Rep. Lois Capps, D-Santa Barbara, on Thursday applauded the announcement that the federal government and 49 states, including California, reached a $25 billion agreement with the nation’s five largest mortgage servicers to penalize robo-signing and other bank servicing and foreclosure misconduct.
The agreement includes a commitment to California of up to $18 billion that will benefit hundreds of thousands of homeowners in the state.
“This settlement is good news for California and Central Coast homeowners, who will finally receive some relief from the big banks that helped cause this mess,” Capps said. “However, our state continues to be hit hard by the housing crisis, and while this settlement is certainly a big step forward, it by no means solves the problem. Less than half of California homeowners are eligible for this relief, which is limited to mortgages owned by the five banks involved in the settlement. I will continue working to ensure the big Wall Street banks are held accountable and California homeowners get the support they deserve, like a Homeowners Bill of Rights and expanded access to refinancing through Fannie Mae and Freddie Mac.”
The joint federal-state agreement was made with the nation’s five largest mortgage servicers: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC). It requires these servicers to implement new mortgage loan servicing standards and commit $25 billion to resolve violations of state and federal law, $18 billion of which is dedicated to California.
The agreement also includes a separate, enforceable California guarantee that requires banks to enact a minimum of $12 billion in principal reductions for California homeowners.
The agreement also requires mortgage servicers to implement several mortgage processing changes that Capps has long advocated for, including ensuring a single point of contact, establishing the right to appeal denials, ending dual tracking, requiring servicers to evaluate homeowners for other loss mitigation options before foreclosure, and ensuring adequate staffing and timely processing by the banks.
Compliance with the agreement will be overseen by an independent monitor, who will oversee implementation of the servicing standards required by the agreement. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by the servicers. The agreement also does not prevent any action by individual borrowers who wish to bring their own lawsuits.
Click here for more information about the settlement and eligibility criteria.
— Ashley Schapitl is press secretary for Rep. Lois Capps, D-Santa Barbara.
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