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CFPB Regulations

New Consumer Financial Protection Bureau (CFPB) Regulations
For the full text, please visit the CFPB publication entitled Help for Struggling Homeowners.

Mortgage servicers must comply with CFPB regulations for loss mitigation applications for first or second trust closed-end loans submitted on or after January 10, 2014. 

EXCEPTIONS

  • If a mortgage servicer services "5,000 or fewer loans and services only mortgage loans that they or an affiliate originated or own, or is a housing finance agency" then the servicer is considered a "small servicer" and is only subject to CFPB regulations relative to the prohibition on foreclosure before 120 days of delinquency (see below).
  • Compliance is only required for a "single complete loss mitigation application for a borrower's mortgage loan account."
  • Compliance is only required for complete applications submitted more than 37 days before the foreclosure sale.
  • Compliance may not be required if borrower is in active bankruptcy.
  • The servicer can foreclose at any time based on the due-on-sale clause.
  • The servicer can foreclose at any time if the servicer is "joining a foreclosure of a subordinate lienholder.


CFPB regulations give borrowers the right to sue for defects in the loss mitigation protocol but do NOT entitle borrowers to receive a work out option.  Whether a secured party participates in a particular program or offers a particular option is not effected or mandated by these regulations.  Borrowers may sue for damages, costs and attorney's fees.

IMPORTANT: IF YOU ARE NOT WORKING WITH A HOUSING COUNSELOR, GET A HOUSING COUNSELOR!  Please visit MD - Foreclosure Resources or DC - Foreclosure Resources for information on finding an approved non-profit housing counselor in your area.

PROTECTION FROM FORECLOSURE

ALL servicers must comply with the CFPB prohibition on taking steps toward foreclosure action when a borrower is less than 120 days in default.  This includes:

  • "[Ma]king the first notice or filing" required by state law.
  • Not moving forward with the foreclosure process or scheduling a sale if the borrower has submitted a complete loss mitigation application.
  • Not moving forward with foreclosure sale if the borrower is in compliance with the terms of an offered and accepted loss mitigation program.

In Maryland, this means that the servicer cannot cause the Order to Docket to be filed (see MD - Foreclosure Resources for a list of terms and definitions).

In District of Columbia, this means that the servicer cannot send/record the Notice of Default in DISB mediation cases or file the Complaint to Foreclose in judicial foreclosure cases (see DC - Foreclosure Resources for a list of terms and definitions).

Despite the prohibition, the servicer is permitted to continue to litigate, arbitrate and/or mediate.

If a dispositive motion is filed and the borrower submits a complete loss mitigation application, the servicer must make reasonable efforts "to avoid a ruling or issuance of an order" on the motion. If the servicer takes appropriate action and the court still rules on the motion, the servicer will not be liable.

SERVICER OBLIGATIONS AND APPLYING FOR LOSS MITIGATION

IMPORTANT: Servicer obligations begin when the borrower has applied for loss mitigation.The borrower must submit an application AND complete it!

  • A borrower has "applied" and is considered as having submitted an application when he/she has provided any oral or written information that would be evaluated as part of a loss mitigation application (not merely an inquiry). Oral or written information = application.
  • Once the application has been initiated, the borrower must COMPLETE the application in order to receive the protections detailed below and be reviewed for any loss mitigation option.
  • An application is considered complete when the borrower provides all information that the servicer requires from the borrower.  If borrower provides all information requested in the acknowledgment letter (see section below) or the acknowledgment letter states that the application is complete, the servicer must consider the application facially complete and continue protection against foreclosure sale.  If facially complete, the servicer may, however, request additional documents.

RELEVANT TIME FRAMES FOR APPLICATIONS AND OFFERS

  • If no foreclosure sale date is set when a completed application is submitted, the application is treated as if it was received more than 90 days before the sale date.
  • If application is submitted more than 90 days before sale date: (1) the servicer must review the application for completeness; (2) send the borrower a written acknowledgment that application was received within five (5) business days and specify whether the application is complete; (3) if incomplete, the acknowledgment must specify what additional documents are needed to complete the application and provide a "reasonable" deadline date. The complete application must be reviewed for all available loss mitigation options within 30 days of receipt.  Borrower has 14 days to accept/reject any offer.
  • If application is submitted more than 45 days before sale date: (1) the borrower is not entitled to receive written acknowledgment; and (2) the servicer must "exercise reasonable diligence in obtaining documents and information to complete the application." The complete application must be reviewed for all available loss mitigation options within 30 days of receipt. Borrower has 7 days to accept/reject any offer.
  • If application is submitted less than 37 days before sale date: The servicer is not required to comply with the CFPB regulations.  The servicer is not required to review the complete application within 30 days of receipt.

