States, banks reach foreclosure-abuse settlement

By: NBC-17 & AP | MyNC
Published: February 09, 2012

WASHINGTON --

North Carolina communities stand to gain $338 million from a $25 billion settlement reached by five of the largest mortgage lenders over foreclosure abuses.

Under the agreement, five major banks - Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial - will reduce loans for nearly 1 million households. They will also send checks of $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.

All but one of the 50 states agreed to the deal. Oklahoma, the lone holdout, will receive no money.

Bank of America will pay the most to borrowers as part of the deal - nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase will pay roughly $4.2 billion, Citigroup will pay about $1.8 billion and Ally Financial will pay $200 million. This does not include $5.5 billion in federal and state payments.

The deal also ends a separate investigation into Bank of America and Countrywide for inflating appraisals of loans from 2003 through most of 2009. Bank of America acquired Countrywide in 2008.

“This agreement is about helping homeowners who tried to make good but were wronged,” NC Attorney General Roy Cooper said. “Just as important, it looks forward by establishing a clear set of rules to make sure foreclosures are done correctly and fairly.”

National funds coming to North Carolina and homeowners total $338 million and include the following:

About $63.7 million to provide for housing counselors, legal help, financial fraud detection and prosecution, general economic reparation for the state and fines and penalties which go to the public schools;
Payments to North Carolina foreclosure victims: $33.57 million
Principal reduction, short sales or other help to homeowners at risk of default: $179.51 million
Refinancing loans at a lower rate for homeowners current on their payments but who owe more than their house is worth: $61.52 million

In addition to the payments and mortgage write-downs, the deal promises to reshape long-standing mortgage lending guidelines. It will make it easier for those at risk of foreclosure to make their payments and keep their homes.

“Some foreclosures have to happen, but they must be done correctly and fairly,” Cooper said. “While this should have been the standard all along, our investigation has shown that it wasn’t, and it might never have been without this settlement.”

North Carolinians who are eligible for direct relief from the settlement will be contacted by their mortgage servicer or the settlement administrator in coming months.

Consumers can contact their mortgage servicer directly at the following numbers: