Mortgage Settlements And Homeowners

Last updated on: May 24, 2022

Another large bank, HSBC, agreed to a settlement amounting to $420 million for past mortgage origination, servicing, and foreclosure abuses.  Some of these funds are expected to go directly to an estimated 6,400 homeowners who have to apply for the funds in order to receive them.  This settlement is not the first of its kind, and several similar settlements have been reached between banks, states and the federal government regarding mortgage origination, servicing, and foreclosure abuses.  After these settlements, which many often consider a slap on the wrist for the banks, homeowners may wonder how they figure into the whole settlement picture, and whether or not they will receive any funds.

In past cases, settlements with the banks meant that in addition to paying out millions to states and the federal government, banks also had to commit to offering homeowners assistance in the form of loan modifications, refinancing, and similar programs to help them stay in their homes.  This is also a component of the settlement with HSBC, to help homeowners avoid foreclosure as a first resort.  The money paid out in past settlements also ended up in programs that provide monetary assistance to struggling homeowners across Florida.  This was supposed to be a way to reach additional homeowners and help them avoid foreclosure.

Mortgage settlements are often the result of lawsuits brought by the states or federal governments, and therefore eligible homeowners get relief without having to sue the banks themselves.  However, mortgage settlements do not stop a homeowner from bringing an individual lawsuit against the mortgage lender or bank for abuses to them personally that led to the loss of their home.  Additionally, the governments that enter into the agreements with the banks may retain their rights to pursue criminal charges if warranted, despite a settlement.

Funds that are to be distributed directly to homeowners are maintained in a trust account run by a state or federal agency, or another organization depending on the terms of the settlement.  There are often restrictions on which homeowners can receive direct compensation from a settlement with a bank.  For example, under the HSBC settlement, homeowners eligible to receive direct funds from the settlement must have lost their home to foreclosure between 2008 and 2012 and encountered some mortgage servicing abuse.

Mortgage settlements are never resolved fast enough to help most of the affected homeowners from losing their homes.  However, the settlements are supposed to serve a broader purpose of keeping banks and other mortgage lenders from repeating the same violations, and to help other homeowners who are struggling to try and keep their homes.  The process may not be perfect and it may not adequately address the major abuses that the banks engaged in in mortgage servicing and foreclosures, but it is a step in the right direction.

Contact An Experienced Foreclosure Attorney

If you are facing foreclosure, it is important to seek an experienced foreclosure defense attorney to protect your interests.  Contact the North Miami foreclosure attorneys at Charlip Law Group, L.C. for a consultation on your case.

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