National Mortgage Settlement & California Commitment Help for Homeowners Community Pre Event Webinar Noah Zinner, Visiting Clinical Professor, UC Irvine Law School California Monitor, A Program of the Attorney General 1
Disclaimer: This presentation reflects the views of the California Monitor Program. It does not necessarily reflect the views of the Attorney General or the California Department of Justice. 2
National Mortgage Settlement Five major banks agreed to improve servicing standards and provide relief to borrowers: Bank of America (includes Countrywide) Wells Fargo JPMorgan Chase Citibank Ally Financial (formerly known as GMAC) Relief under the Settlement includes: Loan relief such as principal reduction modifications or refinances Improvements in how banks treat consumers trying to save their homes 3
Overview: California Commitment Separate 3 year agreement to aid CA homeowners Signed by Bank of America, Wells Fargo, and Chase $12 billion loss mitigation commitment Any principal reduction modifications of first or second liens, including loan mods, deeds in lieu or short sales Must be creditable under national agreement Speeding meaningful relief to hardest hit places Extra credit for first lien principal reductions in first year (3/1/12 to 3/1/13) or in 12 counties with highest foreclosure volume in prior year 4
California Monitor s Role Program of the CA Attorney General Provide Expert Advice and Support to the Attorney General Independent of banks UCI Law Consumer Protection Clinic Not identical to, or duplicative of: National Monitor Attorney General State Monitoring Committee Attorney General Kamala Harris 5
Tasks of California Monitor Track and handle homeowner complaints and inquiries Provide more tailored and detailed assistance to facilitate communication with bank or answer questions Record data on nature of complaints and bank responses Monitor banks implementation of Settlement Analyze data and information to detect implementation problems or settlement violations Engage banks on how to improve their CA performance Outreach, Innovation, and Expertise Workshops and events for counselors, legal aid, etc. Advice on broad range of consumer protection initiatives as requested by AG 6
Who Controls Your Mortgage? A Mortgage Servicer is the party that collects the payments and fees. They communicate with homeowners in default. The Owner (Investor) is the party that eventually receives your payments. Often, this is a group of investors, whose interests are represented by a trust bank. Other common investors are Fannie Mae or Freddie Mac, or the same bank who services your loan. Your eligibility under the Settlement depends on the identities of both the Servicer and the Owner of your mortgage. 7
Consumer Relief: National Settlement Loss Mitigation Menu: $17 billion First lien principal reductions Second lien principal reductions Cash for keys Short sale incentive payments Waiving deficiencies Forgiving arrears for the unemployed Some anti blight activities Refinance Program: $3 billion 8
Consumer Relief: Principal Reductions A principal reduction lowers the balance owed on the mortgage and also reduces payments You may qualify for a principal reduction under the Settlement if: The property is underwater You are delinquent on payments or at imminent risk of default The owner of your loan consents to a principal reduction 9
Consumer Relief: Refinances Refinancing reduces payments by decreasing the interest rate and/or extending the payment term on your mortgage You may qualify for a refinance under the Settlement if: The loan originated before January 1, 2009 The servicer is also the owner of your mortgage The property is underwater Your interest rate is at least 5.25% You have been current payments for the past 12 months You have not filed bankruptcy, been in foreclosure proceedings, or modified your loan in the past 24 months 10
Consumer Relief: Bank of America B of A is required to notify borrowers who may be eligible for a loan modification under the Settlement Ally/GMAC also has a solicitation requirement Criteria: First lien mortgage owned by B of A or part of Countrywide Securitization and B of A has delegated authority to modify. Delinquent for sixty days or more as of January 31, 2012 DTI is greater than 25% Property is underwater Modifications must provide a positive NPV 11
Improvements in Mortgage Servicing Broad Applicability Loans serviced by the 5 major banks Single family, Owner occupied, Primary Residences Includes Fannie/Freddie Standards apply regardless of who owns the loan Implementation October 3, 2012 12
Servicing Standards: National Settlement Three Areas of Focus: Improved communication Single Point of Contact (SPOC) Adequate Training & Staffing Better handling of loss mitigation Faster handling of loan mods Standards for performing foreclosure and default tasks No improper fees No robo signing 13
Servicing Standards: Improved Communication Duties of SPOC Explain loss mitigation options and ensure borrower is considered for all available options Coordinate receipt of documentation for loss mitigation Be knowledgeable about the borrower s situation Beyond the SPOC Must transfer calls to their supervisor when asked Must have ability to access individuals with authority to stop a foreclosure 14
Servicing Standards: Loan Modifications Timing Deadlines for Processing Applications Upon receipt: Servicer must acknowledge receipt of loan mod application within 3 days Servicer must send missing items letter giving borrower 30 days to submit additional documents within 5 days Decisions made within 30 days of receipt Denials: Servicer must send letter with reasons for denial within 10 days Servicer must give some borrowers 30 days to appeal denial 15
Servicing Standards: Loan Modifications Restrictions on Dual Tracking Pre referral to foreclosure: No dual track if complete loan mod application submitted by day 120 of delinquency. Post referral to foreclosure: No dual track if complete loan mod application submitted < 30 days after attorney letter to borrower > 30 days after attorney letter but > 37 days before sale If loan mod application is submitted < 37 days before sale but > 15 days before sale, servicer must conduct an expedited review of the borrower s application. 16
Servicing Standards: Defaults and Foreclosures Restrictions on Default Servicing Fees Example: Late fees not collectible while loan mod application is being considered or short sale being evaluated. Pre Foreclosure letter: 14 days before referral to attorney/trustee. Letter gives account info and tells borrower of right to request certain information, including: Payment history, A copy of the Note, Any assignments of the mortgage or Deed of Trust, and The name of the investor. Affidavits must be verified and properly notarized 17
How We Can Help Homeowners Settlement Loan Modifications: We help homeowners who cannot get information about their eligibility from their servicer. Settlement Servicing Standard Issues: Dual tracking and an impending foreclosure sale date. Receipt of Notice of Trustee Sale while completed mod application is under review. Failure to process completed mod applications within 30 days. Indefinite trial modification periods. Failure to provide written explanations of modification denials. Failure to allow appeal of some modification denials. 18
How to Submit a Complaint to the California Monitor Contact the CA Monitor Program directly email: CAmonitor@doj.ca.gov (preferred) telephone: (949) 824 6683 Submit a complaint to the CA Attorney General s Public Inquiry Unit at: https://oag.ca.gov/contact/consumer complaint against businessor company Or search for CA Attorney General Public Inquiry Unit. 19
National Mortgage Settlement & California Commitment Noah Zinner, Visiting Clinical Professor, UC Irvine Law School California Monitor, A Program of the Attorney General 20