Zoeller: More work still ahead as banks reach obligations under National Mortgage Settlement

NMS Monitor Joseph A. Smith to provide progress update during state roundtable

INDIANAPOLIS – As the nation’s five largest mortgage servicers close in on fulfilling their obligations under the National Mortgage Settlement more work is still ahead, according to Indiana Attorney General Greg Zoeller.

Since last year, the ResCap Parties (formerly GMAC), Bank of America, Citi, JPMorgan Chase and Wells Fargo have reported providing 4,464 Hoosier consumers with $174 million in total relief which includes, but is not limited to, home loan modifications, short sales and mortgage refinances. ResCap has completed its consumer relief obligations while the other servicers could be complete by the end of the year.

Zoeller will host a roundtable discussion today in Indianapolis to highlight the settlement’s progress and draw attention to the work ahead to help curb the number of foreclosures and delinquencies. Joseph A. Smith, Jr., who is the Monitor of the National Mortgage Settlement, is scheduled to give a report on the settlement’s impact so far on Indiana and the nation.

“The National Mortgage Settlement has shown to have a positive impact on Indiana and the participating banks have provided much-needed relief to struggling homeowners,” Zoeller said. “While Indiana’s foreclosure rate is down there is still a long road ahead in making sure distressed borrowers are treated fairly and our state recovers from the nation’s economic downturn.”

In Indiana, 18,440 foreclosed borrowers received $26.3 million in direct payments from participating banks if they lost their home between Jan. 1, 2008 and Dec. 31, 2011, and submitted a valid claim. About 55.9 percent of eligible borrowers submitted a claim, which is comparable to the national response rate of 55 percent, and received a check for $1,480.

Smith, an attorney and former North Carolina Commissioner of Banks, was appointed in March 2012 to oversee the implementation of the settlement and ensure the banks’ compliance with the new servicing standards. Smith has visited several states to hear first-hand from attorneys general, consumer counselors, advocates and lawyers who represent borrowers on how the banks are performing.

“It’s important for me to hear first-hand about the experience borrowers and the professionals who work on their behalf are having with the National Mortgage Settlement,” Smith said. “I know there is still more work to be done for the Settlement’s servicing reforms to have meaningful impact on these homeowners and I am grateful for Attorney General Zoeller’s invitation to gain insight from professionals in Indiana. General Zoeller has been an important leader on these issues and I look forward to his and his staff’s feedback.”

The roundtable will include representatives from the Indiana Foreclosure Prevention Network, Indiana Supreme Court Task Force and state legislators, and other key stakeholders.

Zoeller said the National Mortgage Settlement was a step in the right direction, but statistics show more work is needed. According to the Indiana Supreme Court, 41,274 foreclosures were filed in Indiana courts in 2010 and nearly 34,000 were filed in 2012. Last year, 6,141 foreclosures were filed in Marion County courts.

According to the Mortgage Bankers Association, Indiana’s delinquency rate for the second quarter in 2013 was 8.5 percent compared to the national rate of 6.8 percent.

As part of the settlement, the Indiana Attorney General’s Office was awarded $43.8 million with $28.8 million of that dedicated by the Legislature to the Low-Income Energy Assistance Program (LIHEAP). According to LIHEAP, more than $2.5 million in total state heating and crisis assistance has helped 47,230 Hoosiers so far with the average benefit per homeowner being $50 and $127 respectively. Zoeller said families facing foreclosure are often forced to make painful financial choices and LIHEAP reduces the need for these families to choose between paying their monthly heating bill or their mortgage payment. The LIHEAP funds are distributed in increments of about $4 million a year.

The Attorney General’s office committed the rest of the funds to its Consumer Protection Division and Homeowner Protection Unit (HPU) and other efforts to prevent foreclosure.

Since 2010, Zoeller’s office has filed 165 lawsuits against mortgage-rescue businesses accused of promising homeowners they can stop foreclosure and then taking off with thousands of dollars in upfront fees. In many of these cases the state is awarded default judgments, but companies do not often pay the ordered consumer restitution. To help these already struggling homeowners, the Indiana General Assembly created the Consumer Protection Assistance Fund which is made up of monies recovered from those sued by the Attorney General’s office for violating consumer protection laws. To date, more than $340,000 has been distributed to 192 victims of foreclosure-rescue scams.