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Weíve got to make sure...we get a much more significant package of relief for homeowners when that investigation is concluded.

NY State Attorney General: Mortgage settlement is just a start

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New York State Attorney General Eric Schneiderman says mortgage-holders in the state could end up owing more than $700 million less, under the terms of a new $25 billion settlement between states and five of the nation's biggest lenders. Nora Flaherty has more:

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Nora Flaherty
Digital Editor, News

The deal applies to Bank of America, JP Morgan Chase, Wells Fargo, Citibank and Ally Financial. Forty-nine states have signed on—Oklahoma has signed a separate settlement.

Schneiderman says any homeowner who owes more to one of those banks than his or her home is worth, should expect the bank to get in touch:

The banks under this deal have an obligation to contact every underwater homeowner in the US, and we know there are thousands in the North Country, and try to renegotiate the mortgage.

About 118,000 homeowners in the state are underwater—and Schneiderman says he expects a lot of them will be able to reduce either the amount they own on their homes, or the interest rate they’re paying.
And many whose banks foreclosed on them between 2008 and 2011, will also get checks for $1500-$2000.

The settlement means state Attorneys General can’t bring civil lawsuits against the banks for what have been called “robo-signing” cases. But Schneiderman says that doesn’t mean he—and private homeowners—can’t sue the banks for other reasons:

We carved down the immunity banks get in return for the [payments] to a narrow set of issues. So the good news is this provides some relief, and the better news is it preserves [Attorneys General's] rights to go after the banks for much more relief, and it preserves the ability of all homeowners to seek relief.

Critics have said the settlement is too narrow to make a real difference in the economy—and that the cash payouts are too small. And they’ve pointed out that the settlement doesn’t cover mortgages from the government financing agencies Fannie Mae or Freddie Mac—which account for about half the nation’s home loans.

But Schneiderman says this is just the beginning of a longer fight:

We’re working with all the federal agencies that have the resources and jurisdiction, to go after the banks for the more egregious misconduct, the stuff that actually blew up the economy. We’ve got to make sure everyone’s doing their job, and that the banks are held accountable at the end of the day, and that we get a much more significant package of relief for homeowners when that investigation is concluded.

New York will receive $136 million in the settlement—Schneiderman says he plans to use the money, in part, to fund legal services for homeowners looking to “face off with” lenders.

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