DENIAL OF LOAN MODIFICATIONS

If denied, the servicer must send written notice containing:

  • The specific reason for the denial.
  • The owner, investor or guarantor of the borrower's loan (if denial related to investor guidelines).
  • The specific requirement that was the basis of the denial (cannot just say "investor guidelines").
  • A statement that borrower was denied for other options because he/she qualified for an option in the waterfall (if a waterfall analysis was used for evaluation).
  • NPV inputs (if reason for denial involved NPV calculation).
  • Any right to appeal the decision (if applicable).

MISCELLANEOUS

Servicer must exercise "reasonable diligence" in helping borrower to complete the application. 

If the servicer is changed while the file is under review, the new servicer must obtain all documents from the old servicer.  If the application was complete when it was submitted to the old servicer, then the new servicer must consider it complete as of the date it was submitted to the old servicer.

Borrowers are only entitled to appeal a denial if he/she submitted a complete loss mitigation application: (1) 90 days or more before the foreclosure sale; or (2) before any foreclosure sale date is scheduled. 

The servicer is permitted to evaluate an incomplete application if: (1) the application has remained incomplete for a "significant period of time"; or (2) if the servicer is only offering short-term assistance.

If borrower does not respond to an offer by the applicable deadline but instead makes the trial payment, the servicer must consider the payment as acceptance of the offer.

FORCE-PLACED INSURANCE

Please visit my blog entitled "What you need to know about force-place insurance".

NOTICE OF ERROR / REQUEST FOR INFORMATION SERVICER CONTACTS

Pursuant to the new CFPB regulations, borrowers have the right to provide written notice to their servicers that requests information or provides notice of error. Each notice much be sent to the servicer at the proper address in order to ensure timely response. 

Errors that a borrower can assert include, but are not limited to, failure to accept or apply payments, failure to credit a payment as of the date it was received, failure to pay escrowed items, imposition of an unreasonable fee, failure to provide an accurate payoff balance, failure to provide accurate loss mitigation and foreclosure information, failure to timely transfer loan information to a new servicer, and dual tracking.

Response time - Notice of Error

A servicer must send written acknowledgment of receipt of the notice within five (5) days of receipt of the notice.  The response period does not include weekends or legal holidays.

  • Payoff amount errors - A servicer must either correct the error or conduct an investigation and provide written notification that there has been no error no later than seven (7) business days (not including weekends or legal holidays).
  • First foreclosure filing and conducing sale errors - A servicer must either correct the error or conduct an investigation and provide written notification that there has been no error within the earlier of: 1) 30 days after receipt of the notice; or 2) before the foreclosure sale date.
  • All other errors - A servicer must either correct the error or conduct an investigation and provide written notification that there has been no error no later than 30 days (not including weekends or legal holidays) of receipt of the notice.

Extension of time - For "all other errors", a servicer may extend the time period for responding by an additional 15 days if, before the end of the 30 day response period, the servicer notifies the borrower of the extension and the reasons for extension in writing.

Response time - Request for Information

A servicer must sent written acknowledgment of receipt of the notice within five (5) days of receipt of the notice.  The response period does not include weekends or legal holidays.

  • Investor information - A servicer must either provide the information requested in writing or conduct an investigation and provide written notification that the requested information is not available to the servicer no later than ten (10) days (not including weekends or legal holidays) after receipt of the notice.
  • All other requests - A servicer must either provide the information requested in writing or conduct an investigation and provide written notification that the requested information is not available to the servicer no later than 30 days (not including weekends or legal holidays) after receipt of the notice.

Extension of time - For "all other requests", a servicer may extend the time period for responding by an additional 15 days if, before the end of the 30 day response period, the servicer notifies the borrower of the extension and the reasons for extension in writing.

