National Mortgage Settlement

On February 9, 2012, a bipartisan group of state attorneys general and federal officials announced a landmark $25 billion national accord with the five largest loan servicers — Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo — over mortgage foreclosure fraud and unacceptable mortgage servicing practices. The settlement was approved on April 4, 2012. The accord will enable distressed homeowners to stay in their homes through enhanced loan modifications. It also will provide payments to victims of unfair foreclosure practices and support for housing counseling and state-level foreclosure prevention programs. In addition, the settlement requires comprehensive reform of mortgage loan servicing. Iowa’s estimated share of the settlement is $40 million. In this paper we summarize the major elements of this complex settlement, and describe how it will impact homeowners and government programs in Iowa.