Court filings mean mortgage benefits are one step closer
WASHINGTON, D.C. – Washington State Attorney General Rob McKenna, along with 48 state attorneys general plus the District of Columbia, joined the U.S. Department of Justice (DOJ) and the Department of Housing and Urban Development (HUD) in alleging misconduct by the nation's five largest mortgage servicers in a civil complaint filed today.
The complaint against the banks, filed in the U.S. District Court for the District of Columbia, is a major step toward finalizing the biggest consumer protection settlement in U.S. history. It alleges the financial institutions' misconduct "resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members' and other homeowners' rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds."
The complaint follows a joint investigation and a $25 billion settlement with the servicers announced in February. The parties today also submitted a series of proposed federal court orders – consent judgments – which will formalize the settlements.
“These powerful, court-enforceable orders will assure the direct relief we negotiated in this settlement," McKenna said. “This is an important step toward the loan modifications, principal reductions and other benefits many borrowers will receive.”
The settlement provides an estimated $648 million in benefits to Washington state homeowners.
"Consumers need protection to ensure that mortgage servicing companies treat borrowers fairly. This settlement goes a long way towards that goal,” DFI Director Scott Jarvis said. “I commend the states' Attorneys' General for their dogged pursuit of fair treatment for homeowners."
The defendants in the joint federal-state complaint include Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly GMAC). While the settlement is not fully effective until the court issues its orders, the banks have already begun taking initial steps to implement the agreements.
In addition to the consumer relief, the proposed settlement agreements include comprehensive reforms of mortgage loan servicing practices (PDF).
McKenna added that his office continues to work with legislators to identify those who will sit on a blue ribbon committee helping decide how best to distribute the cash portion of the settlement – about $44 million – available for foreclosure relief and other programs.