Wells Fargo, Bank of America, JP Morgan Chase, Ally Financial and Citigroup to pay $25 billion for fraudulent foreclosure practices

which led to the worst economic crisis since the Great Depression.

In February of 2012 the government reached a $25 billion (yes that is billion) settlement the five of the largest banks for bank fraud.  Under the terms of the deal, banks would have three years to complete principal write downs, refinancing and other relief. It provides incentives for actions taken within the first 12 months so that the aid can get to homeowners as quickly as possible.

New York Attorney General Eric Schneiderman threatened to sue Wells Fargo and Bank of America for violating the terms of the national settlement agreement.

The settlement also includes about $17 billion that would go toward foreclosure-prevention measures, such as lowering the loan balance for borrowers who owe more than their homes are worth. Other provisions would provide for lowering interest rates for homeowners who are current on their loans. In addition, as many as 750,000 borrowers who lost their homes to foreclosure since 2008 would be eligible for payouts, but hardly enough to put down on the first month’s rent for a new home.

Fast forward toturtle in mud May, 2013 – According to the Washington Post, earlier this month, New York Attorney General Eric Schneiderman threatened to sue Wells Fargo and Bank of America for violating the terms of the national settlement agreement. In a letter to the Washington Post Schneiderman stated that his office has received 339 complaints that the two banks were not complying with the timeline requirements of the agreement. He also has determined that “several other states have identified similar, recurring deficiencies by the participating servicers,” Both Wells Fargo and Bank of America have agreed to “look into the situation”.

Illinois Attorney General Lisa Madigan said that “the new servicing standards were supposed to eliminate headaches for homeowners, but unfortunately, it seems we’re hearing about the same frustrating experiences. Homeowners are. . . experiencing continued delays that put them closer to foreclosure.”

The good news is that some funds are reaching some homeowners. Supposedly Bank of American has entered into agreements in the amount of $27.9 billion out of their $50.6 billion obligation as set forth in the settlement. In addition, Citigroup has provided $3.2 billion in relief to 54,742 homeowners. Ally Financial has given 8,866 borrowers about $657 million in assistance. Wells Fargo said it has helped 90,907 consumers with $5.7 billion in relief, while JPMorgan said it has provided $11.1 billion in help to 126,032 borrowers. These agreements include loan modifications, short sales, refinancing of the debts and forbearance assistance according to a report released by the mortgage oversight settlement monitor.

Diane L. DrainWe 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: “My experience is that my own clients are not receiving but a mere pittance from this settlement.  All we can do is wait to see what happens.”