The National Mortgage Settlement is the $25 billion joint state-federal settlement agreement reached in February 2012 with five of the nation’s largest mortgage servicers. The settlement agreement was approved April 2012. It stems from the so-called robo-signing scandal that erupted in 2010, where these five banks — Ally, Bank of America, Citi, JPMorgan Chase and Wells Fargo — were accused of shoddy mortgage paperwork.
Ohio’s share of the settlement is more than $335 million, which includes money to help “underwater” and delinquent homeowners, people who were victims of bad foreclosure practices, and for foreclosure prevention.
Ohio homeowners who did not lose their home in the foreclosure crisis, but are underwater or behind on payments have already started receiving assistance on their loans. Underwater borrowers are those who owe more on their loan than what their property’s worth. Banks were required under the agreement to provide assistance through mortgage refinances, loan modification or principle forgiveness.
More than $48 million in Ohio, of the total more than $335 million share, is going to pay claims to eligible borrowers, Dan Tierney, spokesman for Ohio Attorney General Mike DeWine said.
Qualified borrowers who lost their homes between Jan. 1, 2008, and Dec. 31, 2011 will receive direct cash payments. They should have received a letter in the mail fall of 2012 telling them they qualified.
Original estimates were that 55,086 foreclosed Ohio mortgages were eligible to receive a minimum of $840 in compensation. But due to a smaller number of claimants nationally, the compensation rose to approximately $1,480, the Ohio Attorney General’s Office said.
Claims were filed on 32,547 Ohio loans on behalf of 33,876 Ohio borrowers (some loans have multiple borrowers).
“Ohioans turned in a greater average of claims than the national average,” Tierney said.
The response rate in Ohio was about 58 percent compared to the national average of about 50 percent, Tierney said. The deadline to file a claim was Jan. 18, 2013.
“We always anticipated that the $840 estimate would increase because no class action lawsuit has a 100 percent return rate,” he said. “It was always going to be at least $840, but that was if everybody (who qualified) turned in a claim.”
Eligibility requirements for cash payments include:
• The mortgage loan was secured by an owner-occupied, one-to-four unit residential property;
• The loan was serviced by one of the five servicers;
• Borrower made at least three payments on the mortgage loan;
• Borrower lost home to a foreclosure sale between Jan., 1, 2008, and Dec. 31, 2011; and
• The property address was located in a participating state such as Ohio
The National Mortgage Settlement is a second, separate agreement from one reached with the Federal Reserve Board of Governors. An amended federal settlement agreement reached in 2013 involved 13 mortgage service firms required to pay $9.3 billion to resolve faulty foreclosure processes. Under this other agreement, involving more banks, some borrowers determined eligible also received check payments in the mail this year.
Someone who is eligible but did not file a claim form can call the settlement administrator at 1-866-430-8358. However, late claims are not guaranteed payment, the attorney general’s office said.