Nearly a year of intense negotiations over mortgage servicing and foreclosure abuses has resulted in the largest consumer financial protection settlement in U.S. history. Thousands of Washington state homeowners stand to benefit who have already lost their homes or are struggling with mortgages larger than the value of their property.
“Our settlement holds America’s largest banks accountable for harms homeowners suffered from shoddy loan servicing, illegal robo-signing and faulty foreclosure processing,” McKenna said. “The settlement results from bipartisan cooperation among Democratic and Republican attorneys general partnering with two federal agencies. From the beginning, we have worked to help homeowners harmed by the banks’ corner-cutting and to implement strict new loan servicing and foreclosure standards to prevent future harm.”
Throughout settlement talks, the Attorney General’s Office worked closely with Gov. Chris Gregoire’s cabinet agency, the Department of Financial Institutions (DFI).
“As regulators, one of the primary benefits we see from this settlement are the behavioral changes and expectations going forward that we expect to see these entities living up to,” DFI Director Scott Jarvis said. “We don’t want to experience again what so many have gone through in this mortgage crisis and foreclosure epidemic.”
Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup, Inc., and Ally Financial, Inc. (formerly GMAC) have agreed to an aggressive new effort to reduce monthly mortgage payments for millions of struggling homeowners – including some who are current with their payments but, because they owe more than their home is worth, don’t currently qualify for a refinance. One-time payments will go to many who already lost their homes. The settlement also puts in place a long list of new protections for mortgage-holders – especially those on the brink of foreclosure.
The agreement is backed by a federal court order to ensure that servicers comply with the terms of the settlement. In Washington state, thousands of homeowners will potentially receive loan modifications or principal reductions and thousands who already lost their homes will receive one time payments.