On September 2, 2011, Federal regulators launched lawsuits against 17 major banks and servicers. The suits were brought on by the Federal Housing Finance Agency who accused the banks of selling nearly $200 billion in fraudulent mortgage backed securities to Fannie Mae and Freddie Mac. Those toxic loans led to the massive losses during the financial crisis. The 17 domestic and foreign banks included Bank of America, Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup, Wells Fargo, and Deutsche Bank.
On February 9, 2012, a landmark $26 billion foreclosure settlement was reached between five of the 17 banks and the Federal Government. The five banks that agreed to pay the $26 billion settlement were Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and Ally Financial (formally GMAC). The $26 billion would be spread between 49 states (all but Oklahoma). California, the hardest hit state, would receive the bulk of the settlement: $18 billion in total. The money would be used to help homeowners facing foreclosure, which include loan modification, principle reduction, refinancing and payments, to homeowners who have already lost their homes to foreclosure.
Although the settlement was reached in February 2012, the banks have been slow to implement the new programs. The new modifications are called Department of Justice (DOJ) Modifications. The guidelines and terms of the DOJ modification are completely different from the Government Home Affordable Modification Program (HAMP). Those who have been turned down for the HAMP modification may be able to qualify for the DOJ modification. In California, qualifying homeowners can receive up to $125,000 principle reduction under the DOJ modification.
Unfortunately, the DOJ modification is only available to homeowners who have their mortgage loans serviced by: Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and Ally Financial (formally GMAC). The other 12 banks that are still in litigation with the federal government may reach a similar settlement soon.
Applying for assistance with your bank or servicer is completely free. However, if you find that they are not forthcoming or helpful with the application process and you need a reputable organization to assist you, call Home Retention Alliance of California. Avoid being scammed; never pay any money upfront before services are provided.
For a free consultation call us at 1-888-448-4483. Home Retention Alliance of California does not charge upfront fees.