Sample letters

If you need a sample Request for Information letter, click here.
If you need a sample Notice of Error letter, click here.

Notice of Error / Request for Information letters MUST be sent to:

[NOTE: BE SURE TO CONFIRM THE ADDRESSES BELOW ON THE SERVICER'S WEBSITE OR ON THE MORTGAGE STATEMENT]

AmeriHome Mortgage Company, LLC
P.O. Box 77423
Ewing, NJ 08628

Bank of America, N.A.
Attn: Notice of Error and Request for Information
P.O. Box 942019
Simi Valley, CA 93094-2019

BB&T MSCR Department
P.O. Box 3307
Greenville, SC 29602

Caliber Home Loans, Inc.
P.O. Box 270415
Oklahoma City, OK 73137-0415

Carrington Mortgage Services, LLC
P.O. Box 5001
Westfield, IN 46074

Chase
Mail code LA4-6945
700 Kansas Lane
Monroe, LA 71203

Ditech Financial, LLC
P.O. Box 6176
Rapid City, SD 57709-6176

Fay Servicing, LLC
901 S. 2nd Street, Ste. 201
Springfield, IL 62704

Freedom Mortgage
P.O. Box 50428
Indianapolis, IN 46250-0401

MGC Mortgage, Inc.
Attn: MS NOE1290
1 Corporate Drive, Ste. 360
Lake Zurich, IL 60047-8945

OneWest Bank Mortgage Servicing
2900 Esperanza Crossing
OneWest-99
Austin, TX 78758

PNC Mortgage
P.O. Box 8807
Dayton, OH 45401-8807

Select Portfolio Servicing (SPS)
P.O. Box 65277
Salt Lake City, UT 84165-0277

SN Servicing Corporation (aka Security National Master Holding Company, LLC)
323 5th Street
Eureka, CA 99501

SunTrust Mortgage
P.O. Box 26527
Richmond, VA 23261-6527

USAA – Notice of Error / Request for Information
P.O. Box 610788
Dallas, TX 75261

Bank-Fund Staff Federal Credit Union
Attn: Mortgage Servicing
1725 I Street NW, Ste. 450
Washington, DC 20006-2406

Bayview Loan Servicing, LLC
Customer Support
4425 Ponce de Leon Blvd, 5th floor
Coral Gables, FL 33146

BSI Financial Services
Attn: Qualified Written Requests
1425 Greenway Drive, Suite 400
Irving, TX 75038

Capital One, N.A.
P.O. Box 21887
Eagan, MN 55121

Champion Mortgage
P.O. Box 612877
Dallas, TX 75261

CitiMortgage, Inc.
P.O. Box 6728
Sioux Falls, SD 57117-6728

Dovenmuehle Mortgage, Inc.
Attn: Mail Stop NOE1290
1 Corporate Drive, Ste. 360
Lake Zurich, IL 60047

Flagstar Bank
Attn: NOE/RFI, 2B-116
5151 Corporate Drive
Troy, MI 48098-2639

Mr. Cooper
P.O. Box 619098
Dallas, TX 75261-9741

PHH Mortgage Services
P.O. Box 66002
Lawrenceville, NJ 08648

Quicken Loans, Inc.
P.O. Box 442359
Detroit, MI 48244-2359

Shellpoint Mortgage Servicing
P.O. Box 10826
Greenville, SC 29603-0826

Specialized Loan Servicing LLC
P.O. Box 630147
Littleton, CO 80163-0147

U.S. Bank
Attn: Escalation Center
P.O. Box 21977
Eagan, MN 55121

Wells Fargo Home Mortgage
P.O. Box 10335
Des Moines, IA 50306-0335

Foreclosure, Deficiency and Cancellation of Debt

When you closed on your mortgage loan at settlement, you signed a promissory note that contractually obligated you to repay all amounts due on the loan (including late fees, charges and attorney's fees if you defaulted on the loan and the loan documents entitle the lender to collect those monies).  If the property is later liquidated via a foreclosure sale, a short sale or a deed in lieu of foreclosure, and the proceeds of the liquidation are insufficient to satisfy the entire balance due on the mortgage loan (the "payoff"), a deficiency balance will result.  Based on you obligation under the promissory note, you are still required to pay the deficiency balance as the loan has not been paid in full. Here is an example:

 Loan amount due at time of foreclosure auction - sale price at foreclosure auction  = deficiency balance

                       $300,000                                 -        $250,000                            =  $50,000

Your lender then has three (3) options:
1. Do nothing. (Note: the deficiency balance will still reflect as outstanding balance on your credit report)
2. Sue you in court for a judgment in the amount of the deficiency balance.
3. Waive / forgive the deficiency balance.

If the lender waives or forgives the deficiency balance, you will receive a 1099-C (cancellation of debt form) from the lender.  The lender will forward a copy of the same to the Internal Revenue Service. Then Internal Revenue Service will then make a determination as to whether the loan forgiveness results in an additional tax liability for you. You need to talk to a CPA or tax attorney to help you figure out how the deficiency waiver or forgiveness will effect you.

****FROM THE INTERNAL REVENUE WEBSITE****

Update Jan. 5, 2015 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.
This provision applies to debt forgiven in calendar years 2007 through 2014. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

The amount excluded reduces the taxpayer’s cost basis in the home. More details. Further information, including detailed examples, can also be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

The questions and answers, below, are based on the law prior to the passage of the Mortgage Forgiveness Debt Relief Act of 2007.

1. What is Cancellation of Debt?
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.
Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

2. Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

  • Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
  • Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets.Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
  • Certain farm debts:If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
  • Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.

3. I lost my home through foreclosure.  Are there tax consequences? 
There are two possible consequences you must consider:

  • Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)
  • A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)

Use the following steps to compute the income to be reported from a foreclosure:

Step 1 -Figuring Cancellation of Debt Income(Note:For non-recourse loans, skip this section.  You have no income from cancellation of debt.)

1. Enter the total amount of the debt immediately prior to the foreclosure.___________
2. Enter the fair market value of the property from Form 1099-C, box 7. ___________
3. Subtract line 2 from line 1.If less than zero, enter zero.___________

The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C.  This amount is taxable unless you meet one of the exceptions in question 2.  Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure ________
5.    Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.)                                    ____________
6. Subtract line 5 from line 4.  If less than zero, enter zero.   

The amount on line 6 is your gain from the foreclosure of your home.  If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income.  If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.

4. I lost money on the foreclosure of my home.  Can I claim a loss on my tax return? 
No.  Losses from the sale or foreclosure of personal property are not deductible.  

5.  Can you provide examples?
A borrower bought a home in August 2005 and lived in it until it was taken through foreclosure in September 2007. The original purchase price was $170,000, the home is worth $200,000 at foreclosure, and the mortgage debt canceled at foreclosure is $220,000. At the time of the foreclosure, the borrower is insolvent, with liabilities (mortgage, credit cards, car loans and other debts) totaling $250,000 and assets totaling $230,000.
The borrower figures income from the foreclosure as follows:

Use the following steps to compute the income to be reported from a foreclosure:

Step 1 -Figuring Cancellation of Debt Income(Note:For non-recourse loans, skip this section.  You have no income from cancellation of debt.)

1. Enter the total amount of the debt immediately prior to the foreclosure.___$220,000__
2. Enter the fair market value of the property from Form 1099-C, box 7. ___$200,000__
3. Subtract line 2 from line 1.If less than zero, enter zero.___$20,000__

The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C.  This amount is taxable unless you meet one of the exceptions in question 2.  Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __$200,000__
5.  Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.)                                        ___$170,000__
6. Subtract line 5 from line 4.If less than zero, enter zero.___$30,000__

The amount on line 6 is your gain from the foreclosure of your home.  If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income.  If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.
In this situation, the borrower has a tax-free home-sale gain of $30,000 ($200,000 minus $170,000), because they owned and lived in their home as a principal residence for at least two years. Ordinarily, the borrower would also have taxable debt-forgiveness income of $20,000 ($220,000 minus $200,000). But since the borrower’s liabilities exceed assets by $20,000 ($250,000 minus $230,000) there is no tax on the canceled debt.
Other examples can be found in IRS Publication 544, Sales and Other Dispositions of Assets, under the section “Foreclosures and Repossessions”.

6.  I don’t agree with the information on the Form 1099-C.  What should I do?
Contact the lender.  The lender should issue a corrected form if the information is determined to be incorrect.  Retain all records related to the purchase of your home and all related debt.

7. I received a notice from the IRS on this. What should I do?
The IRS urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency.

8. Where else can I go to get tax help?
If you are having difficulty resolving a tax problem (such as one involving an IRS bill, letter or notice) through normal IRS channels, the Taxpayer Advocate Service may be able to help. For more information, you can also call the TAS toll-free case intake line at 1-877-777-4778, TTY/TDD 1-800-829-4059. 
In some cases, you may qualify for free or low-cost assistance from a Low Income Taxpayer Clinic (LITC).  LITCs are independent organizations that represent low income taxpayers in tax disputes with the IRS. Find information on an LITCs in your area.

Please visit www.irs.gov for additional information.

Settlements With Servicers

There are three (3) major settlements with mortgage lenders that could effect your rights as a homeowner that was previously foreclosed upon or as a homeowner that is currently facing foreclosure.  Please review the information below as well as my blog for further information.The major settlements are:

  • National Mortgage Servicing Settlement
  • Bank of America and Fannie Mae settlement
  • Independent Foreclosure Review settlement

 

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National Mortgage Servicing Settlement - April 2012
The State of Maryland and the District of Colombia are two of the 49 states to sign onto the settlement agreement between the top 5 servicers (Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and Ally Financial).  This settlement agreement represents the largest of its kind in U.S. history and is expected to bring close to $1 billion of benefits to Maryland. There is talk that there are at least 9 additional servicers that will join the agreement.  The settlement agreement does not constitute a release of claims for any other civil remedy that may be available to borrowers. If you are unclear who your “servicer” is, please visit the Foreclosure Resources tabs on this website for a list of applicable definitions.

Does this apply to me?
If your loan is or was serviced by one of the 5 servicers named above, you may be eligible for assistance.
If your loan is owned by Fannie Mae or Freddie Mac, but it is serviced by one of the 5 servicers names above, you are NOT eligible for principal reduction, loan modification or refinancing under the settlement.

If I am eligible, what can I get?

  • Foreclosed borrowers -For borrowers who were victims of unfair servicing practices and were foreclosed upon between January 1, 2008 and December 31, 2011, you may be eligible for monetary relief (approximately $2000 depending on the collective borrower response).  There will be a claims process involved.  Although your bank is supposed to contact you, you may also submit your claim prior to being contacted by the bank.  The Office of the Attorney General will post the claim forms on its website when the forms are available.  

        Maryland - www.oag.state.md.us  
        District of Columbia -  occ.dc.gov 

  • Refinance - For borrowers who are current on their loans, you may be eligible to refinance your loan despite having negative equity.  You must have a loan-to-value ratio in excess of 100% and must have a current interest rate in excess of 5.25%. The refinanced rate must reduce monthly payments by at least $100.  If you meet this criterion, you will be offered a refinance.
  • Modification/principal reductions – Principal reductions must be given for all first and second liens.  The loan must be a conforming loan (see http://en.wikipedia.org/wiki/Conforming_loanfor a table of loan rates).  Relief will only apply to loans that are not owned by Fannie or Freddie. 
  • Other loss mitigation and alternative options:

              o  Unemployment payment forbearance
                 o  Cash for keys/relocation assistance
                 o  Short sales
                 o  Deficiency waivers
                 o  Funding for remediation of blighted property

What else does the settlement require?
 This settlement represents a major comprehensive reform of mortgage servicing practices. The new standards prevent robo-signing and improper foreclosure practices. The new standards will impose timelines for responding to borrowers and will prevent “dual tracking”.

  • The holders of loans and their legal standing to foreclosure must be documented and disclosed to borrowers.
  • All denials of loss mitigation are subject to a right of appeal.
  • Servicers will be required to designate a single point of contact for all loss mitigation assistance.
  • Military personnel will have enhanced protections.
  • Restrictions are imposed on default fees, late fees, third-party fees and force-placed insurance.
  • When a loan is transferred to a new servicer, loss mitigation efforts will also transfer so that momentum will not be lost.

