The state attorneys general mortgage settlement received almost immediate criticism from homeowner and housing advocates alike after its Feb. 9 announcement, with common complaints being the limited reach of the settlement and the numerous consumer groups that were either unaffected or helped only minimally.
According to an HSH analysis, though, at least one group of homeowners will receive an adequate settlement as part of the agreement – veterans whose homes were wrongfully foreclosed on.
Citing Department of Justice figures, the article cited several instances of net benefit for home-owning veterans, all of which are payouts in addition to the original $26 billion settlement.
For instance, four of the five banks involved in the settlement – JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial Inc. (formerly GMAC) – will conduct full reviews of all servicemember foreclosures since Jan. 1, 2006 to see if the foreclosures comply with the Servicemembers Civil Relief Act (SCRA).
In addition, Citigroup, Wells Fargo and Ally will review all loans to servicemembers after Jan. 1, 2008 and determine if they were charged more than 6 percent interest in their mortgage after a valid request for a lower interest rate, which is also in violation of the SCRA. If such a case is found, the services must pay the service member triple the amount charged beyond 6 percent or $500 (whichever is larger).
Lastly, and perhaps most substantially, Wells Fargo, Citigroup and Ally are required to provide any servicemember who was the victim of a wrongful foreclosure with a minimum payment of $116,785, plus the servicemember’s lost equity and interest.
Polyana da Costa, of Bankrate.com, said in the HSH article that the veterans portion of the settlement far exceeds the other portions of the agreement.
“Now that is what I call a settlement,” da Costa said. “It’s certainly much better than the mere $2,000 that nonmilitary borrowers may receive under the $25 billion federal-state mortgage settlement.”