WASHINGTON, D.C. – August 22, 2013 – (RealEstateRama) — Attorney General George Jepsen today called the $25 billion mortgage foreclosure settlement with the nation’s five largest mortgage loan servicing companies a “tremendous success” for providing mortgage relief benefits of approximately $450 million to nearly 6,300 Connecticut borrowers.
The final report today by the national settlement monitor showed that 6,260 Connecticut borrowers have received $448.3 million in debt relief since March 1, 2012, with an average benefit of $71,618. In addition, loan modifications are in process for 14 additional homeowners, totaling $1.2 million in additional debt relief. Those successful in refinancing their homes saw an average drop in interest rate of 2.24 percent.
The relief represents the amount of debt that Connecticut borrowers will not have to repay to their lenders. The monitor’s quarterly report showed that between April and June of this year, 342 Connecticut borrowers received nearly $27.5 million in debt relief, with an average benefit of $80,403.
“The settlement has been a tremendous success in Connecticut, helping many distressed borrowers to keep their homes,” said Attorney General Jepsen. “It was the goal we envisioned during long months of negotiations. I’m pleased to see the results as the banks begin to reach their total consumer relief obligations ahead of schedule.”
Nationally, nearly 644,000 borrowers have benefitted from nearly $51.3 billion in mortgage relief since the program began, with an average benefit of $79,742.
The settlement also brought Connecticut $27.1 million, which the state used for various foreclosure prevention programs, and nearly 5,000 Connecticut borrowers who lost their homes to foreclosure received payments totaling approximately $7 million.
Jepsen helped to negotiate the settlement announced in February 2012 by the federal government, 49 states and the nation’s five largest loan servicing companies — Bank of America, CitiMortgage, Inc., Ally Financial, Inc., J.P. Morgan Chase Bank and Wells Fargo.
Settlement terms required the banks to provide $17 billion in debt reduction and other relief to their mortgage customers nationwide within three years, and to adopt wide-ranging servicing standards aimed at curtailing past abuses. ResCap Parties (formerly Ally and GMAC), Bank of America and Chase, now say they have met their consumer relief commitments under the settlement. Wells Fargo and Citi Mortgage are on track to meet their consumer relief obligations during the third quarter of 2013.
The consumer relief included principal reductions on first and second liens; refinancing; the value of 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. While benefits to Connecticut borrowers will exceed that amount, the totals announced today represent the banks’ accounting in gross dollars of the relief provided to customers. With the exception of ResCap Parties (formerly Ally and GMAC), the bank reports have yet to be reconciled or credited by the monitor toward their settlement commitments.
Different types of relief will receive different amounts of credit. For example first lien loan modifications with principal reductions will be credited dollar for dollar. However, short sales and many second-mortgage modifications may be credited for much less.
Many Connecticut borrowers received assistance early in the program because of the state’s efforts to bring distressed homeowners together with their lenders. The state has hosted five homeowners’ assistance events, with the sixth scheduled for Oct. 22, 2013 at the Connecticut Convention Center in Hartford. Click here for more information about that event.
All banks continue to offer loan modifications and other relief to qualified customers. The Attorney General encouraged any Connecticut homeowner having difficulty with their mortgage to call 1-877-472-8313, the state Department of Banking’s Foreclosure Assistance Hotline, to learn about state and federal help available. They should also contact their loan services to discuss the possibility of achieving an affordable loan modification.
Assistant Attorneys General Joseph Chambers and Matthew Budzik, head of the Finance department, are working with the Attorney General on this matter.
View the monitor’s report here.
Susan E. Kinsman
susan.kinsman (at) ct (dot) gov
attorney.general (at) ct (dot) gov
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