Breaking News: Massachusetts Joins National Foreclosure Abuse Settlement

by Rich Vetstein on February 9, 2012 · 1 comment

in Foreclosure, Massachusetts Property Values, Mortgage Crisis, Mortgages

Updated (2.9.12 6:30pm)

In the largest national settlement since the tobacco litigation, the Boston Globe is reporting that Massachusetts Attorney General Martha Coakley is expected today to sign on to a settlement brokered by attorneys general nationwide with five major US lenders over the banks’ role in the country’s foreclosure crisis. As we wrote about here, in December of last year AG Coakley pulled out of the settlement and brought a historical lawsuit against the big lenders over foreclosure abuses.

As reported in the Globe, Coakley has been been negotiating for days with lenders over the pact, which has been months in the making. Massachusetts is one of only a few states that have yet to agree to the settlement, which reportedly could total between $25 billion and $30 billion. The money is being promised by Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citibank, and Ally Financial Inc.

According to Coakley’s office, Massachusetts estimated total share of the settlement is nearly $318 Million:

  • Massachusetts borrowers will receive an estimated $224 Million in benefits from loan term modifications and other direct relief.
  • Massachusetts borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse would qualify for $14.6 Million in cash payments to borrowers.
  • The value of refinanced loans to Massachusetts underwater borrowers would be an estimated $32.7 Million.

Banker and Tradesman is reporting that homeowners still living in underwater properties may get up to $20,000 each for principal reductions. That may not be nearly enough for many victims of foreclosure abuses. It’s unclear how much money will be available for much needed mortgage principal reduction and loan modifications.

However, the state was told yesterday it could sign on to the pact without giving up its right to litigate other issues related to the five lenders and how they conducted foreclosures, according to the Globe. Under terms of the tentative agreement, Coakley apparently will still be able to pursue claims against MERS and lenders for foreclosures in Massachusetts without having the proper paperwork.

For more information, here is the Attorney General’s Press Release.

  • I am a strong advocate for education. I advise friends and family to do all they can to ensure that when they are buying or refinancing, they understand everything. (Even though it may be a challenge). But it is well worth the effort considering a 30 year loan will take 30 years to pay off.

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