‘Robo’ settlement finalized—does the government owe you cash?by Tim Manni
After a year of back-and-forth negotiations, five of the nation’s largest banks have settled on a $26 billion deal with 49 states over alleged foreclosure abuses by the banks. According to Les Christie of CNNMoney, “In addition, nine other unnamed loan servicers may join the settlement later, and that would bring its value to $30 billion.”
The five participating banks include:
- Bank of America
- Wells Fargo
- JPMorgan Chase
- Ally Financial
Who gets what?
Here’s a breakdown of how the $26 billion will be allocated:
- $17 billion will be spent reducing the principal of underwater borrowers who are behind on their payments. According to CNNMoney, the average principal reduction will average $20,000
- $3 billion will be spent refinancing borrowers who are current on their mortgages
- $5 billion will be paid directly to the states. From that money, those who were wrongfully foreclosed will receive up to $2,000. Of that $5 billion, $1.5 billion will go towards individual payments. The exact amount of the payments will vary depending upon how many participate. HUD expects 750,000 former homeowners to participate. “Other funds will be paid to legal aid and homeowner advocacy organizations to help individuals facing foreclosure or experiencing servicer abuses,” wrote Christie
- $1 billion will be paid to the FHA
Sorry Fannie, Freddie borrowers
For the first time in a long time, those with loans owned or guaranteed by Fannie and Freddie have been (at least partially) left out of a housing relief effort.
“The Federal Housing Finance Agency, which oversees the two government-sponsored mortgage giants, will not allow any balance reductions for loans insured by the companies under the settlement,” wrote Christie.
I believe I was wrongfully foreclosed, how do I get my money?
Former homeowners who believed they were wrongfully foreclosed between 2008 and 2011 should contact their banks for further information.
When will I get my money?
It’s going to take awhile. The settlement will be sent to the courts for approval in the coming weeks. After that, the timeline is unclear. Officials are unsure how long the court-approval process will take, but HUD wants people to be paid within the year. The process could take as long as three years.