One Big, Gaping Hole in the Mortgage Servicing Settlement

Aside from being way too small and way too sweet a deal for the banksters, the recently prematurely touted settlement between the attorneys general of 49 states (plus DC) and the five biggest mortgage banks has a big, major, enormous flaw.

That’s right. We citizens and consumers have been impatiently waiting for our states’ top defenders of the law to rescue us from the big fraud-factory banks. But it turns out a whole bunch of us weren’t included in the group of homeowners deemed worthy of legal protection.

Who? It’s right there in black and white on the official website for the National Mortgage Settlement:

“Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement.”

Yep, that’s right. If you’re one of the millions of homeowners whose mortgage was guaranteed/securitized (without your permission or even your knowledge) by these big government-supported enterprises, you are SOL. Left out. Deemed unworthy of the attention of your state’s primary consumer protection agency.

I’ve seen estimates of Freddie’s and Fannie’s immersion in the mortgage market stating they “own” from 50% to 80% of the mortgages in the nation. That means for the purposes of holding the banks accountable for the foreclosure fiasco, the situations of more than half of the taxpayers and voters and workers and even job creators in the U.S. were ignored by the officials who are tasked with overseeing justice for all their residents.

Even if your loan originated with and is still serviced by Wells Fargo, Citi, BofA, Chase or GMAC/Ally, the “investor” may still be Fannie or Freddie, big players in the so-called “secondary” mortgage market.

And that’s bad news for you because it means you have no access to the touted refinancing or principal reduction or other foreclosure-prevention options provided for by the settlement. If you were a victim of foreclosure fraud such as losing your home due to bank-forged paperwork, you have no access to the restitution payments.

Granted, getting a paltry $2,000 in exchange for having your home and your life’s savings stolen via fraudulent paperwork and underhanded maneuvering isn’t much. But, then, to be told that you aren’t even eligible due to circumstances you didn’t control, just because your state’s AG didn’t include you in his or her negotiations?

I’m furious. If you think your state AG should be protecting your rights as well as those of your neighbors, you should be, too.

If your mortgage is “owned” by Fannie Mae or Freddie Mac, I suggest you write a strongly worded letter to your state attorney general and ask him or her when your rights as a citizen of that state will be upheld.

Of course, you won’t get an answer. Well, in some states, maybe a form letter. But if enough people take the time to write, perhaps the AGs will realize we know they left a big, gaping hole in their deal and we’re not happy about being pushed into it.

3 thoughts on “One Big, Gaping Hole in the Mortgage Servicing Settlement

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  3. You cannot do a short sale until you’ve aalerdy missed payments. If you are up to date on your mortgage, the bank has no reason to worry and therefore will not accept a short sale. The bank knows you can still make the payments because you still are, and will expect you to continue to fulfill your end of the bargain. If you do fall behind on payments, you have to have a good reason why. Such reasons might be a death in the family, loss of job or an injury that has kept you from working. A short sale protects the owners credit when the borrower can no longer make the payments. In that event, the bank realizes it’ll take many more months to wait to evict you and sell it themselves than if they cooperate with you and allow you to retain possession of the house while they sell it. The bank takes the financial hit and pays all the fees in the sale of the property, but in turn, the owner is not entitled to any equity that has built up on the property.If you have absolutely no equity in the house and just want to get rid of it, you might want to do research or talk with a lawyer about a quitclaim deed. With that deed, you sign off all your rights to someone else and they take on all the responsibility you once had. If nobody you know wants the property, I’m sure there are investors who will be more than happy to take it off your hands, rent it out and wait a few years for the market to rise. Then, you can move on to a less expensive house free from the hassle of your overpriced property.I am not a lawyer and not qualified to give legal advice, so please speak with an attorney about your options. Some of them may give you some quick advice over the phone without charging you. Good luck

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