(WASHINGTON, D.C.) After leading a 16-month nationwide investigation and settlement negotiations involving the nation’s five largest mortgage servicers, Attorney General Tom Miller Wednesday announced a landmark $25 billion national joint federal-state accord over mortgage foreclosure abuses and fraud, and unacceptable nationwide mortgage servicing practices. The proposed agreement provides an estimated $40 million in direct relief to Iowa homeowners and addresses future mortgage loan servicing practices. U.S. Attorney General Eric Holder, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan and a bipartisan group of state attorneys general announced the settlement at a news conference at the U.S. Department of Justice in Washington, D.C.
“This agreement is very significant in how it addresses the fraud that these banks committed against many homeowners across Iowa,” said Miller. “This agreement not only provides badly needed relief to Iowa borrowers, but it also puts a stop to many of the bad behaviors that contributed to the mortgage mess throughout Iowa and across the country. This agreement will protect homeowners and ensure they’re treated fairly.”
Iowa’s estimated share of the settlement is $40,235,321.
- Iowa borrowers will receive an estimated $5,899,449 in benefits from loan term changes.
- Iowa borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and encountered servicing abuse would qualify for $7,402,512 in payments to borrowers.
- The value of refinanced loans to Iowa’s underwater borrowers would be an estimated $11,602,880.
- The state will receive a direct payment of $15,330,480.
The unprecedented joint state-federal settlement began with a massive civil law enforcement investigation that included state attorneys general and state banking regulators across the country, and several federal agencies. The settlement holds banks accountable for past mortgage servicing and foreclosure fraud and abuses and provides significant relief to homeowners. With the backing of a federal court order and the oversight of an independent monitor, the settlement stops future fraud and abuse.
Under the agreement, the five servicers have agreed to a $25 billion penalty under a joint state-national settlement structure. The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.
For more information on the proposed agreement: