Valley homeowners who were improperly foreclosed on may get another chance at some financial relief, this time from an $8.5 billion national mortgage settlement reached Monday, the Federal Reserve said.
Local housing experts hope the deal -- the second major mortgage settlement in two years -- will speed up the housing recovery and help those who are struggling to pay their mortgages.
"Cash is always the way to help mend and heal the homeowner," said Travis Takeuchi, a Clovis Realtor who works with families in foreclosure. The banks "are figuring they can smooth things over with the cash. I think this is a step forward for everyone to start healing."
The settlement was reached among 10 mortgage companies -- including Bank of America, Citibank, JP Morgan Chase and Wells Fargo -- and the Office of the Comptroller of the Currency and the Federal Reserve Board.
It comes almost a year after the $15 billion National Mortgage Settlement between the nation's five largest banks and a coalition of state attorneys general.
The intent this time is to replace the Independent Foreclosure Review, a free federal program that looked at mortgages on a case-by-case basis to find errors before paying mortgage holders.
The review was criticized for being too time-consuming. Homeowners said the online registration was difficult and there was too much paperwork to make the pay-out worth it, said John Shore, executive director of the Community Housing Council of Fresno.
"This is probably what they should have done rather than go through every single loan that was foreclosed on to see what was wrong," Shore said.
Under the settlement, $3.3 billion will be made in direct payments to homeowners whose houses were in foreclosure in 2009 and 2010. The other $5.2 billion will be used for mortgage assistance such as loan modifications, the Federal Reserve said.
Homeowners could receive as much as $125,000 depending on the type of error made during the foreclosure. Homeowners who qualify will be notified by their lender by the end of March, the Federal Reserve said.
In Fresno County, more than 11,000 homeowners lost their homes to foreclosure in 2009 and 2010, according to ForeclosureRadar, a foreclosure listing service. CoreLogic, another real estate tracking firm, reported that in the first half of 2012, 44.2% of all residential properties in Fresno owed more than the mortgage was worth.
Cara Pierce, a housing counselor with ClearPoint Credit Counseling Solutions in Fresno, said the settlement makes it easier for homeowners because they don't have to apply for the money. It comes from the lender if they qualify, she said.
But it remains to be seen how much Valley homeowners will receive. Pierce said she hopes Valley homeowners will get a piece of the mortgage assistance.
"Of the people I talk to, most are just looking at getting a loan modification," Pierce said. They say, "I need something long-term that will be affordable."
Mortgage companies participating in the settlement are:
-- Bank of America
-- JP Morgan Chase
-- MetLife Bank
-- U.S. Bank
-- Wells Fargo
Most Popular Stories
- Dmytro Firtash, Ukrainian Billionaire, Arrested in Vienna
- Obama, Ukraine Discuss Russian Incursion in Crimea
- Federal Gov't Deficit Continues to Decline
- Venezuela Death Toll Reaches 28
- Russia Holds Large Military Drills in South
- Calumet Photo Files for Bankruptcy
- Navarro Celebrates 2 Years of Vida Mia
- Ukraine Moves Closer to Joining E.U.
- Herbalife Puts Off Meeting for Icahn Talks
- Ukraine Loan Delayed While Congress Goes on Vacation