“Robo-signing” came to light as one of the potential problems that helped cause or at least sustain the housing market crisis of the past few years. Turns out that the banks were putting papers in front of their employees and having them sign without even reading the mortgage papers, applications, etc. Then, after the housing market went in the tank, the banks said they didn’t know mistakes had been made. Yikes, you can’t have it both ways! Now, news that mortgage lenders are part of a settlement with homeowners and others that seeks to bring this issue to an end, and now it’s not Freddie Mac and Fannie Mae in the hot seat.
How Robo-Signing affects San Diego Homeowners
If you purchased a home through GMAC (now Ally Financial), Bank of America, JPMorgan Chase, or Citibank, you may want to take note. Last week’s settlement of $25 billion is proposed to aid homeowners who may have been subject to “robo-signing,” in loan and foreclosure practices. “Robo-signing” refers to the practice of mortgage providers signing or stamping documents without verifying information. If you currently have a loan or experienced a foreclosure with one of these lenders, you may be eligible to receive assistance.
The new agreement, authorized in 49 states (not Oklahoma), strengthens the review process on loan modifications and foreclosures by requiring application reviews prior to beginning the foreclosure process. Excessive fees, insurance costs, and appraisal rates also received limits, and the agreement also provided avenues for principal reduction for struggling homeowners. This agreement does not apply to any FHA, Freddie Mac or Fannie Mae loans or foreclosures.
Homeowners with a mortgage on their primary home that represent a 20 percent or more reduction on property value with a loan balance of less than $417,000 are targeted for these funds, although eligibility will be determined individually. Homeowners whose mortgage rates are above 5.25 percent may be able to refinance to lower interest rates, and homeowners experiencing unemployment or considering short sales may receive aid, as well.
Contact your lender directly to see if you are eligible or watch for a notification letter from your lender within the next six months. Incentives were provided to lenders who completed settlements within 12 months, and funds must be dispersed within three years. Click here to see actual details of the agreement.
Look, lots of us took a beating from what the banks did wrong, but to find out if your particular loan was mishandled, and more importantly, if there’s anything to be done, you’re going to need a great lender to help. If you’ve contacted your own lender, great. But, if you need some advice and help with seeing if you can refinance, then give Brian Brady a call. He’s my go-to guy for homeowners who may have had problems with robo-signing problems.