[Tallahassee, FL] Florida homeowners to get $8.4 billion in a “landmark” settlement.
The settlement ends the federal-state suit against the nation’s big five mortgage servicers for a myriad of foreclosure abuses including robo-signing and loan origination misconduct, according to a statement by Florida Attorney General (FLAG) Pam Bondi.
The agreement releases civil claims related to the above illegal practices, but “provides no release of criminal claims or of claims related to mortgage securitization,” says Bondi. The companies will also have to clean up their practices going forward.
Florida’s chunk of change is part of a $25 billion nationwide closure to the robo-signing fiasco, among other foreclosure abuses. A robo-signing case made its way to the Florida Supreme Court, as reported by Sunshine Slate in December.
“This settlement will provide substantial relief to struggling Florida homeowners, and ensures that our state gets its fair share of the relief being provided nationally,” stated Bondi. “This agreement holds banks accountable and puts in place new protections for homeowners in the form of strict mortgage servicing standards.”
Amen. But don’t start spending that $8.4 billion just yet – not all Florida homeowners will get that money directly, as in, say, a class action suit. Instead, Florida borrowers will receive $7.6 billion from loan modifications, which includes principal reduction.
Additionally, those homeowners who suffered foreclosure abuses in the process of losing their home from Jan. 1, 2008 through Dec. 31, 2011 will be eligible for a check out of a pool of approximately $170 million.
It is estimated that the value of “underwater” loans that are refinanced is $309 million. The agreement includes a cash payment to the state of Florida of $350 million. The settlement is backed by a federal court order filed in U.S. District Court in Washington, D.C., and will be monitored by an independent auditor.
All of this comes as a result of a giant civil law enforcement investigation that involved state banking regulators as well as state attorneys general.
“These practices were plainly irresponsible and we refused to let them go unanswered,” President Obama said of the landmark agreement. “This settlement is a start. We’re going to make sure that the banks live up to their end of the bargain.”
It will take three years to fully realize all facets of the agreement.
“In some cases participating mortgage servicers will contact borrowers directly regarding loan modification options,” said Bondi’s release. “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 or other available programs.”
For more information on the proposed foreclosure abuses agreement:www.MyFloridaLegal.com
By: Mark Christopher/Sunshine Slate