After months of negotiations, the nation’s five largest banks and state and government officials have agreed to a $26 billion settlement aimed at holding banks accountable for the mishandling of many foreclosures by questionable procedures like robo-signing.
The settlement is expected to help 1 million home owners, by having lenders reduce their mortgage debt or refinance into lower mortgage rates to reduce costs of their monthly payments.
New Jersey will receive an estimated $837.7 million as part of Thursday’s record breaking $25-billion settlement between five giant banks and state and federal authorities on foreclosure abuses.
The money will be used to lower loan amounts and allow refinancing for some homeowners who owe more on their mortgages than their homes are worth — a group that numbers 300,000 in New Jersey. It will also pay $2,000 to foreclosed homeowners hurt by “robo-signing,” in which servicers’ representatives signed legal documents without verifying them.
New Jersey residents will benefit from the settlement in several significant ways:"
the estimated $660 million in benefits from loan term modifications and other direct relief;
$12.5 million in cash payments for those who were abused by mortgage servers and lost their homes to foreclosure between January 1, 2008 and December 31, 2011;
an estimated $89.5 million in loan refinancing for some borrowers whose loans are underwater;
$75.5 million in direct payments to the state for housing programs.
To apply for restitution, borrowers who lost their homes between January 1, 2008 and December 31, 2011, must submit certifications to a claims administrator. Nationally, almost 4 million Americans lost property through foreclosure in that period.