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August 29, 2012

Monitor's "First Take" Report Shows Mortgage Settlement Impacting Iowa, National Foreclosures

(DES MOINES, Iowa) The nation’s largest mortgage servicers have begun providing direct relief to homeowners in Iowa and across the country as part of a national mortgage servicing settlement, according to the first post-settlement progress report released by independent settlement monitor Joseph A. Smith of the Office of Mortgage Settlement Oversight.

In Iowa, the interim report shows that from March 1 through June 30, mortgage servicers provided $6.7 million in settlement-related relief to 260 Iowa homeowners, for an average of $25,781 per borrower.  As of June 30, 2012, mortgage servicers offered relief of approximately $1.9 million to an additional 63 borrowers.  Of those, 47 borrowers had begun trial modifications.

Nationally, the report found that nearly 138,000 borrowers received some type of consumer relief during the same period totaling more than $10.5 billion.  On average, each borrower received $76,616 in relief.

“It’s good news that here in Iowa and across the country we’re starting to see the banks moving generally in the right direction,” said Attorney General Tom Miller.  “But let’s not forget that this report is a limited window, which ended early in the summer, into the very first stages of homeowner relief,” Miller added.  “Even today, we’re still only a few months into a three-year agreement and we know there’s more relief on the way for homeowners.”

Miller noted that the figures provided in the interim report are the raw or aggregate numbers.  The amounts do not reflect credits the servicers will receive against their obligations under terms of the settlement.  Because the servicers do not receive dollar-for-dollar credit for most forms of homeowner relief, they will actually provide much more relief than the $20 billion required by the settlement.

The servicers will provide updated and more detailed consumer relief information in November.  Given the amount of additional relief that servicers have provided since June 30, the November report will reflect a substantial increase in borrower relief, Miller said.

Miller was the lead state attorney general in the joint state-federal investigation and $25 billion landmark settlement into mortgage servicing practices by the nation’s five biggest mortgage servicers.  The servicers include JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Ally Financial (formerly GMAC).

In Iowa, the state received a direct payment of $17,051,922, and Iowa homeowners are expected to receive an estimated $18 million in direct relief, largely through an array of loan modifications, including principal reductions and refinancing.  Other forms of relief include short sales and transitional assistance, forbearance of principal for unemployed borrowers, benefits for service members who are forced to sell their home at a loss as a result of a Permanent Change in Station order, and other programs.   Another $7 million is expected to be paid to Iowa borrowers who lost their home to foreclosure between January 1, 2008 and December 31, 2011, and their loan was serviced by one of the settling servicers.

The investigation began in October of 2010 over reports of widespread “robo-signing” of foreclosure documents, and broadened into other troubling mortgage servicing practices.

In addition to providing the direct borrower relief, servicers are in the six-month process of adopting tough new servicing standards.  “We know from talking to homeowners that because of the settlement, the banks have already made some big changes in how they handle mortgages and how they treat borrowers,” Miller said.  “They have many more changes to make,” Miller said.

Iowans Seeking Help or Answers Should Contact Iowa Mortgage Help or Mortgage Servicer

Miller urges Iowans who are currently behind on their monthly mortgage payment, or may soon experience financial trouble, to contact the Iowa Mortgage Help Hotline, toll-free, at 1-877-622-4866 or  The hotline is free, confidential, and its counselors can help Iowa homeowners identify their most appropriate course of action.

Because of the complexity of the mortgage market and terms of this three-year agreement, borrowers in some cases may be contacted directly by one of the five included mortgage servicers regarding loan modification offers, or may need to contact their mortgage servicer to obtain more information about specific programs and whether their loan qualifies.

For more information on the agreement: (Phone: 515-281-5926 or 1-888-777-4590)

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Background on Settlement



Iowa’s estimated share of the settlement: $40,235,321

  • Iowa borrowers will receive an estimated $5,899,449 in direct benefits from loan term changes from the five servicers.  This type of financial relief includes significant principal reduction, where borrowers owe more on their mortgages than their homes are worth and are either delinquent or at imminent risk of default, along with a variety of other types of relief.
  • Iowa borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and encountered servicing abuse could qualify for an estimated $7,402,512 in payments to borrowers.  Potentially qualified borrowers should receive a written joint notification from Miller’s office and a settlement administrator in the next few months.
  • The value of refinanced loans to Iowa’s current, underwater borrowers is an estimated $11,602,880.  This financial relief is for borrowers who are current on their mortgages but who owe more on their mortgages than their homes are worth, and whose loan is owned by one of the five banks.
  • The state has received a direct payment of$17,051,922.  This payment is helping fund the Iowa Mortgage Help hotline, housing counseling services, Iowa Legal Aid, future enforcement, as well as settlement implementation and monitoring, and future enforcement efforts.


National settlement: $25 billion

  • Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction.  Servicers will likely provide up to an estimated $32 billion in direct homeowner relief, if not more.
  • Under an enhanced agreement with Bank of America, the company will write down principal on more than 200,000 underwater homeowners to market value.  (A potentially eligible borrower must have a home that is underwater, must be delinquent by more than 60 days, and the mortgage payment must account for more than 25% of their income.)
  • Servicers commit $3 billion to an underwater mortgage refinancing program for current, but underwater borrowers.
  • Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
  • Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards (see below). 
  • An independent monitor is ensuring mortgage servicer compliance.
  • States preserve the right to pursue all criminal prosecutions and many civil claims, including claims regarding the packaging of mortgage loans into securities.
  • Borrowers and mortgage investors can pursue individual, institutional or class action cases without restriction.


New Mortgage Servicing Standards

The five mortgage servicers are implementing extensive new servicing standards, which take effect in three phases over the first six months of the settlement’s April 4, 2012 effective date:

  • Stop many past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork through new mortgage servicing standards.
  • Require strict oversight of foreclosure processing, including of third-party vendors.
  • Impose new standards to ensure the accuracy of information provided in federal bankruptcy court, including pre-filing reviews of certain documents.
  • Make foreclosure a last resort, by requiring servicers to evaluate homeowners for other loan mitigation options first.
  • Restrict banks from foreclosing while the homeowner is being considered for a loan modification.
  • Set procedures and timelines for reviewing loan modification applications, and give homeowners the right to appeal denials.
  • Create a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.

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