About 34,000 Washington-state borrowers who lost their homes to foreclosure soon will be receiving forms in the mail to claim their piece of the $25 billion national mortgage-servicer settlement.
Borrowers who had their mortgages serviced by Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo and lost their homes between Jan. 1, 2008, and Dec. 31, 2011, may qualify for a one-time payment under the settlement’s terms.
Nationwide, about $1.5 billion of the settlement will go to pay about 2 million borrowers whose homes were taken through foreclosure. The average payment nationally will be $750.
“This payment is partial compensation for mortgage servicers’ illegal conduct and servicing abuses,” said state Attorney General Rob McKenna in a statement earlier this week. “It’s one part of a settlement that will bring $648 million in benefits to people struggling to hold on to their homes, including loan modifications for qualifying borrowers.”
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McKenna said borrowers should return their claim forms as soon as possible, but no later than Jan. 18, 2013. Those who need help with filing a claim can contact the settlement’s administrator by calling 1-866-430-8358 or sending an email to email@example.com.
Borrowers will be mailed payments in mid-2013, McKenna said. The final amount of the payment will depend on how many eligible borrowers return their claim forms on time.
McKenna urged borrowers to be wary of scam artists and call his office if they come across one.
“Do not provide personal information or pay anyone who calls or emails claiming that they are providing settlement-related assistance,” McKenna said.
The bulk of the settlement is for giving loan modifications to borrowers who still live in their homes and owe more than the house is worth. Banks are contacting borrowers to offer them principal reductions, lower interest rates and other types of modifications, officials said.
Earlier this month, the state Attorney General’s Office announced plans to award $45 million that was allocated under the national settlement for foreclosure-relief programs. The money was awarded in three-year grants, including:
• About $13 million to the Legal Foundation of Washington for legal aid to low- and moderate-income households facing or affected by foreclosure.
• About $6.2 million for second mortgages to help delinquent borrowers get current on their first mortgage and qualify for a loan modification.
• About $3.9 million to the city of Tacoma and the Tacoma Redevelopment Authority to combat blight in neighborhoods and provide down payment assistance to buyers of foreclosed houses.
Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org. On Twitter @sbhatt