Foreclosed on? $8.5B deal may help

blee@fresnobee.com jsmith@mercedsunstar.comJanuary 8, 2013 

Valley homeowners who were improperly foreclosed on may get another chance at some financial relief, this time from an $8.5 billion national mortgage settlement reached this week.

The region's housing experts hope the deal -- the second major mortgage settlement in two years -- will speed up the housing recovery and help those who are struggling to pay their mortgages.

In Merced County, "it's needed," said Andy Krotik, manager of Coldwell Banker Gonella Realty in Atwater. "Merced has a lot of people upside-down. If it helps keep people in a primary residence, that's good news."

The settlement announced Monday was reached among 10 mortgage companies -- including Bank of America, Citibank, JPMorgan Chase and Wells Fargo -- and the Office of the Comptroller of the Currency and the Federal Reserve Board.

It comes almost a year after the $15 billion National Mortgage Settlement between the nation's five largest banks and a coalition of state attorneys general.

The intent this time is to replace the Independent Foreclosure Review, which was criticized for being too time-consuming. The free federal program looked at mortgages on a case-by-case basis to find errors before paying mortgage holders.

Homeowners said the online registration was difficult and there was too much paperwork to make the payout worth it, said John Shore, executive director of the Community Housing Council of Fresno.

"This is probably what they should have done rather than go through every single loan that was foreclosed on to see what was wrong," Shore said.

Under the settlement, $3.3 billion will be made in direct payments to homeowners whose houses were in foreclosure in 2009 and 2010. The other $5.2 billion will be used for mortgage assistance such as loan modifications, the Federal Reserve said.

Homeowners could receive as much as $125,000 depending on the type of error made during the foreclosure. Homeowners who qualify will be notified by their lender by the end of March, the Federal Reserve said.

"During the peak of the foreclosure bust, there were a lot of folks where the foreclosure wasn't done correctly," Krotik said.

In Merced County, more than 8,700 homeowners were in foreclosure during 2009 and 2010, according to ForeclosureRadar, a foreclosure listing service.

Over the same time period, more than 11,000 Fresno County residents lost homes to foreclosure, ForeclosureRadar reports.

Cara Pierce, a housing counselor with ClearPoint Credit Counseling Solutions in Fresno, said the settlement makes it easier for homeowners because they don't have to apply for the money.

It comes from the lender if they qualify, she said. But it remains to be seen how much valley homeowners will receive. Pierce said she hopes valley homeowners will get a piece of the mortgage assistance.

"Of the people I talk to, most are just looking at getting a loan modification," Pierce said. They say, "I need something long term that will be affordable."


AT A GLANCE

Ten of the largest U.S. mortgage servicers will pay a combined $8.5 billion under an agreement that will end case-by-case reviews of foreclosure-abuse claims stemming from a 2011 deal with regulators. Companies including JPMorgan Chase, Bank of America and Citigroup must provide $5.2 billion in mortgage assistance and $3.3 billion in direct payments to wronged borrowers.

• Eligible borrowers are expected to get payments of as much as $125,000, depending on how badly a foreclosure was handled.

• A payment agent will act as go-between for payments, and eligible borrowers should expect to be contacted by the end of March.

• The settlement's payouts will be dispersed among more than 3.8 million borrowers who went through foreclosures in 2009 or 2010.

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