A 2011 foreclosure settlement that could help millions of homeowners throughout the U.S. has reentered the spotlight as federal officials extend the deadline for submitting applications for relief.
The settlement, in conjunction with a separate agreement from earlier this month, could offer billions of dollars to struggling mortgage holders.
Foreclosure Settlements Offer Millions of Borrowers Assistance
In April 2011, federal banking regulators ordered 14 of the nation’s largest mortgage servicers to begin the process of reviewing millions of cases of foreclosure that may have occurred illegally due to robo-signing, in which foreclosure documents were processed without thorough review or notary public verified sworn affidavits.
This settlement, which includes Citibank, Bank of America, JPMorgan Chase and Wells Fargo, is separate from the one agreed upon in early February involving these banks along with Ally Financial that required them to pay $26 billion in settlements for the same issue.
In the deal agreed upon this month, borrowers who are underwater, as well as those who are severely behind in payments, will receive principal reductions, lower interest rates and possibly, cash payouts in the case of wrongful foreclosure.
According to the 2011 settlement, however, banks are required to review millions of foreclosure cases, identify borrowers who were harmed by by robo-signing then compensate them appropriately. No loan modifications are involved in this settlement and no evictions are required.
Mortgage Relief Deadline Extended to July 31
Officials have had a difficult time setting the 2011 settlement in motion, largely because many servicers didn’t begin the review process until much later in the year.
Another problem was that borrowers didn’t understand the process and as a result, didn’t apply for reviews as expected. In fact, only 90,000 eligible homeowners have submitted claims, far less than the hundreds of thousands that may be able to receive mortgage relief.
To give homeowners more time to qualify, officials announced last week that it had moved the application deadline from April 30 to July 31.
The exact amount homeowners will receive has yet to be determined, but if the review finds that “financial injury” occurred in a case, something that could include being improperly charged a single fee, an award will be granted.
Officials say no reviews are finished yet and individual cases may take months to complete. For more information on the review process and new deadline, homeowners can call 888-952-9105 or visit Independent Foreclosure Review.