As part of the National Mortgage Settlement, the largest mortgage servicers of the country have paid $50.63 billion to over 6,20,000 homeowners. In order to concentrate on the issues of mortgage loan servicing and foreclosure abuses, the Department of Justice, U.S., Department of Housing Urban Development and 49 state attorneys general made an agreement with country’s five largest mortgage servicers, over a year ago.
According to HUD Secretary Shaun Donovan, the settlement has made an incredible difference in the lives of Americans struggling to avoid foreclosures. In an effort made by the Feds and 49 state attorneys general, 620,000 homeowners can now stay in their own homes and have received over $81,000 as benefits, according to a progress update released by independent settlement monitor Joseph A. Smith of the Office of Mortgage Settlement Oversight.
The principal reduction program has effectively lowered monthly payments of over 310,000 loans. Also, the loan balances have been reduced by on an average $83,000. It is being considered as one of the most significant progress in the nation’s history.
Attorney General Eric T. Schneiderman has quoted, “New York homeowners have received almost $2 billion in financial relief under the National Mortgage Settlement – far more than the federal government projected would flow to our state a year ago.” He also added that the office would continue to monitor bank’s compliance with this settlement for making further progress on the matter.
The total figure of $50.63 billion includes completed Consumer Relief as well as active first lien trial modifications. It is to be noted that the information will not be credited under the Settlement until and unless a bank produces a request of review from the Monitor as it is self-reported by the banks.
Although this settlement comes as a big help to troubled homeowners, it is also viewed as ‘mea culpa by mortgage servicers’ that introduced ‘mortgage-backed securities’ back in 2008. Initially supported by banks like Bear Sterns and Chase, these Servicers found themselves flooded with loan modification requests when the home prices plunged and houses became worthless compared to their mortgage. Hopefully the end of ‘independent foreclosure review’ and this direct fund should bring much wanted relief to the homeowners.