Last year, 50 states attorneys general and the federal government entered into an agreement with five of the largest banks over the robo-signing foreclosure scandal. The original settlement involved only $26 billion, but that figure rose to $45.8 billion. Some money would go to victims of wrongful foreclosures ($1,800 to $2,000) on average, and $17 billion would be used for principal reduction.
A year after the settlement, The New York Times reports that despite the numbers given by the Office of Mortgage Oversight, many homeowners have not benefitted from the program. Others who have still face foreclosure nonetheless. For instance 170,000 homeowners received help for their subsequent mortgages, but only 70,000, 13 percent, received help on their primary home loans.
Unfortunately, delinquencies on primary loans are one of the main causes of foreclosures, not subsequent loans. For example, the Times interviewed one woman whose second mortgage to Bank of America was canceled to the tune of $115,000, but Bank of America initiated foreclosure proceedings due to her first mortgage anyway. A similar story emerges from the Office of Mortgage Oversight’s report: a preference for short sales and forgiven deficiencies rather than principal reductions. $19.5 billion of the $45.8 billion of the settlement was used this way.
For Nevada homeowners, though, only $1.7 billion of the total has gone to them, even though Nevada has had the highest rate of underwater mortgages in the country. $1.1 billion went to short-sales for 8,760 homeowners alone. A total of 17,768 were helped. No homeowners’ who weren’t in foreclosure received principal forgiveness, and banks did not extend forbearance terms to unemployed borrowers. On the bright side, 996 homeowners received $165.4 million in primary mortgage lien forgiveness.
If you are a Las Vegas homeowner and you are having problems paying your mortgage, then it’s unlikely that the mortgage settlement will be enough to help you solve your financial problems. A more proactive approach would be to contact an experienced Las Vegas bankruptcy lawyer to explore all of your options, both under the bankruptcy code and the mortgage settlement.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.