April 18, 2012
LANSING - Michigan Attorney General Bill Schuette today warned Michigan residents of a scam in which criminals are telling victims of the foreclosure crisis they can help them receive benefits from the national mortgage settlement for a fee. Schuette warned of the scams during testimony before the Michigan House Banking and Financial Services Committee to address the impact of a multi-billion dollar nationwide settlement with five of the nation's largest banks/mortgage servicers.
"Do not provide personal information or pay money to anyone who claims they need it to help you access your mortgage settlement benefits," said Schuette. "Eligible citizens will be contacted by a professional settlement administrator or their own bank to receive free relief. If you have been contacted by a scammer, file a complaint with my office immediately."
Schuette advised that Michigan citizens will not have to pay or provide any personal information to receive assistance under the settlement. He warned that citizens should be wary of anyone who offers to "speed your settlement" or "help you gain access" to benefits. Such claims are false, said Schuette, because the banks and an appointed professional settlement administrator will already have access to all the required information. The complete consumer alert is available online. Schuette encouraged citizens to file complaints regarding settlement scams with the Attorney General's Consumer Protection Division.
The mortgage settlement is signed by five of the nation's leading mortgage servicers, and consumers may call the following toll-free hotlines right now for additional information:
Bank of America - 1-877-488-7814
Citigroup - 1-866-272-4749
J.P. Morgan Chase - 1-866-372-3212
Wells Fargo - 1-800-288-3212
GMAC/Ally - 1-800-766-4622
Schuette also testified that Michigan residents will receive approximately a half-billion dollars, including a $97 million fund provided directly to the State of Michigan, which Schuette proposed safeguarding in a Homeowner Protection Fund.
Of the total half-billion anticipated to benefit Michigan citizens, Schuette expects additional federal funds will be distributed to Michigan citizens affected by foreclosure in the following areas:
Borrower Payments - A national settlement administrator will distribute cash payments to borrowers in Michigan who went through foreclosure from 2008-2011. More information will be forthcoming detailing who will be eligible for benefits and how they can apply. Receipt of payments will not preclude borrowers from taking future legal action, if warranted.
Refinance Program - Servicers will fund a refinancing program for borrowers who are current with their mortgage payments but owe more than their homes are worth due to declining property values. These so-called "underwater loans" will allow affected homeowners to refinance and achieve relief through lower interest rates.
Federal Menu Benefits - A federal spend-down fund will require banks to provide principal balance reductions, short sales, deeds in lieu of foreclosure and other relief for homeowners currently struggling with foreclosure.
Approximately $97 million of the half-billion in funds anticipated to benefit Michigan citizens will come directly to the State of Michigan via the legislature. With these funds, Schuette called for the creation of the Michigan Homeowner Protection Fund, which would be narrowly tailored to ensure Michigan citizens negatively impacted by the foreclosure crisis receive much-needed assistance and support.
"We have a responsibility to ensure these funds are used to help Michigan citizens who were ripped off by banks and fell victim to foreclosure rescue scams," said Schuette.
Foreclosure Counseling for Homeowners - The Michigan State Housing and Development Authority would use these funds to continue their much-needed, free certified homeowner counseling services for citizens seeking to avoid foreclosure
Foreclosure Rescue Scam Restitution - Many Michigan residents have fallen prey to foreclosure rescue scam artists who offered to help citizens save their homes. In the end, victims were out thousands in illegally-collected upfront fees and in some cases even lost their homes. Many of these victims never received any restitution because criminals spent the money before they were convicted. Eligibility criteria to determine qualifying cases will be established at a later date.
Payments to Borrowers Who Suffered Foreclosure - These funds will provide support to certain homeowners who already lost their piece of the American dream and are struggling to get back on their feet. Eligibility criteria will be determined at a later date.
Veteran's Assistance - The men and women who served our country also have been affected by poor mortgage practices, and these funds will provide targeted relief for servicemembers.
Aid for Children Made Homeless by Foreclosure - According to the Michigan Department of Education, during the 2010-2011 school year, more than 31,000 school children were homeless, an increase of 42% from the previous year. These funds will be used to help those children with needed services, including shelter, transportation, supplies and additional aid to help keep their education on track.
Michigan Attorney General Home Protection Unit - Every day foreclosure rescue scam artists con homeowners out of thousands by pretending to offer loan modification services. Instead of helping, the scam artists take the money and run. These funds will allow Schuette's office to ramp up investigation and prosecution of foreclosure-related crimes.
Support for Communities to Eliminate Blight - The foreclosure crisis has resulted in thousands of abandoned properties that are contributing to declining home values and provide a haven for criminal activity. These funds will help rehab properties and tackle the problems associated with blight in Michigan communities.
In addition to the funds paid by the banks to address foreclosure-related issues, Schuette said an important part of the settlement includes critical reforms to the mortgage loan servicing industry. New standards will cover all aspects of mortgage servicing including account accuracy, document production processes, foreclosure practices and information provided to borrowers. Compliance will be overseen by an independent monitor and professional staff who will report to attorneys general and the Court.