A 16-month legal process came to a halt February 9, 2012. Forty nine state attorneys general and five of the nation’s largest banking institutions reached a financial settlement agreement in the “robo-signing” fiasco that has been at the center of the country’s housing crisis.
The robo term has been used to describe the apparent abuses suffered by homeowners at the hands of Wells Fargo, Bank of America, Citi, Ally/GMAC, and JPMorgan Chase. The legal battle, in its simplest form, accuses the big five of using robo-signers to execute, at minimum, hundreds of thousands of affidavits and real estate documents without any real assurance or knowledge of the actual underlying mortgages attached thereto.
The broader scope of the charges includes banks illegally foreclosing on homeowners who thought they were being reviewed for loan modifications. Other charges include financial institutions failing to honor settlement agreements, charging illegal fees, forging documents, back-dating agreements, and a plethora of other servicer abuses.
The final settlement amount agreed upon is $25 billion. This sum releases the financial institutions from liability brought on by the state attorneys general, but individual homeowners can still bring suits against the banks for deceitful practices, wrongful foreclosures, and other grievances.
As part of the monetary settlement, individual states will receive money to fund legal services for individuals, which will ultimately help homeowners facing foreclosure.
The monies will also be used for loan modifications and refinancing mortgages, financial counseling, legal services, restitution for wrongful foreclosures, short sales, and the lowering of principal amounts due for some borrowers. Of the $25 billion, sixty eight percent ($17 billion) will go toward principal reductions for property owners who are underwater.
For example, Ohio received $335 million as part of the robo-signing settlement. The state will use $102 million for modifications and $90 million to refinance underwater mortgages for homeowners. A great deal of Ohio’s settlement monies will be used for legal aid measures to uncover mortgage scams and investigate wrongful foreclosures.
Some states will use portions of funds to remove vacant and abandoned properties. Ohio has slated $75 million as grant money to tackle approximately 100,000 such homes in its state.
Individuals can benefit directly from the financial agreement, as well. Approximately 750,000 homeowners who were wrongfully foreclosed upon can receive between $1,800 and $2,000 if they apply to receive the funds.
Questions and More Information
If you have questions about the robo-signing settlement or loan modifications that will trickle down as a result of the agreement, contact the United States Department of Housing and Urban Development approved housing counseling agency nearest you. Visit the housing counseling agency search page online at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.