National Mortgage Settlement helps Indianans with foreclosure problems

April 05, 2013

After the fallout from the robo-signing and subprime mortgage scandal, five mortgage lending banks and servicers entered into an agreement with the federal government and individual states to provide relief to homeowners affected by their foreclosure abuses. The settlement has provided millions of dollars to Americans, but it cannot help everyone dealing with debt issues and foreclosure problems. When faced with the possibility of foreclosure, filing for bankruptcy is another option that may help people obtain relief.

The National Mortgage Settlement

The National Mortgage Settlement was reached after state and federal investigations revealed that loan servicers were improperly cutting corners in the signing, processing and filing of foreclosure documents. The settlement will help mortgage borrowers whose mortgages are owned by the participating banks as well as borrowers whose loans are serviced by the banks. The participating banks include:
- Ally/GMAC
- Bank of America
- Citi
- JPMorgan Chase
- Wells Fargo

Near the end of 2012, the banks reported that they offered more than $26 billion to more than 300,000 people nationwide. In Indiana, more than $100 million is dedicated to help borrowers who were affected by foreclosure improprieties.

The National Mortgage Settlement's impact on Indiana

In the settlement, Indiana received about $145 million, which is dedicated to the following areas:
- $30 million for homeowners in direct relief and mortgage modifications
- $26.3 million for homeowners who lost their homes in the above-stated time period and experienced a servicing error or abuse
- $43 million in refinancing for homeowners with underwater mortgages
- $45 million to fund state consumer protection and foreclosure prevention measures
- $1 for the Indiana Department of Financial Institutions

The Indiana Attorney General's Office reports that banks have extended nearly $14 million in loan refinancing to 450 Indiana residents, and about $57 million was extended to 1,461 Indiana borrowers for loss mitigation relief related to short sales, loan modifications, principal reductions or deeds in lieu of foreclosure.

Bankruptcy is another foreclosure relief option

The relief provided through the National Mortgage Settlement has helped many, but it cannot help people who lost their homes get their homes back, and the relief is not available to everyone who may be struggling with foreclosure and debt issues. When mounting bills become too much to handle and foreclosure is a possibility, there are other options available to help a homeowner. One option is filing for bankruptcy.

When a bankruptcy petition is filed, an automatic stay is imposed that immediately halts all collection activities, including foreclosure proceedings and phone calls from debt collectors. Depending on the type of bankruptcy chosen, a homeowner may be able to reorganize his or her debt so mortgage payments are manageable and he or she can keep the home.

Bankruptcy and foreclosure proceedings can be complicated, so the watchful guidance and assistance of an attorney is invaluable. If you are struggling to make ends meet and may be in danger of losing your home, contact a knowledgeable bankruptcy lawyer to discuss which option is right for you.

Article provided by The Law Office of Andrew L. Kraemer
Visit us at www.kraemerlawyer.com