More Connecticut borrowers are seeing mortgage relief faster than expected since the $25 billion national mortgage foreclosure settlement took effect in April.
The state was slated to receive roughly $150 million of debt relief within three years, but an interim progress report shows that the state is on track to surpass the goal by the end of the year.
“There”™s a world of hurt out there,” said Connecticut Attorney General George Jepsen, who is on the settlement”™s monitoring committee. “Several thousand people who would have lost their home(s) will be protected.”
To ease the housing crisis and stop foreclosure abuses, the settlement requires the five largest mortgage servicers to provide at least $17 billion in financial assistance to borrowers nationally. Bank of America Corp., Citigroup Inc., Ally Financial Inc., JPMorgan Chase & Co. Inc. and Wells Fargo & Co. agreed to the settlement with 49 states and the federal government. Government entities are currently trying to extend the agreement to the next nine lenders in size as well.
“Not everyone will qualify for relief,” Jepsen said. “And they”™re the true victims in the financial collapse.”
As of June 30, about 1,000 Connecticut homeowners received a total of $65 million in debt relief in the form of first and second-lien modifications, refinancing, forbearance for unemployed borrowers or short sales of their homes. The average relief for a homeowner was $63,000. Additionally, another $82 million was in the pipeline as of June 30 for 800 more borrowers to receive loan principal forgiveness.
Through aggressive event planning and public service announcements, the state has been ahead of the curve in receiving its share of the settlement dollars, Jepsen said. He expects the state will surpass the state”™s goal amount.
Gov. Dannel P. Malloy, the Department of Banking and the attorney general”™s office have hosted daylong mortgage-servicing events, where mortgage borrowers and holders were able to meet face to face in Bridgeport, Hartford and Storrs. With the proper documentation present, borrowers received on-the-spot debt relief. The events have become a model for other states.
Jepsen said after one serving event a man approached him saying that in just two hours, he had accomplished more than he had in a year of back-and-forth phone calls. About $4 billion went to state governments in the settlement, which gives the states the resources to fund housing counselors, legal aid and other assistance for homeowners, including payments for those who have experienced servicing abuse.
Nationally, about 137,800 people have received debt relief so far, totaling $10.6 billion. Another $6.9 billion as of June 30 was scheduled to be forgiven for 60,000 borrowers.
“This will help put a whole foundation under our real estate market,” Jepsen said, “which will affect everybody in the state.”
Housing is a major investment for most people, he said, and until the housing market has recovered, consumer confidence won”™t be at the levels needed for the rest of the economy to recover.
