Settlement helps borrowers net $851.8M in mortgage relief

2012-11-29T12:00:00Z 2012-12-03T23:01:24Z Settlement helps borrowers net $851.8M in mortgage reliefBowdeya Tweh, (219) 933-3316
November 29, 2012 12:00 pm  • 

Five banks participating in a national mortgage servicing settlement reported that refinancing and home loan modifications have been extended to more than 1,900 Indiana borrowers and 11,000 Illinois borrowers. 

Indiana residents have received mortgage relief worth about $72.1 million and Illinois residents have received more than $779.7 million in relief, according to data posted Thursday on the website for the Office of Mortgage Settlement Oversight.

The relief became available in February after state attorneys general joined the federal government’s settlement with Ally, Bank of America, Citi, JPMorgan Chase and Wells Fargo following an investigation of foreclosure abuses and other misconduct in mortgage loan servicing.

The program is open to borrowers who lost their home due to foreclosure between 2008 and 2011 and people whose loan was serviced by one of the five financial institutions, according to a news release from the office of Indiana Attorney General Greg Zoeller.

About 450 current Indiana borrowers received nearly $13.9 million in home loan refinancing and 1,477 borrowers received more than $58.2 million in relief through short sales, loan modifications, deeds in lieu of foreclosure or principal reductions.

About 1,748 current Illinois borrowers have been provided nearly $67.1 million in home loan refinancing and 9,525 borrowers received more than $712.6 million in loss mitigation relief.

Banks self-reported data on consumer relief activities between March 1 and Sept. 30 to the program's oversight office and said they've provided more than $21.9 billion in relief with an additional $4.2 billion for homeowners in the trial loan modification process. The settlement monitor has not yet confirmed the data.

Since relief is not credited dollar-for-dollar, the dollar amounts cannot be used to evaluate the progress toward the banks' obligation to provide $20 billion in relief, the Indiana attorney general's office said.

Residents eligible for the program have until Jan. 18 to submit claims for relief. Eligible individuals should have received notification about the program in September. Claim forms can be sent in the mail or filed online at 

Payment checks are expected to be mailed in mid-2013.

Zoeller also said he joined a national effort by 41 other attorneys general to urge Congress to extend tax relief to consumers who have mortgage debt canceled or forgiven because of financial hardship or a decline in housing values. If the exclusion in the federal Mortgage Debt Relief Act expires as scheduled Dec. 31, the debt relief could be considered taxable income.

"It’s important for federal legislators to help protect already struggling families from being hit with an unexpected tax bill," Zoeller said in the news release.

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