National Mortgage Settlement Information and FAQs

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
39
48
Colorado
www.loansafe.org
After many months of negotiation, 49 state attorneys general and the federal government have reached agreement on a historic joint state-federal settlement with the country’s five largest loan servicers:

The settlement will provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government. It’s the largest multistate settlement since the Tobacco Settlement in 1998.
The agreement settles state and federal investigations finding that the country’s five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. The settlement provides benefits to borrowers whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.

  • About the Settlement: Learn about the settlement, who is affected and what claims may still be pursued against the banks. Find links to your state Attorney General’s Office to find state-specific information and contacts.
  • Help for Borrowers: Learn how to find out if your loan is affected by this settlement, the timeline for relief, how you will know if you are eligible. Find links to your state Attorney General’s Office to find state-specific information and contacts.
  • News: Read the national news release and find links to your state Attorney General’s Web site for state-specific news.


Joint State-Federal Mortgage Servicing Settlement FAQ | NationalMortgageSettlement
 

HateCiti

LoanSafe Member
Feb 25, 2012
13
0
0
Hi Cat !
Thx for all of ur posts and assistance!
I'm hoping you can shed some light on my situation...
Current on both loans w/ Citi. Underwater on both loans...second completely under.
Citi modified me on the 1st in 2010 by lowering interes to 3% (was 6.75% )for life of loan ($435,000) .However kept it at Interest only???
Can they do that? I had an interest only to begin with in order to purchase this home. At the time (2006, bad time ) the realtor said it was only to get me into the home and i would be able to refi anytime....I beleieved her!!!!
So, was laid off in 2009...and mod was done in yr later, but never understood y interest only again. I still owe the same balance, feel like Im just renting and my neighbors are buying for half the price and a mortgage of $1500 PITI?
I called Citi last month ( after being rejected by them at the NACA event ) inquiring on this "Attorney General Settlement", I asked about the principle reduction program? They said I did not qualify for any of these programs because they are not the owner of this loan , it was sold to a private investor and i have no other options??? In order to qualify for any of these they would need to be the owner? GREAT!

Anyhow, My 2nd is 10yr fixed at 8.9%
So, I called in rgrds the 2nd and advsd them that I,m looking into settling my 2nd...the Exec rep said they would turn my financials over to the underwriter? ( they had my recent docs from the NACA event in Feb). A month went by and just yesterday i rcvd mod docs for the 2nd??? Lowering my interest to 2% for the life of $98000 loan ! I was rqsting a settlement confused?
And why was my 1st sold? That's not fair...I see no light at the end of this tunnel, unless a BK?
 

davephx

LoanSafe Member
Jul 21, 2009
5,435
47
48
Gezze you have what I would consider great deal.

I'll take interest only any day at the 2-3% - after tax deduction is probably a negative "real" cost after much of any inflation.

If you have extra cash you don't need and don't like the cheap 2-3% interest just make extra payments. But I'd love the interest only to keep the required payments as low as possible.
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
39
48
Colorado
www.loansafe.org

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
HateCiti

Thanks for your posts. I agree with Cat's advice.

I recommend you strive to settle your Citi 2nd. A settlement is always a better deal for the borrower because it's less expensive and because the lien is extinguished. Of course the lenders all prefer you accept a modification of the 2nd; it's much better for their cash flow and balance sheets.
 

HateCiti

LoanSafe Member
Feb 25, 2012
13
0
0
Hi Davephx!
Really? Well, I'd much rather pay the $800 pymnt on 2nd loan towards the 1st and apply it to principle. In 2016 , the first will be principle and interest...which would bring my pymnt to $2100, then I wouldnt be able to continue paying the second any longer. Thats why I'm looking to settle this second now, but no such luck!
 

HateCiti

LoanSafe Member
Feb 25, 2012
13
0
0
Hi TomEason!
Can they foreclose if I stop paying second? I read on another thread that Citi will not settle if they are the owner of the loan! And on my 2nd they are the OWNER! The 1st they are NOT the owner that's why I dont qualify for the "Attorney General Programs"! Even my first is underwater by $80,000 but Id rather keep paying that and add on principle $$$ that I would have if I don't pay the 2nd!
Then on the otherhand I have these MOD docs for the second but it makes no sense to me to continue paying the second in full when my 1st is an Interest only paymnt.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
HateCiti

Thanks for your post. Since your Citi 2nd is underwater, they won't FC.

If it were me I'd immediately stop making payments on that loan.