When does this become effective for me?
The settlement agreement was signed by the Maryland Office of the Attorney General, the Department of Labor, Licensing and Regulation’s Office of the Commissioner of Financial Regulation, the federal government and the 5 servicers named above.  The next step is for a federal judge to sign off on the consent order that commemorates the agreement. At that point, the 5 servicers will be obligated to begin the process of implementing the relief measures outlined in the agreement.
Please note that while the clock is ticking, it is still going to take some time for the applicable protocols and programs to be finalized and put in place.  In the interim, be sure to remain in contact with your servicer using the contact numbers below.

If the banks fail to comply, what is the enforcement mechanism?
Once the consent order is signed, an independent monitor will be appointed by the court to oversee compliance with the settlement agreement.  The Office of the Attorney General will assist the monitor and borrowers will be able to contact the OAG to voice a complaint regarding their bank’s compliance and behavior.
The 5 servicers will be subject to the federal court (consent) order and that order will be enforceable in federal court. Compliance with the standards outlined in the agreement will be enforceable in court.   We will not know exactly how a borrower may enforce the agreement until the final text of the consent order is available.

How do I contact my bank?
Wells Fargo  800-288-3212
Bank of America 877-488-7814
Citi:  866-272-4749
JP Morgan Chase:  866-372-6901
Ally Financial/GMAC:  800-766-4622
Please visit www.nationalmortgagesettlement.com for more information. 

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BANK OF AMERICA AND FANNIE MAE SETTLEMENT - JANUARY 2013
Bank of America agrees to pay Fannie Mae over $11 billion for selling Fannie Mae bad mortgages. Bank of America and 9 other lenders entered into a settlement agreement with bank regulators to resolve claims of foreclosure abuse and botched loan modifications.
Bank of America will pay the agency about $3.6 billion to compensate for faulty mortgages and $6.75 billion to buy back mortgages that could have resulted in future losses for the government. The bank also agreed to sell to other firms the right to collect payments on $306 billion worth of home loans.
This settlement is separate from the other settlements discussed herein.
Note: This settlement has not specified whether or not any relief will trickle down to homeowners that were previously foreclosed upon or that are currently facing foreclosure.
Please visit my blog for full text articles on this subject.
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INDEPENDENT FORECLOSURE REVIEW SETTLEMENT - JANUARY 2013
The January 7, 2013 Independent Foreclosure Review Settlement was driven by banking regulators who felt that the mandatory foreclosure review was inefficient, costly and not yielding relief for homeowners.  Thirteen (13) mortgage servicing companies subject to enforcement for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement with the OCC and Federal Reserve Board to pay more than $9.3 million in cash and other assistance to help borrowers.
Note: The settlement ended the Independent Foreclosure Review for ten (10) of the servicers and will result in $3.6 billion in cash payments to nearly 4.2 million eligible borrowers and $5.7 billion in additional assistance.  The Independent Foreclosure Review process will continue for loans being serviced by Ally, Everbank and Onewest.
Relief will be distributed to homeowners even if they did not file a claim for their loans to be reviewed. A payment agent will be appointed to administer payments to borrowers. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. The servicers' internal complaint process will remain available to borrowers.
Relief includes loan modification, principal reduction, forgiveness of deficiency balances.
You could be contacted as early as March 31, 2013.   This agreement is separate from the National Mortgage Servicing Settlement that occurred in early 2012.
If your loan is serviced by one of the following lenders, then you may be eligible for additional relief under the settlement:
Bank of America
JP Morgan Chase
Wells Fargo
Citibank
Aurora
MetLife Bank
PNC
Sovereign
SunTrust
US Bank
Goldman Sachs
HSBC
Morgan Stanley
(Note: Ally Financial, HSBC, OneWest Bank and Everbank were originally a part of the settlement but did not sign on to this agreement).
For more information, contact 888-952-9105.
This settlement is separate from the other settlements discussed herein.
Please visit my blog for full text articles on this subject.
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JPMORGAN CHASE SETTLEMENT - NOVEMBER 2013
The Justice Department, along with federal and state partners, announced a $13 billion settlement with JPMorgan - the largest settlement with a single entity in American history - to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009.  As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public - including the investing public - about numerous RMBS transactions.  The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country.  The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.
JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.  That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight.  An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations.  If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.

