MN Homeowners Get $280M Under Nat’l Bank Settlement
Under the terms of a deal negotiated by 49 state attorneys general, the federal government, and a handful of the nation's largest mortgage lenders, Minnesota homeowners are eligible for as much as $280 million in relief.
Minnesota Attorney General Lori Swanson and Commissioner of Commerce Mike Rothman on Thursday issued a joint statement announcing the settlement. It will provide relief to eligible borrowers of mortgages from Bank of America, JP Morgan Chase, Wells Fargo, Citibank, and GMAC/Ally Financial.
Nationally, the five banks will reimburse American homeowners to the tune of about $25 billion. The deal represents “the largest federal-state civil settlement ever obtained,” and it “holds mortgage servicers accountable for abusive practices,” according to the U.S. Justice Department.
Under the terms of the settlement, Minnesota borrowers will be eligible for up to $113 million in monetary and refinancing payments, as well as $167 million in principal reductions and other forms of relief, Swanson's office said, citing national estimates.
Borrowers from the five banks who were foreclosed on between January 1, 2008, and December 31, 2011, will be eligible for cash refunds of roughly $2,000 if they lost their homes as a result of financial hardship while either trying to save them through a modification or encountering errors in the foreclosure process. Minnesota's portion of those payments is expected to be about $34 million but will depend on the number of eligible borrowers who file claims.
Minnesotans who borrowed from the five banks may also file a claim for monetary relief “if they were harmed by the banks' practices,” according to the attorney general's office. Those relief payments are expected to total about $43.4 million in Minnesota.
Minnesotans with mortgages from the five banks will be allowed to refinance at a lower interest rate if they are current on their mortgages and have had no delinquencies in the past year; owe more on their mortgage than the home is worth; originated the loan before 2009; and are paying an interest rate of 5.25 percent or higher. Those refinancing benefits are expected to be worth about $36 million.
Minnesota borrowers of loans from the five banks will also be eligible for other forms of relief, including but not limited to principal reductions or the delaying of foreclosure for unemployed borrowers. These additional forms of relief will be worth up to about $167 million.
The settlement also creates stricter mortgage servicing standards for banks; for example, they must now process loan modification applications within 30 days, and they can't foreclose if a borrower has a loan modification application pending at least 15 days prior to the public auction.
“Ordinary homeowners struggling to make ends meet in the bad economy have routinely faced corporate red tape and callous disregard when asking the big national banks for help,” Swanson said in a statement. “This settlement gets some money back to people who have been hurt by the big five banks and hopefully will help others trying to work out loan modifications down the road.”
Minnesotans with questions about the settlement and eligibility for relief can learn more here.