A couple of days ago, I blogged about the multi state mortgage settlement between 49 U.S. states and five of the nation’s biggest banks: Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial. How much of the settlement money is to go to Florida? According to the state's Florida Attorney General, homeowners and foreclosure victims will receive almost one-third of the $8.4 billion mortgage settlement announced yesterday. The state's settlement amount is second only to California.
Most of the money is slated to go to current homeowners who owe more on a mortgage than their home’s current worth in the form of principal reductions and/or converting their mortgage interest rate to lower levels. About $170 million will go to homeowners who lost their home in foreclosure.
The settlement applies to clients or past clients of five of the nation biggest banks. Other banks may also sign on, though they have not been named. The settlement does not apply to loans held by Fannie Mae and Freddie Mac.
According to the Florida Realtors site, the settlement details are as follows:
Relief won’t be immediate. While the agreement calls for immediate principal reductions for first and second liens, it will take up to two months for negotiators to select an administrator to handle the logistics, up to nine months to identify eligible homeowners and contact them by mail, and up to three years to complete the process.
Underwater homeowners get relief. The agreement calls for Floridians to receive $7.6 billion from banks to pay for refinancing relief, including principal reductions; borrowers with higher interest rates will also be able to refinance at 5.25 percent. While banks will handle the disbursements, state Attorneys General will oversee the process.
Foreclosed owners get cash. Ex-homeowners who lost a home within the past three years will receive about $2,000 each even if their foreclosure did not involve allegations of robo-signing. Critics, however, say that amount is far too low to compensate for their suffering.
Foreclosures could increase. “The immediate results are not going to be all that pleasant,” predicts Mark Vitner, an economist with Wells Fargo. “The amount of foreclosures will actually increase and there will be some additional downward pressure on home prices.” Some homeowners have lived in a home over two years as the foreclosure process crawls through Florida’s legal system. Analysts, such as Vitner, believe the just-announced settlement brings clarity to the process and banks will proceed more quickly to take back homes.
Florida oversight grows stronger. The state will collect $350 million from the settlement to pay for foreclosure prevention programs and to protect consumers.
To see more information including settlement documents, a set of frequently asked questions, breaking information, and addresses for the banks involved in the settlement, go to NationalMortageSettlement.com.
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