Where to go for help
State Attorney General Rob McKenna warned that it could take time for borrowers to find out whether they are eligible for relief, to be performed over a three-year period. He said banks would contact borrowers in some cases. Consumers may also contact the banks directly for more information at:
Bank of America: 877-488-7814
Wells Fargo: 800-288-3212
Source: Washington State Office of the Attorney General
Washington state homeowners who are underwater — owing more for their house than it's worth — could be thrown a lifeline within the next nine months as part of a $25 billion national settlement.
The deal will translate to $648 million in benefits for Washington state homeowners and former homeowners, said the state's attorney general Rob McKenna, during a Thursday press conference. McKenna served on the eight-member executive team negotiating the landmark settlement with the nation’s five largest mortgage servicers, Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc., formerly GMAC.
"In order to qualify, the homeowner must have a loan still owned by one of these five banks," McKenna said, explaining that the bulk of the state's settlement money would go to helping mortgage holders who face imminent foreclosure.
To that end, the five banks agreed to spend $17 billion - up to $455 million in Washington state - to modify loans that are larger than the home's value and to reduce mortgage balances for borrowers who are behind on their payments, but still have a reasonable chance of success with smaller payments. Another $70 million is earmarked for borrowers across the state who are current on their payments, but still underwater due to home values that have fallen steadily since 2008.
"It will help stabilize the residential market by helping people get out from under high mortgage payments," McKenna said.
The state's portion of the settlement includes $24 million earmarked to compensate homeowners who were foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, if the mortgage was held by one of the five banks that settled. The foreclosure victims could receive up to $2,000 in the form of direct payments within the next three to nine months, McKenna said.
It is unclear how much money is earmarked to help homeowners in Clark County, where approximately 12,694 homes were sold as foreclosures during the four-year period ending Dec. 31, according to California-based RealtyTrac. Of the state's 39 counties, Clark County has consistently ranked among the top four with the highest rates of foreclosure.
In addition to the direct payments and loan modifications, the attorney general said $45 million of the settlement would be used for consumer protection and foreclosure programs across the state. He is asking state legislators to form a bipartisan, blue-ribbon committee to help determine the best way to allocate the money.
The $25 billion national settlement grew out of an investigation of the nation's five largest mortgage servicers. The investigation was launched in 2010 by all 50 state attorneys general amid an uproar over revelations that people were evicted by banks using false or incomplete documentation and “robo-signers," people who rushed to sign thousands of documents a day without reviewing the details. Relief is expected to go to all 50 states, except Oklahoma.
Mckenna stressed the agreement will not protect banks from criminal prosecutions. It also does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases.
Visit: nationalmortgagesettlement.com to learn more about the settlement.