– Attorney General Jeffrey S. Chiesa
announced today that New Jersey has joined
a landmark $25 billion joint state-federal
settlement that resolves a national investigation
into alleged foreclosure abuses, fraud and
unacceptable business practices by the country’s
five largest mortgage servicers.
proposed settlement provides an estimated
$762 million in direct relief to New Jersey
homeowners and reforms mortgage loan servicing
practices. U.S. Attorney General Eric Holder,
U.S. Housing and Urban Development (HUD)
Secretary Shaun Donovan and a bipartisan
group of state attorneys general announced
the national settlement today in Washington,
five settling mortgage servicers are Ally
Financial, Bank of America, Citi, JP Morgan
Chase and Wells Fargo.
settlement is important because it will
bring much-needed relief to New Jersey borrowers,
and significant reform to the mortgage servicing
industry,” said Attorney General Chiesa.
“Through the changes required by this
settlement, we are putting a stop to the
conduct that has harmed borrowers in the
past and contributed to the mortgage problems
in our state and across the country.”
announcement about the multi-state mortgage
servicing settlement is a step forward for
consumers as they work hard to recover from
the last recession,” said Commissioner
of Banking and Insurance Tom Considine.
“It is also a key step for mortgage
servicers as improved performance helps
them turn the corner toward a healthier
the terms of the settlement, New Jersey
and its citizens will benefit in several
New Jersey borrowers will receive an estimated
$660 million in benefits from loan term
modifications and other direct relief.
New Jersey borrowers who lost their home
to foreclosure between January 1, 2008
and December 31, 2011, and suffered servicing
abuse, will qualify for $12.5 million
in cash payments.
The value of refinanced loans to New Jersey
borrowers who owe more on their mortgages
than their homes are worth will be an
estimated $89.5 million.
The State will also receive a direct payment
of $75.5 million, which will help pay
for various State housing programs.
unprecedented joint, state-federal settlement
is the result of a massive civil law enforcement
investigation and initiative that includes
state attorneys general and state banking
regulators across the country, and nearly
a dozen federal agencies.
New Jersey Division of Law’s Affirmative
Civil Enforcement Group and the Division
of Consumer Affairs, both part of the Attorney
General’s office, conducted a joint
investigation reviewing consumer complaints,
court filings and other relevant documents.
The Attorney General’s office also
conducted interviews with New Jersey borrowers
affected by the servicers’ conduct.
The problems identified during New Jersey’s
investigation mirrored those encountered
in other states.
settlement announced today holds banks accountable
for past problems with mortgage servicing
and foreclosure practices and provides relief
to homeowners. With the backing of a federal
court order and the oversight of an independent
monitor, the settlement is designed to prevent
such conduct in the future.
the terms of the settlement, the five servicers
have agreed to pay $25 billion under a joint
state-federal settlement structure. Nationally:
Servicers commit a minimum of $17 billion
directly to borrowers through a series
of national homeowner relief effort options,
including principal reduction. Based upon
the structure of the settlement, servicers
will actually provide up to an estimated
$32 billion in direct homeowner relief.
Servicers commit $3 billion to a mortgage
refinancing program for borrowers who
are current, but owe more than their home
is currently worth.
Servicers pay $5 billion to the states
and federal government ($4.25 billion
to the states and $750 million to the
federal government). The states’
share includes funding for payments to
borrowers harmed by the servicers’
Homeowners receive comprehensive protections
from new mortgage loan servicing and foreclosure
An independent monitor will ensure mortgage
Government can pursue civil claims outside
the scope of the settlement, including
securities cases and any criminal case;
borrowers and investors can pursue individual,
institutional or class action cases regardless
of the settlement.
deciding to join the settlement, Attorney
General Chiesa explained that the State
factored in the five servicers’ cooperation
during the investigation and their readiness
to implement significant reforms concerning
business practices and mortgage loan servicing
settlement addresses breakdowns in the mortgage
servicing industry, and allows us to pursue
other mortgage-related misconduct,”
said Attorney General Chiesa.
the settlement includes significant relief
for homeowners, it also puts in place new
protections for homeowners in the form of
reformed mortgage servicing standards,”
Chiesa added. “That’s not something
we’d see if we simply won a money
judgment after trial.”
final agreement, implemented through a consent
judgment, will be filed in U.S. District
Court in Washington, D.C., and will have
the authority of a court order.
to the complexity of both the mortgage market
generally and this settlement in particular,
which will span a three-year period, participating
mortgage servicers will in some cases contact
borrowers directly regarding loan modification
options. However, borrowers are urged to
contact their mortgage servicers to obtain
more information about specific loan modification
programs and whether they qualify under
terms of the settlement.
administrators or state attorneys general
may also contact borrowers regarding certain
aspects of the settlement. More information
will be made available as the settlement
programs are implemented.
more information on the proposed settlement
who wish to inquire about the settlement
may also contact their mortgage servicer
of America: 1-877-488-7814
Morgan Chase: 1-866-372-6901