According to Joseph Smith, the monitor of the National Mortgage Settlement, Bank of America, Wells Fargo, Chase, Citi, and ResCap have all met the consumer relief goals and refinancing obligation laid out by the settlement agreement. Smith confirmed this in a report filed with the U.S. District Court for the District of Columbia.
The National Mortgage Settlement is a multibillion-dollar deal between the nation’s five largest banks and 49 state attorneys general to resolve portions of the national foreclosure crisis. The deal called for the banks to provide loan modifications, refinance mortgages to lower rates, and look for short sales and other steps to prevent foreclosures. The settlement also calls for banks to modify how they service loans and foreclosure cases. Those requirements have not all been achieved yet. Smith will release an updated report on those efforts later this year.
What does this mean for homeowners?
In my opinion, it means that things are about to get much harder for folks having difficulty with their mortgage or facing foreclosure. Joseph Smith touted the extensive oversight of the implementation of the National Mortgage Settlement, and that he was confident the banks actually did what they were supposed to do. If that is the case, I applaud both Mr. Smith and the banks for satisfying their obligations. However, now that they’ve gotten their slaps on the wrist and paid their penance, I suspect things are going to be back to business as usual at the big banks.
For the banks that were a part of this settlement–Bank of America, Wells Fargo, Chase, and Citi in particular–I expect getting relief from your mortgage is going to be more difficult than ever because much of their incentive to work with homeowners has been removed. This is why it is imperative to get out in front of any mortgage problem you may be having. In mortgage disputes, time is typically your greatest asset; the more time you have, the more work out options you typically have. Unfortunately for many homeowners, time is also a quickly evaporating asset. I see too many instances when homeowners come to me just days before a scheduled foreclosure sale looking for help. While we have certainly helped many homeowners at the last minute, the sooner you take action, the easier it is to get relief (and usually with less stress).
In light of what I believe are going to me more stringent loan modification and work-out standards from the settlement banks, it is more important than ever to go on the offensive with the bank and not simply sit back and wait until you’re just days–or even weeks–away from a foreclosure. The sooner you act the better.