Florida Joins in $25 Billion Bank Mortgage Settlement

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Earlier this week, the federal government and several states including Florida, reached a landmark $25 billion settlement with five major banks:

  • Ally/GMAC
  • Bank of America
  • Citi
  • JPMorgan Chase
  • Wells Fargo

The collective sum paid by these banks buys them relief from most state and federal investigations over improper foreclosure practices, including robo-signing, where bank representatives signed affidavits and other documents to hasten foreclosures despite the signers’ lack of personal knowledge about the facts.

According to the Tampa Bay Business Journal, Florida homeowners stand to receive approximately a third of the $25 billion settlement or $8.4 billion in payments and loan modifications.  Specifically, the money will be used to pay certain homeowners who lost their homes through improper foreclosure practices $2,000 per household, totaling an estimated $170 million; $309 million toward refinanced, upside-down loans; $350 million to state consumer and foreclosure protection programs; and principal reductions for qualified homeowners.

Attorneys and consumer advocates throughout the country have expressed concerns about the lack of adequate money and enforcement mechanisms included in the settlement, arguing that other similar bank settlements in recent years have not benefited homeowners substantially, nor have they reduced the rate of foreclosures.  For example, despite the promise of principal reductions as part of the settlement, approximately 80% of American homeowners do not qualify for this relief because Fannie Mae and Freddie Mac, either control or own their home loan.  Eligibility for a reduction in the principal amount of a home loan for homeowners who are upside down on their mortgages is limited to bank or investor-owned loans. Unfortunately, Fannie Mae, Freddie Mac, HUD, FHA, and other government-controlled loans (which represent the majority of home loans) are not offering principal reductions, even if the actual lender or servicer is one of the banks participating in the settlement.

For a summary and Q&A on relief available to Florida homeowners resulting from this mortgage foreclosure settlement, click here.

The mortgage foreclosure and bankruptcy attorneys at PERENICH The Law Firm have decades of experience helping distressed homeowners throughout the Tampa Bay area keep their homes, working to achieve a loan modification including principal reduction in some cases, discharging their second mortgage or home equity loan, and discharging future deficiency judgment liability to the banks following foreclosure.