Mortgage Settlement Program-How Arizona Homeowners Will Benefit

Managing Real Estate Broker with Arizona Real Estate Options

Arizona Real Estate Options, LLC

Last night Arizona was awarded $1.6 Billion from a major class action lawsuit settlement involving 5 of the largest banks in America: Wells Fargo, Bank of America, JPMorgan Chase, CITI and GMAC/Ally.

They were sued for their involvement in illegal foreclosures and abuse (including ROBO signing) and are now required to shell out damages to the tune of approx $26 Billion. 

Where will the 1.6 Billion for Arizona end up?

$110 Million of  the settlement money will go to borrowers who lost their homes to foreclosure in AZ between Jan 1, 2008 and Dec 31, 2011. These borrowers will receive a check for $2000 sometime in the next couple years. However, the loans had to have been originated and then foreclosed by one of the 5 banks named in the settlement .......and these loans must not have been sold to another lender.

The banks have agreed to use a good portion of the money to write down borrowers principle. 1.3 Billion in Arizona will be allocated for this purpose. Those who will qualify and for what amount is undetermined at this time.

$85.8 Million will be used to refinance loans to current rates for borrowers who have mortgages that are underwater but not deliquent.

Bank of America ....which as you know is my favorite bank (insert sarcasm)...... was also involved in an additional $10 Million lawsuit for their unethical and fraudulent loan modification programs. This money will be used to further investigate and prevent future fraud as well as educate consumers. AZ will get $1.3 Million specifically for our state.

This won't be the first time AZ has received money meant to assist struggling homeowners.  Arizona was one of the hardest hit areas in the country and more than half of mortgages are underwater. We in the real estate business are always hopeful money set aside to help homewoners will find their way through the maze of government bureaucracy and into the pockets of those who really need it. So far we have been disappointed to say the least.

How can I get assistance now?

The Arizona Attorney General has stated, "Because of the complexity of the mortgage market and this agreement, which will span a three year period, in some cases participating mortgage servicers will contact borrowers directly regarding loan modification options and other relief available under the agreement.  However, borrowers can contact their mortgage servicer to obtain more information about specific loan modification programs and whether they qualify under terms of this settlement."

Here is the timeline that has been set up:

Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance.

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.


 **Loans backed by government entities of Fannie and Freddie will NOT be eligible for any of these benefits.

(click here to find out if your loan is Fannie/Freddie)

There are other programs for govt-backed loans. You can find out more about your OPTIONS by calling Laura at Arizona Real Estate Options 480-570-6800.






Comments (3)

Charlottesville, VA

It sounds like this will be very helpful!

your friend in Charlottesville

Feb 10, 2012 10:14 AM
Joe Buczkowski
Boulder, CO

Let's hope they follow through on their promises.

Feb 10, 2012 02:42 PM
Tony Morganti
RE/MAX Crossroads in Cuyahoga Falls and Stow, Ohio - Cuyahoga Falls, OH
CRS, ABR, SRES - Cuyahoga Falls, Stow

This is indeed good news, but like most states, I think it will be but a drop in the bucket.  Much more will be needed to make any serious impact.

Feb 10, 2012 04:31 PM