Iowa Attorney General, Tom Miller, says the state’s estimated share of a $25-billion settlement with the country’s five largest mortgage servicers is $40-million. The settlement over alleged abuse and by the servicers in handling mortgages and foreclosures was announced today in Washington, D.C.
In a conference call this afternoon, Miller says the state will receive a direct payment of $15.3-million. “The first thing I think should be done with the state payment is use that to support what I call the infrastructure that helps homeowners in distress,” Miller said.
“That’s the Iowa Mortgage Help Hotline, thought to be the best and most effective in the country, it’s the housing counselor group that helps in that process, it’s Iowa Legal Aid that provides legal assistance to those who need legal assistance.”
Miller said another part of the settlement helps those who are “under water” or owe more than their home is worth. “Many of them are current on their loans, are paying on their loans and would be eligible to refinance their interest rate, but are unable too because they are underwater. It’s sort of a ‘catch-22’, but this would remove the ‘catch-22’ and provide that they could get could get a lower interest rate toward the market interest rate,” Miller said.
He said there’s some $11-million dollars to help those who’re underwater on their loans. Other money would pay those who have been subject to some kind of abuse by the loan servicers.
“If someone was foreclosed upon in the last three years and can point to anything that was done ineffectively by the servicing companies, they can get a payment probably in the area of 15-hundred dollars,” Miller said. He said it would go to people who could not recover money if they sued their loan servicer.
Miller said Iowans weren’t hit as hard by the housing crisis as people in other states, and isn’t sure just how many might benefit from this settlement. He said it is hard to calculate how many people were impact and they will know more as they get more information and are trying to be conservative in their estimates.
If you have had a problem with your loan, there are several ways to seek settlement money. “One choice that we recommend very highly is the Iowa Mortgage Help Hotline, it’s helped a lot of homeowners,” Miller said. “They can also contact their banks their servicers, if they have any trouble…they can contact our office directly.”
The settlement covers claims for loan servicing and foreclosures for :Ally Financial, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo. Miller said they are working on agreements with the other loan servicers.