TALLAHASSEE, Fla.-Attorney General Pam Bondi today formally entered a
landmark $25 billion joint federal-state agreement with the nation’s five
largest mortgage servicers over foreclosure abuses and unacceptable
nationwide mortgage servicing practices. The proposed agreement provides an
estimated $8.4 billion in relief to Florida homeowners and addresses future
mortgage loan servicing practices. The settlement generally releases civil
claims related to robo-signing, other foreclosure-related abuses, and loan
origination misconduct, but it provides no release of criminal claims or of
claims related to mortgage securitization.
“This settlement will provide substantial relief to struggling Florida
homeowners, and ensures that our state gets its fair share of the relief
being provided nationally,†stated Attorney General Pam Bondi. “This
agreement holds banks accountable and puts in place new protections for
homeowners in the form of strict mortgage servicing standards.â€
Florida’s share of the total monetary benefits under the settlement is
approximately $8.4 billion.
· Florida borrowers will receive an estimated $7.6 billion in benefits
from loan modifications, including principal reduction, and other
direct relief.
· Approximately $170 million will be available for cash payments to
Florida borrowers who lost their home to foreclosure from January 1,
2008 through December 31, 2011 and suffered servicing abuse.
· The value of refinanced loans to Florida’s underwater borrowers would
be an estimated $ 309 million.
· The state will receive a direct payment of $ 350 million.
In addition to the terms of the national settlement agreement, Attorney
General Bondi separately negotiated an agreement with the nation’s three
largest mortgage servicers to ensure that a guaranteed portion of the
overall settlement funds goes to Florida borrowers.
The unprecedented joint state-federal settlement is the result of a civil
law enforcement investigation and initiative that includes state attorneys
general and state banking regulators across the country, and nearly a dozen
federal agencies. The settlement holds banks accountable for past mortgage
servicing and foreclosure fraud and abuses and provides relief to
homeowners. With the backing of a federal court order and the oversight of
an independent monitor, the settlement reforms the mortgage servicing
industry and protects against future fraud and abuse.
Under the agreement, the five servicers have agreed to $25 billion in
monetary relief under a joint state-national settlement structure.
Nationally:
· Servicers commit a minimum of $17 billion directly to borrowers
through a series of national homeowner relief effort options,
including principal reduction. Given how the settlement is
structured, servicers will actually provide up to an estimated $32
billion in direct homeowner relief.
· Servicers commit $3 billion to a mortgage refinancing program for
borrowers who are current, but owe more than their home is currently
worth.
· Servicers pay $5 billion to the states and federal government $4.25
billion to the states and $750 million to the federal government.
The state payments include funding for payments to borrowers for
mortgage servicing abuse.
· Homeowners receive comprehensive new protections from new mortgage
loan servicing and foreclosure standards.
· An independent monitor will ensure mortgage servicer compliance.
· Government can pursue civil claims outside of the agreement, any
criminal case; borrowers and investors can pursue individual,
institutional or class action cases.
The settlement does not grant any immunity from criminal offenses and will
not affect criminal prosecutions. The agreement does not prevent
homeowners or investors from pursuing individual, institutional or class
action civil cases against the five servicers. The pact also enables state
attorneys general and federal agencies to investigate and pursue other
aspects of the mortgage crisis, including securities cases.
The final agreement, through a consent judgment, will be filed in U.S.
District Court in Washington, D.C., and will have the authority of a court
order.
Because of the complexity of the mortgage market and this agreement, which
will span a three year period, in some cases participating mortgage
servicers will contact borrowers directly regarding loan modification
options. However, borrowers should contact their mortgage servicer to
obtain more information about specific loan modification programs and
whether they qualify under terms of this settlement or other available
programs.
More information will be made available as the settlement programs are
implemented.