qualify if your mortgage is supported or owned by Freddie Mac or Fannie Mae. Use Fannie's and Freddie's loan look-up sites to see if yours is one of those:

The timeline: According to the official deal site, it will take:

  • 30 days to identify someone to administer the settlement.
  • Six to nine months to identify homeowners eligible for the cash payments, principal reductions and refinancing. If you're eligible, you'll get a letter in the mail. If you're worried the bank can't find you, contact your state's attorney general.
  • Up to three years for help to be delivered.

More on who's eligible

News reports are fleshing out a little more detail on who will qualify under the categories above.

 

Principal reductions: Apparently only homeowners who are behind on their mortgage payments will be eligible to have some of the balance shaved off their loans. This $10 billion in help applies to first or second mortgages and liens.

 

The Wall Street Journal has more on this category:

For one thing, borrowers have to be behind on their payments or at "imminent risk" of default. The owner of your loan also makes a difference. Most of the principal reductions are expected to go to borrowers whose loans are owned by the banks, though some borrowers whose loans were packaged into securities may also qualify.

Refinancing: The only loans eligible for refinancing are mortgages owned by the banks that signed the deal, says the Journal. That's a relatively small number. Apparently, those eligible for this $3 billion chunk are homeowners who are up-to-date on payments but who can’t refinance at current low rates because their homes are "underwater" -- worth less than the value of the mortgage.

 

Foreclosed homeowners: The deal sets aside $1.5 billion for roughly 750,000 people who lost homes to foreclosure between September 2008 and December 2011, according to the Journal.

 

Bottom line: "Borrowers could receive $1,500 to $2,000 each, with the actual amount paid depending on the number of borrowers filing a claim."

 

Foreclosed homeowner Nadine Bond of Middletown, Conn., told the Journal: "It will help, but it is not going to get my home back."

 

Ineligible? Wait, there's more

The Times reports that two other big mortgage-servicing settlements were announced today:

A mortgage servicing subsidiary of Bank of America agreed to settle Federal Trade Commission charges that it illegally assessed more than $36 million worth of fees against struggling homeowners, in violation of an earlier settlement with the FTC.
Bank of America, Citigroup, JPMorgan Chase and Wells Fargo also agreed to pay a penalty of $394 million as part of a settlement over foreclosure abuses, the Office of the Comptroller of the Currency said.

More on MSN Money:

113Comments
Feb 10, 2012 7:37AM
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As usual, the hard working, responsible, 70 hour + work week people like me (and all of the ones like me who made comments) get screwed, and get no reward EVER for doing the right thing.  I am losing all of my faith in the US.  We reward the filthy rich, and the irresponsible.  No wonder we are creating a culture of moochers.  Come to America, don't work, and you can get FREE stuff!  Wanna work hard?  Good.  We will tax you heavily, penalize you, leave you out of any societal benefits, and screw you so you can PAY for all the others.  What a joke.  No offense to people with TRUE hardship...  however, don't kid yourself people...  there are 5 lazy,freeloader Americans for every ONE who is trying their best and just having a rough time.  I'm sick of the apologizing for the freeloaders and the irresponsible.  Help those who NEED IT. 
Feb 10, 2012 4:27AM
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Still waiting for my buyout.  I own a home did the right things made sacrafices and never missed a payment or needed help from the government.  WTF where is my help.  I guess because i have a job, was smart with my money, i get punished.  F#$% this BS
Feb 10, 2012 5:03AM
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This country no longer rewards success but makes anyone who works and makes smart choices pay for all of those who didnt. I support over 40 percent of the population of this country ( crackheads welfare recipients, now people who had no business getting loans, ) Thanks GOD I worked 80 hours weeks for the last 10 years so I can give it away to a bunch of slackers and people who paid no attention to the obvious housing bubble. What did you think houses would just keep appreciating ? Duh it had to stop sometime. If your a **** you get a bailout if your smart you get a kick in the ****. I apologize for this gross generalization I know with this economic downturn due to crooked banks etc that a lot of good people got nailed to, but I am just so sick of paying for people who work less. How many of you have put in 80 hour weeks for 10 years. I didnt work twice as hard as everyone else just to throw it away people with no brains or work ethic

Feb 10, 2012 8:23AM
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Let's face it, if you live in the U.S. you never really own property. Even if you work hard and pay off your mortgage the County comes around to wet their beak. Say your home or property is free and clear and you don't owe a dime on it. Try not paying your property tax for a year. If you don't pay the legalized extortion money.... they simply take your home or property and auction it off on the courthouse lawn. The only difference between this and paying protection money to the Mob is.... it's the law.

