A massive settlement in the wake of the mortgage meltdown could impact thousands of people in West Virginia, Kentucky and Ohio.
CHARLESTON, W.Va. (WSAZ) -- A massive settlement in the wake of the mortgage meltdown could impact thousands of people in West Virginia, Kentucky and Ohio.
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The Obama administration announced a $26 billion settlement Thursday with five of the country's biggest home lenders.
They were accused of foreclosing homes based on something called robo-signing. That means they'd speed up taking the homes without proper paperwork.
The banks were also putting up too many roadblocks, keeping people from modifying their loans and putting them further behind on their payments.
The settlement is with: J.P. Morgan Chase, Bank of America/Countrywide, Wells Fargo, Citibank and GMAC/Ally
West Virginia will get $33.8 million to help homeowners. Here’s how the Attorney General’s office breaks down how that money will be allocated:
-An estimated $2,000 to each homeowner who lost their home to foreclosure between January 1, 2008 and December 31, 2011.
-$18.4 million in loan modifications and benefits to homeowners currently in default or foreclosure.
-$5.7 million in free financing for “underwater” but current homeowners.
-$6 million for foreclosure and mortgage assistance and prevention programs.
Kentucky will receive $58.8 million, and Ohio will get $335 million. Those states will allocate their money to provide similar assistance as West Virginia.
WSAZ.com talked to several homeowners who’ve been struggling in recent months and years and faced the threat of foreclosure, who say Thursday’s settlement is a major step toward helping people like them.
"I've been trying everything possible to save my home, and then they go and pull sneak tactics," says Gloria Scott, of East Lynn. She and her husband started to struggle with their payments when he was fighting to get his disability payments.
Krystle Harrison, of Kenna, had children and unexpected medical bills.
"We love our home. We love our family. We just want to raise our kids there," says Harrison.
Mary Kerns and her husband, Charles, started having trouble with their payments when he was laid off from one of his two jobs.
"We've been fighting for our home for over three years. And, our home is fighting for. We want to keep our home," says Mary.
In each case, it suddenly meant they could not afford their mortgage payments anymore.
There could have been a simple solution: a loan modification.
But, these families found themselves in a mess of red tape and threats of foreclosure.
"When you call the bank, and they have a large number of people working for them, you just get whoever's available at the time, who may not have any knowledge or any familiarity with what your issue is," says Attorney General Darrell McGraw (D-West Virginia).
He says as part of the settlement, there is expected to a “bill of rights” for homeowners that would prevent situations like these from happening.
Charles Kerns says, "It shouldn't be just part of the process. You tell me it's going to take 90 days to get this thing through, and that was how many years ago?"
Some important things to note about the settlement:
If your mortgage has been sold to Fannie Mae and Freddie Mac, this settlement does not apply to you.
It's only for people with the five banks. State and federal officials say negotiations continue with other banks to arrive at additional settlements.
Also, critics have already attacked the $2,000 payment expected to go to people who’ve already lost their homes to foreclosure, saying that’s an insufficient amount for someone who improperly lost their home.
Attorney General McGraw says these people still retain other rights, such as the ability to sue a bank or join a class action lawsuit. The settlement does not prevent states from pursuing criminal charges. In West Virginia, the attorney general does not have prosecutorial power, so any potential action would have to be originated on the county level.
People who've been trying to get their loans modified will be able to get help over time. The parties involved have three years to give the required help.
Government officials are stressing patience, saying it may take several months to determine who specifically will get what kind of help.
The attorneys general in Kentucky, Ohio and West Virginia encourage homeowners who may qualify for this relief to contact them. The various banks involved are also expected to contact homeowners.
West Virginia Attorney General’s Office consumer hotline: 1-800-368-8808.
Kentucky Attorney General’s website: www.ag.ky.gov/mortgagesettlement.
Ohio Attorney General’s website: http://www.ohioattorneygeneral.gov/