Mortgage Settlement Allotment to Struggling WI Homeowners: Too Little too Late?

March 15, 2012

Of the $25 billion federal settlement funds for mortgage foreclosure abuses, Wisconsin will receive $140 million. The settlement money is being paid by J.P. Morgan Chase, Bank of America, Wells Fargo & Co, Citigroup and Ally (formerly GMAC), and is intended to help homeowners having difficulty making their mortgage payments and individuals who were the victims of improper foreclosures.

According to Assistant Attorney General Holly Pomraning in a recent TheNorthwestern.com article, Wisconsin's share of the settlement will be divided and distributed as follows:

- $60 million will go toward lowering the principal loan balance for homeowners in danger of defaulting on their mortgage, as well as assisting in short sales, relocation and restoring homes that have been lost to foreclosure.

- $31.6 million will go to the state to be used as determined by the Attorney General's office, such as refunding the state for money already spent on prosecuting fraud, relief programs and other foreclosure expenses.

- $31.3 million will be aimed at helping struggling property owners make mortgage payments and refinance mortgages for a reduced monthly payment of at least $100.

- $17.3 million will be disbursed to individuals who have been improperly foreclosed upon (since 2088); approximately $2,000 should be paid to affected persons.

Homeowners must be eligible in order to receive assistance from the settlement funds. Eligibility will be determined by the five mortgage servicers paying the federal settlement, the Wisconsin Attorney General's office and the settlement administrator over the next 6-9 months. Persons deemed eligible will be contacted and the settlement will be distributed to those individuals over a three-year period. Borrowers with questions about settlement eligibility are directed to contact one of the five mortgage servicers.

Impact of Settlement Funds on Struggling Homeowners

Realtors in many of Wisconsin's areas hit hardest by foreclosures don't have high hopes that the government settlement funds will actually do anything to help homeowners, as reported by The Northwestern. The amount of money doled out to homeowners facing foreclosure won't begin to touch the thousands of dollars many are behind in mortgage payments. It this market, it is all too common for homeowners to be underwater by $100,000 or more; for those property owners, receiving $2,000-$3,000 in settlement funds sometime in the next three years is not going to help them get back on their feet.

Foreclosure filings are still taking place and real estate professions predict that the number will continue to grow in 2012 as the housing market struggles to make a comeback. Though the federal settlement may help some, the majority of struggling Wisconsin homeowners may still find themselves facing foreclosure.

For homeowners not eligible for assistance from the federal foreclosure abuse settlement or for whom settlement funds will not help, there are still options available to help you keep your home. Speak to a Wisconsin Debt Relief attorney knowledgeable in foreclosure matters about your circumstances. The best option for you will depend on your specific situation; an attorney can explain the alternatives, determine the best fit and help you get back on the road to financial recovery.

Article provided by Debt Advisors, S.C.
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