Attorney General Says Help to State Homeowners
Running Ahead of Earlier Mortgage Relief Estimates
Attorney General George Jepsen said Connecticut’s distressed homeowners are on track to receive significantly more mortgage relief from the $25 billion national mortgage foreclosure settlement than anticipated when the settlement was announced last year.
The latest report today by the national settlement monitor shows that 5,050 Connecticut borrowers have benefitted from $345.3 million in debt relief since March 1, 2012. In the three months ended Dec. 31, 2012, 2,175 Connecticut borrowers received nearly $160.3 million in debt relief.
The $345.3 million represents the amount of debt that Connecticut borrowers will no longer have to pay back to their lenders. The average benefit was approximately $68,500.
“This is very good news for distressed homeowners and I am pleased the loan servicers are making good on their promises to provide real relief and to help people stay in their homes,” Attorney General Jepsen said. “While not everyone will qualify for help, the numbers in Connecticut show a very positive trend.”
Nationally, a half million borrowers have benefitted from some type of relief since last March, including more than 276,000 in the three months ended Dec. 31, 2012.
The consumer relief includes the value of first- and second-lien principal reductions; refinancing; short sales or deeds in lieu of foreclosure; deficiency waivers; forbearance for unemployed borrowers; anti-blight activities and benefits for members of the armed services.
Connecticut borrowers had been estimated to receive $155 million in relief when the settlement was announced in February, 2012 with the five largest mortgage servicing companies: Bank of America, CitiMortgage, Inc., Ally Financial, Inc., J.P. Morgan Chase Bank and Wells Fargo; 49 states and the federal government. It took effect in April, 2012.
The settlement required the banks to provide $17 billion in debt reduction and other relief to homeowners within three years. The agreement requires 60 percent of the credited relief to provided through first- or second-lien principal reduction and $3 billion through refinancing.
Connecticut’s numbers are better than anticipated because the state has been aggressive in bringing distressed homeowners and their loan providers together by hosting mortgage foreclosure assistance events around the states. The events helped to jump start the mortgage review or modification process for many homeowners. The next event is planned for April 17 in New Haven. In addition, nonprofit housing counselors and legal aid attorneys have worked tirelessly to assist borrowers seeking relief under the settlement.
Since Oct. 2, 2012, the five banks have been operating under more than 300 new loan servicing standards required by the settlement to reform and improve the way borrowers are treated by the companies. However, Joseph A. Smith Jr., the national monitor responsible for overseeing the banks’ compliance with the settlement terms, reported a significant increase in complaints by consumers and professionals, such as lawyers, advocates and housing and credit counselors, about the companies’ practices. Complaints are now averaging 830 a month nationally.
Attorney General Jepsen said he was concerned the increase in complaints may indicate banks may have not entirely abandoned the practices that contributed to the foreclosure crisis.
Many of the complaints involve loan modification and customer service issues, such as lost documents, delays in reviewing applications, changes in a customer’s single point of contact and questionable or undocumented fees being added to loan amounts. As a member of the settlement monitoring committee, Jepsen said he will work to ensure that the servicers address such complaints and fulfill their obligations under the settlement.
Jepsen encouraged Connecticut homeowners who are having difficulties with their mortgage to learn about state and federal resources that may be available by calling the Department of Banking’s Foreclosure Assistance Hotline at 1-877-472-8313. He also encouraged borrowers to consider any loan modification applications or refinancing solicitations made by their loan servicers.
Jepsen was part of the executive committee of Attorneys General that helped to negotiate the settlement agreement. Assistant Attorneys General Joseph Chambers, Finance, and Matthew Budzik, head of the Finance department, are working with the Attorney General on this matter.