Mortgage Settlement Update

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					Mortgage Settlement Update

     Presenter:
       Jessica Whitney,
       Assistant Attorney General
       Deputy Administrator ICCC
       April 19, 2012
       Contact Information


             Jessica Whitney
             Assistant Attorney General
             Iowa Attorney General’s Office
             1305 E. Walnut St.
             Des Moines, IA 50319
             Jessica.Whitney@iowa.gov
             515-281-5926



5/14/2012
Mortgage Robo-signing
Investigation
        Launched in October 2010 by State
         AGs
        Admitted false affidavits by major
         banks which service mortgage
         loans
        Servicing Procedures/Charges
National Mortgage Settlement

        Announced February 9, 2012
        Filed in Court on March 12, 2012
        $25 Billion Plus
        Parties
         – 49 States, OK not included
               AGs and State Banking
         – Federal Government
             US DOJ
             HUD

         – Conference of State Bank Supervisors
National Mortgage Settlement
Continued
        Parties Continued
         – Top 5 Mortgage Servicers
             Ally/GMAC
             Bank of America
             Citi
             JP Morgan Chase
             Wells Fargo
National Mortgage Settlement,
Continued
        Parties Not Included
         –   Oklahoma
         –   MERS
         –   Other Servicers than the top 5
         –   Fannie and Freddie
                 Loans owned by Fannie and Freddie are
                  not included in the settlement
By the Numbers

        $25 Billion Plus
         – $20 Billion Plus in Homeowner Relief
         – $5 Billion in Cash Payments
        $ 40,235,321 to Iowa
         – $5,899,449 to Iowans from loan term changes
         – $7,402,512 for borrowers who entered
           foreclosure from January 1, 2008 through
           December 31, 2011 and encountered
           servicing abuse
         – $11,602,880 for underwater Iowans
         – $15,330,480 direct payment to State
Reforms of Future Conduct

        New servicing standards
        Special focus on those seeking
         foreclosure
        Consumer access to documents
        Opportunity to modify the loan
        Required numbers of well-trained staff
        Single Contact Person for a consumer
         facing foreclosure – no constantly talking
         to different people
Foreclosure Reforms

        Prohibits robosigning. Affidavits
         filed with the court must be signed
         by a person with knowledge, must
         include accurate information, and
         must be notarized.
         – Training and supervision for
           employees
         – Qualification standards for employees
         – No incentives to employees or third
           parties to encourage speed in signing
           the affidavits
Foreclosure Reforms
Continued
        Pre-foreclosure notice
          – 14 Days before a delinquent loan is referred to a
            foreclosure attorney
          – Bank’s right to foreclose
          – Borrower’s right to payment history, copy of note
          – Itemized plain language summary of the account
          – Summary of loss mitigation efforts undertaken by
            bank
        Required Review of Foreclosure documents
          – Quarterly review of a sampling of documents used
            to foreclosure (affidavits, sworn statements, etc)
        Third Party Oversight
          – Procedures to better track third party contractors
            and agents (sub-servicers, foreclosure firms, etc)
Servicing Reforms

        Must apply payment including posting
         within 2 days
        Bank shall accept and apply at least two
         partial payments when thy come within
         $50 of payment
        Suspense Account requirements
         – Disclose suspense account to borrower
         – Apply full payment as of date there is enough
           for one payment in suspense account
         – Principal, interest, and escrow must be paid
           from suspense account before servicer fees
        Itemized Monthly Statement
Servicing Fee Restrictions

        Banks keep updated, explanatory fee
         schedules
        Attorney’s fees only for work actually
         performed
        If a borrower is delinquent two payments
         and makes a full payment that is applied
         to current payment, bank cannot assess
         late fee on older payment
        No late fees while loan mod or short sale
         is being considered or while in trial
         payment phase
        No duplicative third party fees – property
         inspection, preservation, valuation, etc.
Servicing Fees Continued

        No preservation fees for borrowers
         in a loss mitigation program or
         pending loss mitigation program
        Valuation fees only every 12
         months, unless borrower needs for
         modification or short sale
        Reasonable market value
        No mark-ups on bank initiated
         default/foreclosure services
Force-Placed Insurance

        Reasonable basis
        Banks must continue to advance funds to
         insurer from an escrow account
         regardless of payment
        Disclosures to consumer including
         procedures on how to prove insurance
         and cost of fp insurance
         – Bank shall accept any reasonable written
           confirmation of insurance and terminate fp w/n
           15 days of receipt
        FP Insurance must be at commercially
         reasonable price
Loans Underwater Covered by
Settlement
        May qualify for refinancing relief
        Principal forgiveness/write down
        Short Sale
        Denials of loan modification are reviewed
         by independent internal auditor
        Appeals process for homeowners – 30
         days
        $3 billion to underwater relief
        At least $17 billion to homeowner relief,
         could be more like $32 billion or more
Foreclosed Homes Covered by
Settlement
        Consumers who lost their home to
         foreclosure between January 1, 2008 and
         December 31, 2011
        Forms sent to these borrowers, but
         people should check with a state
         settlement administrator anyway
        Approximately $2,000 per consumer,
         depends on violation, and does not
         prevent consumer from seeking private
         action in court or from other relief the a
         federal banking regulatory agency may
         order
Enhanced Protections for
Servicemembers
        In addition to protections afforded by the
         Servicemembers Civil Relief Act
        Extends period for qualifying for SCRA
         protections
        Not requiring Servicemembers to be delinquent to
         qualify for loss mitigation relief like a short sale or
         loan modification if servicemember is suffering
         financial hardship and would otherwise qualify
         (new duty station provisions)
        For active duty in combat banks shall not sell or
         foreclose their homes (improvement b/c it doesn’t
         limit when the mortgage debt was incurred)
Enforcement of Settlement

        Monitor to review servicer’s
         conducts and documents
        Monitor will report to States and
         Feds
        Failure to follow the Consent
         Judgment is a violation of a court
         order, the servicer/bank could be
         found in contempt of court and
         subject to penalties enumerated
         within the Consent Judgment
Narrow Release of State and
Federal Claims
        Just claims tied to servicing and
         origination
        Securities and Securitization claims
         can still be pursued
        Criminal charges can still be
         pursued
        Individual and class action rights
         not affected
More Information

        www.nationalforeclosuresettlement.
         com
        Contact the borrower’s servicer
         directly
        Borrower might be contacted by
         servicer especially for a loan
         modification or a refinance, but
         does not hurt to check

				
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