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Florida joins multi-state mortgage settlement, grabs $8.4 billion for homeowners

The details of the $25 billion multi-state mortgage settlement have been released, and Florida is a top beneficiary of settlement money.

 Florida homeowners will receive an estimated $8.4 billion in relief in the form of principal reductions, mortgage refinancings, loan modifications and cash payments for those who lost their homes.

In exchange, the banks are released from prosecution for civil charges for robo-signing, a practice that was allegedly rampant in Florida. The settlement includes five major financial institutions: Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup.

Attorney General Pam Bondi released details of the settlement’s impact in Florida this morning.

 “This agreement holds  banks  accountable  and puts in place new protections for homeowners in the form of strict mortgage servicing standards,” Bondi said in a statement.

 Details, from the Attorney General's office, are after the break:

     Florida Enters $25 Billion Joint State-Federal

                      Mortgage Servicing Settlement
 State share of national settlement estimated at more than $8.4 Billion

TALLAHASSEE,  Fla.-Attorney  General  Pam  Bondi  today  formally entered a landmark  $25  billion joint federal-state agreement with the nation’s five largest   mortgage  servicers  over  foreclosure  abuses  and  unacceptable nationwide mortgage servicing practices. The proposed agreement provides an estimated $8.4 billion in relief to Florida homeowners and addresses future mortgage  loan servicing practices. The settlement generally releases civil claims  related to robo-signing, other foreclosure-related abuses, and loan origination misconduct, but it provides no release of criminal claims or of claims related to mortgage securitization.

“This  settlement  will  provide  substantial  relief to struggling Florida
homeowners,  and  ensures  that our state gets its fair share of the relief  being  provided  nationally,”  stated  Attorney  General  Pam  Bondi. “This agreement  holds  banks  accountable  and puts in place new protections for homeowners in the form of strict mortgage servicing standards.”

Florida’s  share  of  the  total  monetary benefits under the settlement is approximately $8.4 billion.

  ·    Florida borrowers will receive an estimated $7.6 billion in benefits
     from  loan  modifications,  including  principal reduction, and other
     direct relief.
  ·    Approximately $170  million  will be available for cash payments to Florida  borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse.
  ·    The value of refinanced loans to Florida’s underwater borrowers would be an estimated $ 309 million.
  ·    The state will receive a direct payment of $ 350 million.

In  addition  to  the  terms of the national settlement agreement, Attorney General  Bondi  separately  negotiated an agreement with the nation’s three largest  mortgage  servicers  to  ensure  that  a guaranteed portion of the overall settlement funds goes to Florida borrowers.

The  unprecedented  joint state-federal settlement is the result of a civil law  enforcement investigation and initiative that includes state attorneys general and state banking regulators across the country, and nearly a dozen federal agencies.  The settlement holds banks accountable for past mortgage servicing   and  foreclosure  fraud  and  abuses  and  provides  relief  to homeowners.  With the backing of a federal court order and the oversight of an independent  monitor,  the  settlement  reforms  the mortgage servicing industry and protects against future fraud and abuse.

Under  the  agreement,  the  five  servicers  have agreed to $25 billion in monetary relief under a joint state-national settlement structure.


  ·    Servicers  commit  a  minimum  of  $17 billion directly to borrowers through  a  series  of  national  homeowner  relief  effort  options, including   principal   reduction.    Given  how  the  settlement  is structured,  servicers  will  actually provide up to an estimated $32 billion in direct homeowner relief.
  ·    Servicers commit  $3  billion to a mortgage refinancing program for borrowers  who are current, but owe more than their home is currently worth.
  ·    Servicers pay $5 billion to the states and federal government $4.25 billion  to  the  states  and $750 million to the federal government.
     The state  payments  include  funding  for payments to borrowers for mortgage servicing abuse.
  ·    Homeowners receive  comprehensive new protections from new mortgage loan servicing and foreclosure standards.
  ·    An independent monitor will ensure mortgage servicer compliance.
  ·    Government  can  pursue  civil  claims outside of the agreement, any criminal   case;  borrowers  and  investors  can  pursue  individual,
     institutional or class action cases.

The settlement does not grant any immunity from criminal offenses and will not   affect   criminal  prosecutions.   The  agreement  does  not  prevent homeowners  or  investors  from pursuing individual, institutional or class action civil cases against the five servicers.  The pact also enables state attorneys  general  and  federal  agencies  to investigate and pursue other aspects of the mortgage crisis, including securities cases.

The  final  agreement,  through  a  consent judgment, will be filed in U.S. District  Court in Washington, D.C., and will have the authority of a court order.

Because  of the complexity of the mortgage market and this agreement, which will  span  a  three  year  period,  in  some  cases participating mortgage servicers  will  contact  borrowers  directly  regarding  loan modification options.   However,  borrowers  should  contact  their mortgage servicer to obtain  more  information  about  specific  loan  modification programs and whether  they  qualify  under  terms  of this settlement or other available programs.

More  information  will  be  made  available as the settlement programs are implemented.