$25 Billion Robo-Signing Settlement
The US Department of Justice announced on Feb. 9th a $25 billion Settlement with 5 major banks. The settlement includes both the monetary settlement as well as new regulations. The banks are Bank of America, Ally Bank ( formerly GMAC), Chase, Citibank and Wells Fargo. Understand that the settlement as well as the new regulations affect only these banks, although the regulations may go on eventually enacted as new laws or as 'best practice.'
Where does all the money go?
$5 billion. Consisting of $2000 payments to borrowers who were foreclosed between Jan. i, 2008 and Dec. 31, 2011.
$10 billion. For principal reductions and loan modifications to borrowers who are delinquent on their mortgage.
$7 billion. To assist homeowners through short sales, relocation assistance.
$3 billion. Helping homeowners who are not delinquent refinance their loans to lower rates.
The settlement becomes effective March 1, 2012. But there is a 60 day period of setting up logistics as to how to monitor compliance and assign administrators.
Important Points:
Robo-Signing is prohibited
Dual-Track foreclosures are forbidden. (Working with a homeowner on a loan modification or a short sale while simultaneously pursuing foreclosure.)
Fannie Mae, Freddie Mac and FHA loans are not part of this settlement.
What does this mean for you as an agent?
As a Certified Distressed Property Expert (CDPE) I hope this is a unique opportunity. Banks would rather explore other less expensive options than foreclosure, and this settlement gives them both the motivation and the funding to explore them. However, since the new regulations give them the incentive to push paperwork through quickly along proper channels, borrowers who are not working on some alternative will likely find that foreclosure will come more quickly.
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