Local homeowners with foreclosure issues may get help

Local homeowners who have lost their homes to foreclosure in the last few years may be in line for $2,000 as part of a national settlement with the five largest mortgage service companies for mortgage abuse and fraud.

A $25 billion settlement between the 50 states and the five service companies affects homeowners who lost their homes to foreclosure between January 1, 2008 and December 31, 2011.

The settlement is the result of a federal probe started in October 2010 investigating the practice of “robosigning” – rubber stamping by banks or their agents of foreclosure documents without delving into or trying to remediate each individual situation.

The five mortgage service companies named in the case are Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.

The settlement does not cover mortgages held by Fannie Mae or Freddie Mac.

Settlement measures will be implemented over the next three years, according to the West Virginia Attorney General’s office.

West Virginia’s share
Of the $25 billion national settlement, West Virginia will receive $33 million.

Of that amount, an estimated payment of $2,000 will go to each qualified state homeowner whose home was foreclosed on during the affected dates.

More than $18.4 million will go for loan modifications and benefits to homeowners who are currently in default or foreclosure. Another $5.7 million will go to free refinancing for so called “underwater” homeowners who are still current on their payments but are struggling.

(Underwater means the homeowner owes more on the house than the property is worth in the current market.)

According to Attorney General Darrell McGraw, another $6 million is being set aside for foreclosure, mortgage assistance and prevention programs in the state.

And finally, $1 million will go for Legal Aid West Virginia to do home mortgage modifications.

Regional office will assist
McGraw was in the Eastern Panhandle last week making preparations to open a branch office at 269 Aikens Center off of Edwin Miller Blvd. in Martinsburg. This office will open soon – possibly by the end of April — to help facilitate applications for foreclosure relief and other programs.

Speaking at a meeting of the Region 9 Council in Morgan County recently, McGraw said the office will handle consumer and housing issues.

Exception to lending law
State Senator Herb Snyder of Jefferson County, also at the Region 9 meeting, said the recent passage of Senate Bill 551 (SB551) by the West Virginia Legislature will also help homeowners that are underwater.

The new law offers an exception to West Virginia code, which says a bank is not allowed to make a home loan in an amount more than the appraised or fair market value of the home.

For homeowners who are underwater, that old law forces makes it difficult to qualify for a new loan.
The new bill says homeowners who are participating in certain federal loan modification programs can borrow in excess of the fair market value of their property.

Both the settlement and the loan exception should bring relief to some struggling homeowners and those who may have been unfairly foreclosed upon.

For more information and to obtain forms to make a claim, contact the West Virginia Attorney General’s office at 1-800-368-8808 or visit the website.