Foreclosure Settlements


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Foreclosure Settlements

  1. 1. FORECLOSURESETTLEMENTSBY: MICHAEL P. JAMES, J.D., M.B.A.© 2012 Fraser Trebilcock Davis &Dunlap, P.C.
  2. 2. The Settlements Independent Foreclosure Review Settlement April 2011 Foreclosures in 2009-2010 Independent Consultants Review Foreclosure Multi-State Settlement of Foreclosure Misconduct February 2012 Foreclosures in 2008-2011 Multiple Potential Avenues for Recovery Can be Eligible for Relief from Both Settlements
  3. 3. Independent ForeclosureReview Federal Reserve Board Enforcement Actions Independent Consultants to Review Foreclosures that wereInitiated, Pending, or Completed between 2009 and 2010 Financial Harm from Errors, Misrepresentations, or otherDeficiencies during the Foreclosure Process 3 Criteria: Property Securing Loan was Primary Residence Property in Foreclosure Process: 1/1/09 – 12/31/10 Mortgage Serviced by one of 27 Institutions
  4. 4. The 27 Institutions:• America’s Servicing Co.• Aurora Loan Services• BAC Home Loans Servicing• Bank of America• Beneficial• Chase• Citibank• CitiFinancial• CitiMortgage• Countrywide• EMC• EverBank/EverHomeMortgage Company• Financial Freedom• GMAC Mortgage• HFC• HSBC• IndyMac Mortgage Services• MetLife Bank• National City Mortgage• PNC Mortgage• Sovereign Bank• SunTrust Mortgage• U.S. Bank• Wachovia Mortgage• Washington Mutual (WaMu)• Wells Fargo Bank, N.A.• Wilshire Credit CorporationIndependent ForeclosureReview
  5. 5.  4.3 Million Eligible Borrowers Only 90,000 claims filed to date Eligible Borrowers Received Materials Oct/Nov11’ Deadline: July 31, 2012 to SubmitApplications Improper Charge for a Single Fee Qualifies Could be Relatively Large Claims Several Months to Complete ReviewIndependent ForeclosureReview
  6. 6. Multi-State Settlement ofForeclosure Misconduct $26 Billion Settlement: Bank of America - $8.6 Billion Wells Fargo - $4.3 Billion JPMorgan Chase - $4.2 Billion Citigroup - $1.8 Billion Ally Financial - $200 Million Not Included: Fannie Mae & Freddie Mac Michigan’s Share - $790 Million Settlement Subject to Approval by FederalJudge
  7. 7. Multi-State Settlement ofForeclosure Misconduct 6% of Fund Improperly Foreclosed on between: 1/1/08 and 12/31/11 Expected Uniform Payment: approx. $2,000 Mortgage with one of these Institutions: Bank of America, Wells Fargo, JPMorganChase, Citigroup or Ally Financial Timetable for Recovery: UnknownPayments to Foreclosure Victims:
  8. 8. Multi-State Settlement ofForeclosure Misconduct 68% of Fund - Principal Reductions Currently in Default or Risk of Default Help People Stay in Homes, Make Reasonable Payments Procedures Yet to be Released 3% of Fund - Homeowner Assistance Programs: Relocation Assistance Waiver of Deficiency Balances Remediation of Blighted Properties Facilitation of Short Sales Unemployed Payment ForbearanceRelief for Struggling Homeowners:
  9. 9. Multi-State Settlement ofForeclosure Misconduct 12% of Fund Not Delinquent on Payments, Just “Upside-Down” Can’t Refinance to Lower Rates – Negative Equity Lenders Notify Borrowers of Eligibility Eligibility Requirements: Current on Mortgage Payments Loan to Value Ratio in excess of 100% Current Interest Rate: +5.25% Must Reduce Monthly Payment by at least $100Refinancing of Underwater Homes:
  10. 10. Multi-State Settlement ofForeclosure Misconduct States will not Pursue Civil Claims – MortgageAbuse States and Feds May Pursue Criminal Charges Borrowers DO NOT Release Claims Free to Seek Additional Relief in Civil Courts Release does not Apply to Third PartyForeclosure Servicing Companies: MERSCORP, Inc. MERS, Inc.Release of Claims:
  11. 11. Multi-State Settlement ofForeclosure Misconduct 1% of Fund Michigan’s Proposed Plan for its Share of the Fund Legislature Create a Special Fund for 6 Activities: Foreclosure Counseling for Homeowners: $20M Foreclosure Rescue Scam Victim Restitution: $10M MI Attorney General Home Protection Unit: $6M Payments to Borrowers who Suffered Foreclosure: $35M Assistance for Children Displaced by Foreclosure: $20M Assistance for Military Service Members: $10MPayments to the States:
  12. 12. © 2012 Fraser Trebilcock Davis &Dunlap, P.C.Fraser Trebilcock Davis & Dunlap, P.C.124 W. Allegan Street, Suite 1000Lansing, Michigan 48933www.fraserlawfirm.comPhone: (517) 482-5800Fax: (517) 482-0887Fraser Trebilcock Davis & Dunlap, P.C.One Woodward Avenue, Suite 1550Detroit, Michigan 48226www.fraserlawfirm.comPhone: (313) 237-7300Fax: (313) 961-1651Michael P. James, J.D., M.B.A.Phone: (517) 377-0823Email:
  13. 13. © 2012 Fraser Trebilcock Davis &Dunlap, P.C.This material is for educational and informational purposes only. The information contained herein does notconstitute legal advice. You should not act upon the information contained in this material without seekingprofessional counsel. This material is not intended to create, and receipt does not constitute, an attorney-clientrelationship between you and Fraser Trebilcock Davis & Dunlap, P.C. Merely sending e-mail to an attorney does notestablish an attorney-client relationship. The firm has no duty to keep unsolicited information confidential and youhave no reasonable expectation of confidentiality as to any such information. This material is provided "as is" withoutwarranty of any kind, either expressed or implied, including, but not limited to, the implied warranties ofmerchantability, fitness for a particular purpose, or non-infringement. This material is offered only as a general guideand is used at your own risk. The authors and publishers cannot ensure that the information is accurate and currentand are not responsible for any errors. The authors and publishers are not offering a guarantee or warranty of anykind regarding the quality or adequacy of the information contained herein.Disclaimer