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Cuccinelli signs on to $25 billion joint state-federal mortgage servicing settlement
Virginia's share of settlement benefits estimated at nearly $480 million
** Recorded video Q&A with attorney general available **
RICHMOND, VA (February 9, 2012)-- Today, Attorney General Ken Cuccinelli formally announced that Virginia has signed on to a landmark $25 billion joint federal-state settlement with the nation's five largest mortgage servicers over foreclosure abuses and fraud.
The proposed agreement provides an estimated $479,594,672.22 in direct relief or other benefits to the commonwealth and Virginia home borrowers and addresses future mortgage loan servicing practices. U.S. Attorney General Eric Holder, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan and a bipartisan group of state attorneys general announced the national settlement today in Washington, D.C.
The mortgage servicers are Bank of America, J.P. Morgan Chase, Wells Fargo, Citigroup, and Ally Financial/GMAC.
"We joined the multistate investigation because there was credible evidence that banks had engaged in wrongdoing in the commonwealth," said Cuccinelli. "Based upon our investigation and the investigations conducted by the other states, we were able to confirm that the banks have been guilty of robo-signing and disregarding certain servicing issues. The banks must answer for this conduct, and this settlement makes them do just that.
"However, not every claim made about the banks has been demonstrated by the evidence. In crafting the settlement terms, we stressed to our fellow attorneys general and the U.S. Department of Justice our belief that the penalties and payments in the settlement be tied to actual acts of wrongdoing that were uncovered; and, in large measure, the states' part of the settlement does that.
"While there were some aspects of this settlement that we would not have drafted if we were the only state involved - aspects where the benefits being paid out are not as tightly tied to the wrongdoing as we would have liked - one of the costs of participating in a multi-state effort is the need to reach consensus. However, that cost was far outweighed by the benefits of addressing a national problem of fraud and abuse, as well as trying to clear the housing market to get the economy moving again. My priority is to enforce the rule of law in Virginia, and that is precisely what we did. I am pleased that the citizens of the commonwealth will benefit from the settlement that has been reached."
The terms of the settlement include:
Virginia's home borrowers will receive an estimated total of $409,937,551.22 in benefits from loan term modifications and other relief.
Virginia's borrowers who lost their homes to foreclosure from January 1, 2008, through December 31, 2011, and suffered servicing abuse qualify for approximately $31,301,320.91 in cash payments.
The value of refinanced loans to Virginia's underwater borrowers will be an estimated $84,309,742.00.
The commonwealth will receive a direct payment of $69,657,121.00.
The Bureau of Financial Institutions at the State Corporation Commission, as Virginia's banking regulator, also joined the settlement and will receive an additional $1,000,000.
This unprecedented joint state-federal settlement is the result of a substantial civil law enforcement investigation and initiative that included the Virginia attorney general's office, other state attorneys general, state banking regulators, and nearly a dozen federal agencies.
With the backing of a federal court order and the oversight of an independent monitor ensuring mortgage servicer compliance, the settlement should stop future fraud and abuses.
Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Given how the settlement is structured, servicers will actually provide up to an estimated $32 billion in benefits to homeowners.
Servicers commit $3 billion to a mortgage refinancing program for qualifying borrowers who are current but owe more than their home is currently worth.
Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government). The state payments include funding for payments to borrowers for mortgage servicing abuses.
Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
An independent monitor will ensure mortgage servicer compliance.
Government can pursue civil claims outside of the agreement and any criminal case; borrowers and investors can pursue individual, institutional, or class action cases regardless of the agreement.
The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional, or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.
"This agreement addresses breakdowns in the mortgage servicing industry, and allows us to pursue other mortgage-related misconduct. However, I want to make clear that any Virginia citizen who believes that he or she was wrongfully foreclosed upon remains free to pursue a legal action against the appropriate bank. Nothing in this settlement deprives any individual of the right to make his or her personal claim," said Cuccinelli.
"While this settlement includes significant relief for homeowners, it also puts in place new protections for homeowners in the form of mortgage servicing standards. That is not something we would see if we simply won a money judgment in a trial.
"While some may argue that the settlement does not do enough, it accomplishes things that we could not have done outside of the settlement. For example, Virginia's Mortgage Lender and Broker Act did not allow this office to bring fraud actions based on mortgage originations until 2009. Thus, without the settlement, Virginians who were harmed by conduct that took place prior to July 1, 2009, would not receive any relief. In this way, the settlement achieves a better result for these citizens than the law would otherwise allow," explained Cuccinelli.
Cuccinelli concluded by noting that, "Because of the importance of the housing market to both the Virginia and national economy, I stressed to all parties during the investigation and subsequent negotiations that any resolution should focus on creating a market-clearing environment that will help homeowners, prospective homebuyers, and the economy as a whole. We believe that many of the provisions of the agreement do just that."
The final agreement, through a consent judgment, will be filed in U.S. District Court in Washington, D.C., and will have the authority of a court order.
Because of the complexity of the mortgage market and this agreement - which will span a three-year period - in some cases, participating mortgage servicers will contact borrowers directly regarding loan modification options. However, borrowers should contact their mortgage servicer to obtain more information about specific loan modification programs and whether they qualify under terms of this settlement.
More information will be made available as the settlement programs are implemented.
For more information on the proposed agreement:
For eligibility questions:
Borrowers should contact their mortgage servicer to obtain more information about specific loan modification programs and whether they qualify under terms of this settlement. The toll free numbers for the settling servicers are:
Bank of America: (877) 488-7814
Citigroup: (866) 272-4749
J.P. Morgan Chase: (866) 372-6901
GMAC: (800) 766-4622
Wells Fargo: (800) 288-3212
For those who have had multiple changes of address:
For Virginians who went through a foreclosure during the period from January 1, 2008, through December 31, 2011, and whose loans were serviced immediately prior to foreclosure by one of the settling servicers, but who are worried that the settlement administrator will not be able to locate them due to multiple changes in address in the intervening period, please visit ag.virginia.gov and click on Mortgage Servicing Settlement Agreement under Hot Topics and complete the Address Update form. The attorney general's office will collect your information and forward it to the settlement administrator.
Broadcast video: Attorney general's video Q&A:
Attorney General Cuccinelli has prepared a broadcast-quality video Q&A. See a low resolution version by following this link, and feel free to use any footage you may need: http://www.youtube.com/watch?v=LE0NuQT_JLk&feature=youtu.be.
For a broadcast quality version of this video, please e-mail Caroline Gibson, Deputy Director of Communication (firstname.lastname@example.org).
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