National Mortgage Servicer Settlement  

Attorney General William Sorrell announces a landmark national settlement to halt foreclosure abuses.

Vermont Attorney General William H. Sorrell today formally joined a landmark $25 billion joint state-federal agreement with the nation’s five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices.  The proposed agreement addresses future mortgage loan servicing practices, affords an estimated $3.1 million in financial relief to Vermont homeowners, and provides approximately $3.6 million to the State.

The state’s share of the settlement consists of the following:

• Vermont borrowers will receive an estimated $1.6 million in benefits from loan modifications and other direct relief, such as principal reductions, short sales, and deficiency waivers.
• Vermont borrowers who lost their homes to foreclosure by the settling banks between January 1, 2008, and December 31, 2011, will be eligible for payments in the amount of approximately $2,000, totaling $411,000, to make up for any servicing abuse they may have experienced; they will not lose their right to seek further relief on their own or through a class action.
• The value of refinanced loans to Vermont’s “underwater” borrowers will be an estimated $1.1 million.
• The State will receive a direct payment of almost $2.7 million.
• The Vermont Department of Banking, Insurance, Securities and Health Care Administration will receive a direct payment of $1 million.

The settlement does not grant immunity from any crime, or from liability for other aspects of the mortgage crisis, including securities fraud.  It will also leave homeowners and investors free to pursue individual, institutional and class action cases against the five servicers.  

The settlement holds five servicers—Bank of America, J.P. Morgan Chase, Citigroup, Wells Fargo, and Residential Capital (GMAC)—accountable for past mortgage servicing and foreclosure abuses and provides relief to homeowners.  With the backing of a federal court order and the oversight of an independent monitor, the settlement will strongly deter future fraud and abuse.

Consumers may contact their mortgage servicer for more information. A national website is available with details of the settlement at http://nationalmortgagesettlement.com.

Last modified February 09 2012 10:49 AM