Feb 10, 2012 7:33AM
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this type of policy shows that the american people are nothing more than sharecroppers anymore...

we all work for the financial sector now....the banks pay off the politicians and the politicians sell out the people and make us pay for the banks crooked deals....after the banks and insurance companies screw us so bad they destroyed the housing market and lose their investors money, they simply get the politicians to write them a check...so they can re-capitalize the very companies that went under,(under dif names of course) so they can get back to thieving...then when it comes time to pay us back, they use typical insurance policies/strategies to settle their debts....they will never pay what they owe...thats how the banks and insurance companies make their money......and the wheels on the bus go round and round, round and round....lol...we have the most corrupt government in the world as far as the scale of the thievery is concerned...it is also the most sophisticated scam in history, most people could never figure it out...

Feb 10, 2012 6:01AM
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What is funny here is people complaining about staying above water on there mortgage.  Home ownership should be thought out from A to Z.  The sad part about all this is the lenders are getting off EASY! They were the ones that made BAD LOANS. They should EAT ALL there RISKY DEBT. Instead the TAX PAYERS are giving MONEY AWAY AGAIN!!  When I bought my home. I got one that was half the cost of what I qualified for. So I could PAY bills and EAT after the mortgage payment was made.
Feb 10, 2012 7:55AM
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May I just say one more thing?  26 BILLION dollars...So where did this bailout come from?

Can you imagine how hard it will be to payback a Billion dollars?  You think we have problems...our kids are screwed!

Feb 10, 2012 9:39AM
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It seems like there's a lot of hate towards Mike here, but he's got a point. He bought a house that wasn't way overpriced, he wasn't suckered by an ARM, and he is fortunate enough to still have a job. He's not being insensitive to those that are now unemployed with the double whammy of a loan now worth more than their house, but his house lost value too and he gets nothing. Say he bought a $250k house, and went in with 20%, he had 50k invested, and if his house is now worth only $200k. He's lost 50k and doesn't get any bailout at all.

 

It seems that a better way to do this would be to drop everyone's loan rate by say 2% to 2 1/2%. and cut down the owner's payments, and the bank's profits.  No government bail out, everyone with a mortgage is helped, and the banks, who are mostly responsible for this mess, get punished.

Feb 10, 2012 9:15AM
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This bogus program may help a few that really need help but based on history most of this will bail out those who should never have been given a mortgage due to Red Lining requirements by the thugs aligned with Barney Frank.  Those who just walked away when they had the means to fulfill their obligations should not get a dime.

 

If you cannot afford to pay for a home you should not be allowed to be placed in such a situation.  No study ever proved that being given something for nothing was productive.  People need to work toward a goal and not just expect a handout.

Feb 10, 2012 4:41AM
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i agree with you Mike, i have never missed a payment. I did all the right things. luckily i didn't lose my job. but you kind of feel you are being left out
Feb 10, 2012 10:02AM
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The lesson learned, is that those that did it is the right way, get screwed.
They end up paying for their house and everybody else's mistake.
We paid 280 (worth about 240 now)for our house, but the banker at the time said we qualified for a 400,000 house. I told him he was crazy we couldn't even afford to eat if we bought that house, he said, just get an arm and re-fi later.
I said to the guy you are crazy if you think I am going to gamble my family's home on the price of my house going up.
Guess what, I have lost my job and gotten a new job and still pay my f'n mortgage, while one of my friends laughed an me and bought the 400,000 and surprise, surprise they lost it and now want others to feel bad for him/then because they got screwed.

And guess what the Government is going to reward them with $2,000, me I get nothing because we own almost exactly what our house is worth.
Just think I could have skipped a few house payments and used that money for a smart phone and cable tv and came out ahead, but instead I didn't waste my money on those because I had an obligation to pay my mortgage.

One more thing, a bank can't steal a house from you that you don't own. You might have forgotten but you signed a promissory note that you would pay them back, if you didn't then it is their house. Naval idea I know.


Feb 10, 2012 9:58AM
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Help me, Help me please!! I've got a huge blister on my derriere !!

Normal Response: Get up, move, do a little work

Government response: Well, we need to look deeply into this debilitating situation! We will assemble a team of doctors and scientists, do an 18 month study, (stay seated please), and develop a plan to address this problem. Money is no object, we will throw it around like it's yours, anyway.

Feb 10, 2012 9:27AM
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 American politicans created the entire financial problem. This lawsuit is another example of political corruption.
The attorney general should not be going after the corporate business entities, YET.
The attorney general should be going after the politicans responsible for creating a hybrid (fannie & freddie) then REQUIRING these hybrid companies to buy unsecure or risky loans from the banks. The Attorney Gen should be paying attention to all politicans with insider connections to fannie freddie. The Washington DC process is beyond corruption; they have taken it to a level second only to N Korea. The Arabs have a better political process than Washington DC. 
The attorney general should be holding the politcans including the sec of trea responsible for repealing glass-seagal.
Once again the American political system has RAPED the taxpayer......this is the second time in 4 years....
The way to amends would be to utilize the Washington DC Monument as a hanging post. If we could hang the people responsible for the hybrid transition of fannie & freddie,  repeal of Glass-Seagal and the out of the box thought that companies are  ' to big to fail'  we would be a better society......but then I also believe individuals are responsible for their action..something the Attorney Generals Office does not believe in these days..

