You might be wondering what the $25 billion foreclosure settlement with the big banks and states means for you, your home and your local housing market.
The answer is, it depends.
For homeowners and those whose homes were recently foreclosed upon, the deal means that you could receive a cash payment, a principal reduction or refinancing with the money from the settlement.
Only those borrowers who used the five banks involved in the settlement are eligible. If that means you, you can visit a new government website — nationalmortgagesettlement.com — to find out how you can benefit from the deal.
If you have had a mortgage or currently have your mortgage through the five banks, each bank has set up a toll-free number to get the process started.
- Ally/GMAC: 800-766-4622
- Bank of America: 877-488-7814
- Citi: 866-272-4749
- J.P. Morgan Chase: 866-372-6901
- Wells Fargo: 800-288-3212
Here are three categories of consumers who could benefit from the settlement, from the government’s website:
- Homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide. State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.
- Borrowers who are current, but under water. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.
- Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the review process. $1.5 billion will be distributed nationwide to some 750,000 borrowers.
But don’t wait for your check in the mail or your payment to change quickly. It will take some time for each state to set up the structure to take in the applications, evaluate them and decide who is eligible.