I recommend you take your time and be very patient in seeking to eventually settle. You likely have a very long time horizon before a settlement becomes compelling.

You might visit the following thread and read post #1.

http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd-94.html
 

davephx

LoanSafe Member
Jul 21, 2009
5,435
47
48
Obviously if you have the cash a settlement on the 2nd is preferred but very rare. Also unlikely to foreclouse but we are starting to see posts on foreclosure actions on under water 2nds.

A reason bank owning 2nds which is typical unlike 1sts where banks usually only service, under accounting rules the bank doesn't have to write down the mortgage if just holds and you wouldn't think they would foreclose since they get no service fees and then would have to book the loss on their 2nds owned if they foreclose. But a few are.

The name of the game is keeping zillions or profits for as long as possible to help stock price and of course pay out the millions in salaries to lots of execs - especially with tax rates the lowest in 50 years even on earned income and among the lowest in the world. Then capital gains at such extreme low rates.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
davephx

Thanks for your opinion. I disagree with your assessment. Your statement that
a settlement on the 2nd is preferred but very rare
is just wrong. You might visit http://www.loansafe.org/forum/debt-settlement/40564-success-stories-settling-2nds.html and see for yourself how many members have settled.

Those borrowers who need the cash to pay to the lender in an eventual settlement can save up the money over the many months that the borrower isn't making payments on that 2nd. As most successful settlements are in the range of 5-10 percent of the loan balance, we're not talking about a lot of $$ here.

You state
we are starting to see posts on foreclosure action on underwater 2nds.
That is rarely occurring in only the two states (FL and MD) that legally permit a secured junior lender to sue on the note for breach of contract in lieu of foreclosing.

If a lender tries that in any other state, the borrower can easily defend against the suit by answering the complaint citing the state code, along with affirmative defenses. At the same time the defendant might cross-complain and also might ask the court for sanctions against the plaintiff and plaintiff's attorney.

You might instead be referring to a lawsuit by a recourse SOJL. Those SOJLs can and do sometimes sue the debtor, but as of yet, it's a rare occurrence.

If an underwater junior lender were to FC and end up acquiring an asset that's worth less than they paid for it, that would be a career ending move for the bank manager who was responsible for that decision.

In my state, a borrower is protected by CA CCP 726, which includes the "security first rule," which in essence provides that a secured junior must first foreclose before it can pursue any other collection action against the debtor.
 
Last edited:

rosalinda

LoanSafe Member
Apr 8, 2009
150
0
0
I called Citi today and was told that my loan does not qualify for assistance under the new settlement, because my loan is NOT OWNED by citi. I thought the loan just need to be serviced by citi to qualify.

on page 1 of the settlement FAQ from citimortgage website:

Q: I heard the settlement only applies to loans owned, rather than just serviced by citimortgage, Inc. - Does Citimortgage own my mortgage?

A: The settlement applies to all loans, but certain consumer benefits are only available to loans owned by citimortgage.

anyone know where can I information pertaining this information? my objective is principle reduction. In other words, does principle reduction available to loans owned by non-citi private investors. The lady I talked to was just reading a note attached to the loan. she's not sure of the requirements/qualifications etc.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
rosalinda

Thanks for your post.

Why not access and download the Citi Mortgage agreement doc? You can then verify your loan's eligibility.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
Tom,

Thanks. Do you happen to have a link?


https://www.citimortgage.com/Mortgage/displayHomeOwnerAssistance.do?page=settlement
it says: Loans that are serviced but not owned by CitiMortgage are not eligible for the programs under the National Mortgage Settlement. This includes loans owned by Freddie Mac and Fannie Mae.
rosalinda

The link is provided at the bottom of that Citi page. Federal Government & Attorneys General reach landmark settlement with major banks | NationalMortgageSettlement

At that site, on the right side you will see the pdf document Citi Consent Judgment. You can download and read it.
 

HateCiti

LoanSafe Member
Feb 25, 2012
13
0
0
Hi Rosalinda!
Im in the same situation :( I was told by Citi I didn't qualify for any of the Attorney General programs due to my 1st mortgage being sold to PI and they only service it! I don't know what to do now? Do I need to deal w/ the Private Investor for HELP? Just feeling like its hopeless!
 

HateCiti

LoanSafe Member
Feb 25, 2012
13
0
0
I don't know. They can't even give me the name of the Investor? Weird huh! I should call and spk to mngr?
 

rosalinda

LoanSafe Member
Apr 8, 2009
150
0
0
let me know what you hear. private investors are mysterious to me. but i don't think we can control who owns our mortgages.