Federal, state housing settlement deal to bring $335M to Ohio, AG DeWine says

 

COLUMBUS, Ohio (CGE) - In remarks President Barack Obama made Thursday on the $25 billion settlement agreement federal and state agencies reached with the nation's five largest mortgage services over their abuses involving distressed homeowners, he said the deal "will speed relief to the hardest-hit homeowners, end some of the most abusive practices of the mortgage industry, and begin to turn the page on an era of recklessness that has left so much damage in its wake.

 

 

Former Ohio Attorney General Richard Cordray, who President Obama appointed to head the Consumer Financial Protection Bureau and who lost an election in 201o to Ohio's current AG, Mike DeWine, said widespread failures in the mortgage servicing industry have been well-documented. 

 

"All too often, paperwork was lost, phone calls went unanswered, errors were not resolved, or documents were falsified," he said in a statement Thursday. As a result, he said, some families who qualified for loan modifications did not receive them in time to stop foreclosure. 

  

The $25 billion settlement will help many struggling homeowners across the country stay in their homes. Moreover, under the terms of the agreement, the largest five servicers must adhere to new consumer protections and provide customers with options for avoiding the pain of foreclosure.

 

Cordray, who had already earned a reputation for taking on Wall Street Titans as Ohio AG, vowed to continue examine servicers throughout the industry to make sure they are following the law. 

 

"We will also be issuing rules to bring greater fairness and transparency to the mortgage servicing marketplace," he said, adding, "And where we find unlawful practices, we will not hesitate to use our full authority to protect consumers and hold all servicers accountable.”

 

 

"This settlement will provide much-needed relief to Ohio homeowners and communities and help our state to recover from the destruction left behind from the mortgage financing crisis," he said Thursday in prepared remarks.

 

The $335 million will be broken down into four major areas for relief:

 

Ohio borrowers will receive an estimated total of $102 million in benefits from loan term modifications and other direct relief.

 

Ohio borrowers who lost their home to foreclosure from January 1, 2008 through December 11, 2011 and suffered servicing abuse would qualify for part of an estimated total of $44 million in cash payments.  

 

The value of refinanced loans to Ohio's "underwater" borrowers would be an estimated total of $90 million.

 

The Ohio Attorney General's Office will receive an estimated $97 million to help with foreclosure prevention, revitalizing neighborhoods by getting rid of blighted properties, assistance to Ohio families who have experienced or are on the brink of foreclosure and the investigation and prosecution of mortgage rescue scam artists.

 

The settlement is with the following mortgage servicers: Ally, Bank of America, Citi, JPMorganChase and Wells Fargo.  Borrowers should contact these mortgage servicers to obtain more information about specific loan modification programs and whether they qualify under the terms of this agreement.

 

Ohio was particularly hard hit by the foreclosure crisis, and many communities are struggling with abandoned properties that detract from the value of existing housing. New foreclosure filings in Ohio totaled 85,483 in 2010, with one foreclosure filing in 2010 for every 59 housing units.  Many Ohioans are also "underwater" with nearly one in three mortgage holders owing more on their mortgage than their home's value.

 

DeWine's announcement today identified categories for using the $97 million that will be allocated to his office when the settlement funds are finally dispersed following a court order.

 

 

Helping homeowners, families and communities recover from the foreclosure crisis.

 

 

One of the necessary components of Ohio's economic recovery is ridding our communities of the blight of abandoned homes.  These vacant properties are a drag on our recovery, inhibiting the growth of our neighborhoods.  They create a toxic breeding ground for crime.  And, they depress the value of the remaining homes in that neighborhood. 

 

"I am very pleased today to commit $75 million to the creation of a grant program through my office that will provide communities with much-needed funding to remove the blight and give our neighborhoods a chance to prosper," said Attorney General DeWine.  

 

While an exact total of abandoned homes is not available, conservative estimates place the number of vacant and abandoned properties in Ohio in need of immediate demolition at 100,000.

 

 

The Attorney General's Office will make available $20 million for a grant program to provide assistance to families and individuals who are at risk of foreclosure or have already lost their home.  The plan is to use these resources to fund creative and innovative proposals from non-profit organizations and local government entities to address the needs of citizens who have suffered because of the foreclosure crisis and to help them get back on their feet, with priority given to projects that target assistance to more vulnerable populations, including children, persons with disabilities, the elderly, veterans, and homeless.

 

Two million dollars will be set aside to expand the Economic Crimes Division of the Ohio Attorney General's Office.  These funds will be used to go after these criminals who perpetrate foreclosure rescue and debt relief scams on Ohioans.   In addition, some of this money will be used to provide training on these scams to law enforcement and prosecutors around Ohio.  These funds will also be used to increase our consumer education efforts to help Ohioans avoid becoming victims of financial fraud and to safely manage their credit and mortgage debts.

 

 

President Obama reminded everyone that 4 million families lost their homes to foreclosure. But he applauded them for doing the right and responsible thing: shopped for a house, secured a mortgage that they could afford and made their payments on time.

 

But irresponsible actions by others, who sold loans to people who couldn't afford them; by buyers who knew they couldn't afford them; by speculators who were looking to make a quick buck; by banks that took risky mortgages, packaged them up, and traded them off for large profits, have done tremendous harm. "It was wrong, " he said.

 

Under the terms of the settlement, America's biggest banks, the banks that were rescued by taxpayer dollars, will be required to right these wrongs, which means more than just paying a fee.  

 

Obama said these banks will put billions of dollars towards relief for families across the nation. "They'll provide refinancing for borrowers that are stuck in high interest rate mortgages.  They'll reduce loans for families who owe more on their homes than they're worth. And they will deliver some measure of justice for families that have already been victims of abusive practices."

 

Cities across Ohio, which have been shrinking over the years as job seekers leave the state to find employment elsewhere, have suffered from blighted homes and blocks, where the properties of those who remain have lost value, which in turn means school districts, that rely on local property taxes for a majority of their operating funds, are facing an unwanted choice between cutting personnel and programs and going to voters to ask for more tax money.