Please visit http://www.justice.gov/opa/pr/2013/November/13-ag-1237.html for more information.
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OCWEN SETTLEMENT  - DECEMBER 2013
The CFPB, attorneys general and state banking regulators in 49 states and the District of Columbia have entered into a settlement agreement with Ocwen Financial Corporation and Ocwen Loan Servicing (also to include Litton Loan Servicing, Homeward Residential Holdings LLC fka American Home Mortgage Servicing, Inc. ("AHMSI") to provide $2 billion in principal reduction loan modifications for first liens on properties that are underwater and to refund $125 million to borrowers that were foreclosed upon by any of the above-referenced entities between January 1, 2009 and December 31, 2012. Additionally, the agreement will impose additional homeowner protections (as outlined in the 2012 National Mortgage Settlement).
If you are a borrower entitled to a refund, you will receive a Notice Letter and Claim Form from the settlement administrator beginning June 2014.
Please note that if your loan is currently serviced by Ocwen, the settlement does not require that Ocwen stop all foreclosures. Borrowers should contact Ocwen to determine what home retention options may be available for them.
Ocwen can be reached at 800-337-6695 or consumerrelief@ocwen.com.
Please visit www.nationalmortgagesettlement.comfor more information.
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CITIGROUP SETTLEMENT - 2014
The $7 billion deal that Citigroup agreed to strike with the Justice Department involves one of the largest cash penalties ever paid to settle a federal inquiry into a bank suspected of mortgage misdeeds.
But another major component of the settlement has little to do with troubled mortgages. As part of the deal, Citigroup has also agreed to provide $180 million in financing to build affordable rental housing.
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SUNTRUST SETTLEMENT - JULY 2014
The Department of Justice has announced an agreement with SunTrust Mortgage Inc. that resolves a criminal investigation of SunTrust’s administration of the Home Affordable Modification Program (HAMP).

Is detailed in documents filed today, SunTrust misled numerous mortgage servicing customers who sought mortgage relief through HAMP.  Specifically, SunTrust made material misrepresentations and omissions to borrowers in HAMP solicitations, and failed to process HAMP applications in a timely fashion.  As a result of SunTrust’s mismanagement of HAMP, thousands of homeowners who applied for a HAMP modification with SunTrust suffered serious financial harms.

SunTrust has agreed to pay $320 million to resolve the criminal investigation into SunTrust’s HAMP Program.  The money is divided as follows:

  • Restitution – SunTrust will pay $179 million in restitution to compensate borrowers for damage caused by its mismanagement of HAMP.  That money will be distributed to borrowers in eight pre-determined categories of harm.  If more than $179 million is needed, the bank will also guarantee an additional $95 million for additional restitution.  SunTrust will also pay $10 million in restitution directly to Fannie Mae and Freddie Mac.
  • Forfeiture – SunTrust will pay $16 million in forfeiture.  This money will be available to law enforcement agencies working on mortgage fraud and other matters related to the misuse of TARP funds.
  • Prevention – SunTrust will pay $20 million to establish a fund for distribution to organizations providing counseling and other services to distressed homeowners. Specifically, SunTrust will pay this amount to a grant administrator selected by the government, which funds will in turn be awarded to housing counseling agencies and other non-profits devoted to consumer counseling and advocacy.

Please visit http://www.justice.gov/opa/pr/2014/July/14-ag-697.html for more information.
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WELLS FARGO MATERNITY SETTLEMENT -  OCTOBER 2014
The U.S. Department of Housing and Urban Development has announced a $5 million settlement with Wells Fargo Home Mortgage for lender discrimination against women that were pregnant, had recently given birth or were out on maternity leave.
Under the settlement, Wells Fargo will distribute $165,000 among the six (6) families that were the named Plaintiffs in the lawsuit, create a fund with at least $3.5 million to compensate other applicants that were discriminated against, and pay $20,000 to an additional 175 claimants.  If there are more than 175 claimants, Wells Fargo will replenish the fund with $1.5 million and pay the next 75 claimants $20,000 each.
Additionally, Wells Fargo is required to modify its underwriting guidelines related to reviewing applications from applicants that are on maternity leave.
Please visit http://www.washingtonpost.com/blogs/federal-eye/wp/2014/10/09/hud-reaches-5-million-settlement-with-wells-fargo-over-maternity-leave-discrimination/ for more information.

