Banks Slow to Put National Mortgage Settlement into Effect

After attorneys general from 49 states investigated a slew of reports that banks were using fraudulently signed documents to speed up foreclosures in court the national mortgage settlement was put into place. There were also complaints of wrongful foreclosures and other issues coming from the banks’ improper handlings of borrower’s accounts. The banks, however, are progressing rather slowly.
Few Borrowers Given Assistance
The settlement was supposed to help one million borrowers and give $10 billion to struggling borrowers in the form of debt relief. The settlement went into effect over five months ago and the banks have only helped 7,093 borrowers by writing off $750 million in first mortgage debt. The banks have a total of three years to complete the terms of the settlement, if they complete it in the first year, they receive financial incentives.
Bank of America is one of the five banks, and also the bank with the highest settlement obligations. This bank, however, had not made any changes as of the end of June according to the monitor of the national mortgage settlement. The Bank of America claims to have given $596 in relief to 3,823 borrowers.
The banks say that the majority of the relief so far is coming in the form of a short sale. A short sale occurs when a bank sells the borrower’s home for less money than is owed on the home. The bank then agrees to not pursue any further action on the property.
Some Say the Settlement is not Enough
Within the housing community there are critics of the settlement. They say that the agreement is not enough to deal with the current housing crisis. They claim that only 10% of outstanding loans will qualify under the settlement. This is because the main mortgage holders in the country, Fannie Mae and Freddie Mac, are not included in the settlement.
Critics also argue that they are skeptical as to whether the banks will perform the agreement. The agreement requires the banks to implement changes to prevent errors and help with other issues the banks were having in regards to the mortgages. Attorneys and housing counselors who are now working with struggling borrowers claim that the banks’ compliance with the new rules is not as good as it should be.
Individuals struggling with mortgage debt or suspect fraudulent bank practices as were involved in the settlement should seek help before the problem gets out of control. An attorney is a great resource for struggling borrowers and those who feel as if they are being treated unfairly by their lender to get back on track.