America? going down  down  down  but Frank and DODD are RICH RICH RICH !

Feb 10, 2012 6:21AM
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Mikesellmeyer you are correct.  I have done the same.  I have two mortgages, never had a late payment; however, circumstances beyond my control have devalued my property to where I cannot sell it.  All I want is for the bank to refinance me at a lower interest rate and I will continue to make timely payments but not at 6% and 8.19%.  I need a lower payment to coincide with the value.  If the value was where the mortgage is I could (maybe) sell the house; however, the way it is now it seems to me they want me to just walk out, doesn't make business sense to me.  I have this house as a home for myself and my 85 year old mother who happens to have had quad heart surgery, diabetic and now on dialysis, things keep going up in price and she needs special care, I am going to do that first rather than pay out exhorbitant interest to these greedy banks.  I also my just forget what morale values my mother taught me because there isn't any in this country anymore.  I should refigure my math and probably walk out and not look back because all I am doing is proping up the greedy bankers with their high interest and all for what, I am not looking to make millions, just need a break and let me do things the right way and pay what is fair.
Feb 10, 2012 9:51AM
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For the last 7 years I've lived in my "starter" house which I don't like because I'm trying to do the right thing.  I'm underwater by 1/3 of my purchase price and I've never missed a payment, I've even tried to pay extra whenever I can to get out of this mess.  I question this attempt to help out the people who didn't make payments, they knew what they were getting into!!  What's next, in 5 years all people with bad credit from a foreclosure are cleared of their bad rating?!  I can't even explain how irate that would make me as I sit on this piece of crap house...
Feb 10, 2012 11:04AM
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lets  see...... we  have  the  federal  government  threatening  lenders  to "  come  up  with loans"  for  deadbeats  that  in no  way  could  afford  homes.... than  we  villianize  these  lenders  than  we  take  $25  billion  dollars  from  them.  what  a  great  country  we  live  in.

 

 

 we  are  to  belive  that lenders  hit  people over  the  head  with  clubs  ,  dragged  them into  an office  ,  held  them  at  gunpoint   and  forced  them  to  sign  mortgage  papers?

Feb 10, 2012 9:13AM
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So, we bought a house, re-fi'ed to do home improvements, did them...

3 years later, the payments begin to climb, even though my credit score went up from where it was when I ref-i'ed. Then it went up again. And again...

Eventually, I had to sell our home at a loss, after the payments went up 80%.

My mistake was to re-fi to do the improvements. Had I not jumped at the ARM to help lessen the impact, we would still have our home.I made a mistake, we lost our home, I paid the price...

Since I sold it...I'm screwed.Not that I want a hand, I'm a free market guy.

I do think, however, that we should all play by the same rules.

Feb 10, 2012 7:54AM
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The short answer.  IF IF IF you got a home loan BACKED by the government, this does NOT apply to you.  PERIOD.

 

Only those who have the credit score high enough to get a straight loan from the bank without Fannie or Freddie will be affected.

 

It sure sounds good  but doesn't go into affect until AFTER the election.  So many Obama worshiper idiots will believe it's to help them and hand this Liar in Cheif their vote only to learn after the election nope nope not you but I do not care I got your vote and do not need you for anything now.  So go F^^^ yourself..

Feb 10, 2012 7:32AM
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I feel everbody's pain here, whether you lost your home and savings due to losing your job or sickness; or you are lucky enough to have a good job and home and are tired of working so hard to support the other 48%.  Is whinning here going to help? It might make you feel better temporarly, but tomorrow you will still have the problem.  So what can you do?  Vote.

   Have you ever tried to fill up your kids wading pool when it has a small hole in it?  As the leak gets bigger the pool goes dry.  That's whats happening to all of our wealth in this country.  Every adminstration since camelot has been fighting these no-win wars and doling out money & US jobs to third world countries and dictators.  Until our government starts being alittle more conservative...we're​ all screwed.  Now I'm not saying drink TEA...those guys are radical...all I'm saying is until we slow down the flow of wealth from our country, more and more of us are going to be homeless.  It wouldn't hurt to hang accouple crocked bankers & politicians up by their nut sack as an example to all. Please vote for people that will fix the problem, not just hand out money....that's all of our money they are giving away.  Giving people or countries hand outs doesn't help them, it makes them dependent on you.

Feb 10, 2012 10:29AM
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This is what the plan should be:

 

If you bought a home for $800k when you only made $50k a year.   Its not the banks fault..it is your own fault.

 

The fix:  You should be homeless for your own bad decision.

 

 

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