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GOLDMAN SACHS SETTLEMENT - JANUARY 2016
Potential $1.8 billion in relief for underwater and affected homeowners. Settlement details still pending.
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HSBC SETTLEMENT - AUGUST 2016
The Federal government together with state attorneys general in 49 states and the District of Columbia reached a settlement in 2016 requiring HSBC Mortgage, Inc., to provide $428 million in various forms of relief to certain borrowers. The agreement was filed in the United States District Court for the District of Columbia on February 5, 2016. The United States District Court for the District of Columbia entered the Consent Order on March 14, 2016. The agreement addresses HSBC's alleged misconduct regarding its mortgage servicing and foreclosure practices. HSBC must create an approximately $58 million fund for the approximately 75,000 HSBC borrowers who were foreclosed upon between January 1, 2008 and December 31, 2012. In addition, HSBC must adhere to significant homeowner protections. The agreement requires that HSBC follow the servicing standards set up by the 2012 National Mortgage Settlement (NMS) with the five largest mortgage servicers. HSBC's compliance with this settlement will be monitored by the same professional monitoring team in charge of enforcing the NMS, led by former North Carolina Banking Commissioner Joseph Smith.

Settlement Highlights:
• $370 Million in relief for borrowers who are still in their homes
• $58 Million in cash to foreclosed homeowners
• Modeled on National Mortgage Settlement
Borrowers must meet certain minimum criteria to be eligible to receive a Settlement payment. In particular:
• The loan was serviced by HSBC at the time of the foreclosure sale,
• The loan went to foreclosure sale between January 1, 2008 and December 31, 2012 ,
• The borrower made at least three payments on the loan,
• The home (or foreclosed property address) was, or was intended to be the borrowers’ primary residence at the       time the mortgage loan was obtained.
• The borrower had a mortgage loan secured by a one-to-four unit residential property, and
• The unpaid principal balance of the first-lien mortgage loan did not exceed $729,750 for a one-unit property;
$934,200 for a two-unit property; $1,129,250 for a three-unit property; or $1,403,400 for a four-unit property.

Borrowers will be ineligible to receive a payment from the National HSBC Settlement if they received a payment from:
(i) The National Mortgage Settlement, involving Bank of America, JP Morgan Chase, Citibank, Wells Fargo, and
GMAC/Ally,
(ii) the National Ocwen Settlement, involving Ocwen Loan Servicing, Litton Loan Servicing, and American Home
Mortgage Servicing Inc. (AHMSI) aka Homeward Residential; or (iii) the National SunTrust Settlement.

Notices to be Sent to Eligible Borrowers:

  • August 2016 Primary Deadline to File a Payment Claim:
  • November 15, 2016 Payments to be mailed to eligible borrowers who make claims:
  • We anticipate checks will be mailed in the first quarter of 2017.

Borrowers who are eligible to participate in the HSBC Settlement will be mailed a postcard followed by a Notice Letter and Claim Form in August 2016. Borrowers who believe they are eligible but have not received a Notice Letter by September 2016 may contact the administrator toll free by calling 1-888-538-5792, Monday through Friday between 7:00 a.m. and 7:00 p.m. Central Time.
Please contact the National HSBC Settlement Administrator with questions at 1-888-538-5792, Monday through Friday, 7:00 a.m. - 7:00 p.m. Central Time.
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PHH SETTLEMENT - JANUARY 2018
The settlement is between PHH and the Multi-State Mortgage Committee, including more than 45 state mortgage regulators, along with 49 state attorneys general, and the District of Columbia.
The settlement requires PHH to adopt new servicing standards and provide monetary relief to affected borrowers, though the company counters it already currently uses said standards. The settlement covers the company’s mortgage servicing practices, including foreclosure activities, between Jan. 1, 2009 and Dec. 31, 2012.
As part of the settlement, PHH will pay more than $30 million to borrowers who lost their homes to foreclosure or were referred for foreclosure during the time period in question.
PHH borrowers whose homes were lost in foreclosure during that period will qualify for a minimum $840 payment, while borrowers who faced foreclosures that PHH initiated, but did not lose their home, will receive a minimum $285 payment.

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