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Kentucky Borrowers to Receive More than $11 Million in Mortgage Servicing Abuse Payments

Tuesday, 06 04, 2013

Shelley Catharine Johnson
Deputy Communications Director
502-696-5659 (office)

Kentucky Attorney General Jack Conway today announced the distribution of more than $11 million to 7,801 eligible borrowers in Kentucky for mortgage servicing abuses. Checks to borrowers who submitted valid claims will be mailed June 10 through June 17, 2013.

Eligible borrowers must have had their mortgage serviced by one of the settlement's five participating mortgage servicers, lost their home to foreclosure between January 1, 2008 and December 31, 2011, and submitted a valid claim form. The participating servicers include Ally (formerly GMAC), Bank of America, Citi, JPMorgan Chase, Wells Fargo.

"These checks come from a $1.5 billion payment pool we negotiated and set aside as part of the National Mortgage Settlement," General Conway said. "The payments help compensate borrowers for the mortgage servicing abuse that they likely endured. And I'm pleased that the final amount of approximately $1,480 is much higher than the minimum amount we first announced, which was $840. Additionally, the payment does not limit a borrower from seeking relief through a separate lawsuit or other claims."

Nationally, the settlement administrator will mail valid claim payments to 962,278 loan records from June 10 through June 17.

"These payments are about holding the banks accountable, through the National Mortgage Settlement, for creating a crisis that harmed families across Kentucky and the nation," General Conway said. "In addition to compensating borrowers for the servicing abuse that happened in the past, we're working to prevent similar practices in the future through the settlement's tough new mortgage servicing standards."

A relatively small number of borrowers will not receive a check in the initial mailing or will receive a split payment.

* Some borrowers will receive a check for less than the approximate $1,480 payment in situations where borrowers are divorced or separated and no longer live at the same address. The full per-loan amount will be paid on these loans, but the payment will be evenly split between the borrowers.

* A small number of borrowers who submitted a claim form but do not have a valid Social Security number on file will be delayed in receiving their payments while tax-related issues are addressed.

* Two servicers recently provided information on an additional 31,000 borrowers across the country, and thus they could not be included in this distribution. Later this summer, these consumers will receive a notice and will have the opportunity to submit a payment application.

Every borrower who filed a claim will receive a letter regarding their outcome. Borrowers with questions about their National Mortgage Settlement payment should call the settlement administrator at 1-866-430-8358.

National Mortgage Settlement, Independent Foreclosure Review Payments are Separate

The IFR settlement is unrelated and separate from the National Mortgage Settlement and does not include the same governmental agencies. The IFR payments began in mid-April of 2013, and the OCC announced that final payments will be mailed in mid-July. For more information on the OCC Independent Foreclosure Review settlement, go to www.OCC.gov and click on Independent Foreclosure Review.

Help for struggling Kentucky homeowners

According to the fourth post-settlement report released in May by the independent settlement monitor, 1,757 Kentucky homeowners have received more than $61.1 million in settlement-related relief from the five participating servicers through March 31, 2013. Borrowers received an average of $34,806 in assistance.

The report also shows that as of March 31, 2013, mortgage servicers were processing additional relief claims for Kentucky borrowers totaling more than $2.1 million, bringing Kentucky's total consumer relief to $63.2 million. The report compiles information provided by the servicers and has yet to be verified by the compliance monitor.

Mortgage Settlement History

Forty-nine state Attorneys General reached the historic $25 billion settlement with five of the nation's largest banks in February of 2012. Kentucky received $58 million under the settlement. Thirty-eight million dollars is being allocated by the settlement administrator to consumers who qualify for refinancing, loan write downs, debt restructuring and/or cash payments. Kentucky also received $19. 2 million in settlement money that was allocated to agencies in the Commonwealth that create affordable housing, provide relief or legal assistance to homeowners facing foreclosure, redevelop foreclosed properties and reduce blight created by vacant properties.

Preliminary data shows that, so far, the servicers have provided more than $50 billion in direct settlement relief to borrowers nationwide.

In addition to participating in the national mortgage settlement, General Conway filed suit in January 2013 against the Mortgage Electronic Registration Systems, Inc. (MERS) for violating Kentucky's recording statutes by not recording mortgage assignments with County Clerks when mortgages were sold or transferred from one bank to another. Additionally, the lawsuit alleges that since MERS' creation in 1995, members have avoided paying more than $2 billion in recording fees nationwide. Additional information about the MERS lawsuit is available at http://migration.kentucky.gov/Newsroom/ag/merscomplaint.htm .

To learn more about the mortgage foreclosure settlement, visit http://ag.ky.gov/mortgagesettlement