What do you know about the National Mortgage Settlement of 2012 as a Homeowner?
Well it is the largest dollar settlement since the 1998 tobacco settlement and it provides up to $25 billion in help to distressed
National Mortgage Settlement of 2012 for Distressed Homeowners
homeowners, states and federal government from the country’s largest loan servicers: Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo. It was reached in February 2012. This is important to all Rhode Island real estate homeowners struggling to pay their mortgage.
Because of the complexity of the mortgage market and this national mortgage settlement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief. Borrowers from states who did not sign the settlement will not be eligible for any of the relief directly to homeowners.
FINANCIAL RELIEF FOR HOMEOWNERS: The servicers will be required to dedicate $20 billion to various forms of relief to borrowers. As stated below in the Mortgage Settlement Information sheet as follows:
• Principal reduction. At least $10 billion will be dedicated to reducing principal for borrowers who, as of the date of the settlement, owe more on their mortgages than their homes are worth and are either delinquent or at imminent risk of default.
• Refinancing. At least $3 billion will be dedicated to a refinancing program for borrowers who are current on their mortgages but who owe more on their mortgages than their homes are worth.
• Other forms of relief. Servicers will be required to dedicate up to $7 billion to other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance, benefits for service members who are forced to sell their homes at as a result of a Permanent Change in Station, and other programs. Approximately 750,000 homeowners impacted here.
- Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
- This settlement will be executed over the next three years.
If you are a short sale agent this is needed information to understand and know as you help homeowners weigh their options on what to do.
One of my clients is a Wells Fargo borrower that is underwater but is current and is paying their mortgage. Wells Fargo has identified this homeowner as qualifying for refinancing as part of this mortgage settlement program. However, they require $3800 in fees to make the refinancing happen. This to me is unbelievable yet I am not sure yet if this is a scam since they just reached out to me or a legitimate proposal but we will find out. Be aware the scam artists are out there and can get access to the bank lists.
My client is considering his financial options for a short sale instead which is why he reached out to the north kingstown short sale agents for alternatives. Because this homeowner is not delinquent, he is not eligible for a principal reduction under this settlement…so does this really solve the issue for a homeowner substantially underwater. In my part of the country, I do not think so. I say not, what say you?!
UPDATE 1/5/2013: Congress has extended the Mortgage Debt Forgiveness Act through 2013 which is good for short sale sellers. Talk to me today if you need help on a short sale.
Understand the National Mortgage Settlement for Your Clients. What do you know about the National Mortgage Settlement of 2012 as a Homeowner?
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Ginny Lacey Gorman is your go to waterfront Rhode Island agent for real estate in RI real estate and beyond…knowing the geographic area, schools, happenings, important tidbits of information and businesses well.
As a North Kingstown short sale agent, if you are having trouble paying your mortgage contact Ginny to help you through the short sale process successfully.
Waterfront, oceanfront, luxury and coastal RI real estate are her specialty but all of RI is her backyard. When you are in need of a good professional for your buying and selling needs and an internet savvy marketer and agent who sells RI houses in this real estate market – call Ginny at 401.529.7849.
