January, 2013 – The federal government and 10 banks agreed to an $8.5 billion foreclosure settlement on Monday. The agreement puts to rest allegations that the banks didn’t follow proper foreclosure procedures.

Following the financial crisis that began in 2008, millions of Americans lost their homes through foreclosure. Many of those people were actually current on their mortgage payments.  Regulators initially tried to introduce a system to review foreclosure files for defects, but this settlement will replace it. So, if you dealt with foreclosure in 2009 or 2010, this settlement may apply to you.

The awards that homeowners will get from the settlement will vary. Many who were charged improper fees will get a few hundred dollars, while others who lost their homes to foreclosure.

As part of the agreement, banks will provide $3.3 billion in cash to 3.8 million mortgage borrowers who were foreclosed on. Ten banks have signed on: Aurora Bank, Bank of America, Citigroup, J.P. Morgan Chase, Wells Fargo, Sovereign Bank, MetLife, US Bank, SunTrust, and PNC, according to USA Today.

If you held a mortgage with any of those banks, you’re entitled to some of that money.  That applies even if your foreclosure was handled appropriately, or if you haven’t filed a complaint.  Why? Because most banks have determined that it’s more cost-effective to compensate everyone rather than determine which foreclosed individuals suffered harm.

The awards that homeowners will get from the settlement will vary. Many who were charged improper fees will get a few hundred dollars, while others who lost their homes to foreclosure — even though they were paid up — may get as much as $125,000, according to CBS News. What do you have to do if you are in this group?  Supposedly nothing.  The regulators will contact all affected individuals by the end of March.

We have several videos on our web site.  Below are a few that might be of interest:
  • “Lender’s Foreclosure Rights in Arizona”
  • “Should I keep my home or let it go into foreclosure?”
  • “Meet Ms. Drain and Suggestions on How to Hire an Attorney”

MUSINGS BY DIANE: “For those of you struggling to keep you homes, another $5.2 billion will go toward mortgage relief.

A settlement like this means legal claims against the banks will be dropped in exchange for their compliance.  But that only applies to claims that have already been brought.  If you’re unsatisfied with the way your bank handled your mortgage, you can still bring a claim.”

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