California and Florida have been the worst hit by the housing crisis. Last month, Duval County had the highest number of bankruptcies since September, 2010.
The Government instituted a $25 Billion Mortgage settlement on Thursday. Because of the majority of the problems occurring in California and Florida, an estimated 75% of the funds will be distributed to these two states.
It was noted that many homes were being seized by the private banks improperly. Foreclosure paperwork was forged, paperwork was robo-signed and improper procedures were followed.
Those who benefited from the new program are homeowners who are underwater. It is estimated that it will bring relief to about one million homeowners. It is estimated that mortgage balances will be reduced by an average of $20,000 per homeowner. But this only represents ten percent of those in trouble. This program requires banks to use foreclosure as the last resort. Also, banks are not permitted to institute bankruptcy on those who are currently being considered for a loan modification.
Only those mortgages whose loan is with a private lender qualify for the program. If the mortgage is owned by government controlled Fannie Mae or Freddie Mac, the homeowner doesn't qualify for the program.
Those who already lost their homes unfairly may qualify for a check for $2,000. There are about $750,000 of those. This is not much consolation, but it's something.
Lenders who violate the rules of this program are subject to a $1 Million penalty. Repeat offenders are subject to a $5 Million penalty.
For more information go to www.nationalmortgagesettlement.com. The five banks and their contacts are ALLY/GMAC (800)766-4622, Bank of America (877)488-7814, Citi (866)272-4749, J.P. Morgan Chase (866)372-6901, and Wells Fargo (800)288-3212.