Reed: RI to Receive Estimated $172 Million in Foreclosure Fraud Settlement
WASHINGTON, DC - A $26 billion nationwide settlement with five major financial institutions accused of wrongfully foreclosing on borrowers is estimated to bring $172 million to Rhode Island homeowners affected by the banks' activities. The companies involved in the settlement are: Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.
U.S. Senator Jack Reed (D-RI), who has been leading the effort in the Senate to help revitalize the housing market, stated:
“Rhode Island was hit harder than most states by the foreclosure crisis and this settlement will help provide relief to more families.
“I commend the Attorneys General like Attorney General Kilmartin and federal authorities for working together to hold the banks accountable and establish stronger loan-servicing standards. It is important to note that this settlement leaves the door open to continue investigations into other abusive practices, and individuals retain the right to bring their own lawsuits.
“This settlement is a positive development, but it is not a silver bullet. In fact, foreclosure rates are likely to rise nationwide as backlogs might start to be processed more expeditiously. We need a more targeted effort to help responsible borrowers who’ve been collateral damage from the foreclosure fallout. I have taken steps, such as convincing the Administration and the Federal Housing Finance Agency (FHFA) to convert vacant foreclosed properties under their control into affordable rental housing, but there is more that FHFA can and must do to help more homeowners.”
Reed noted the settlement money will be distributed under a complex formula designed to encourage the banks to speed assistance to the hardest hit borrowers and quickly aid the housing market. An approximate breakdown of the funding for Rhode Island includes an estimated:
• $152.6 million will go to assist homeowners in danger of foreclosure.
• $8.9 million in cash may be set aside in a general fund for the state, which will hopefully be used on housing-related projects, such as foreclosure mitigation efforts.
• $7.3 million will be set aside to assist with more mortgage refinancing.
• $3.1 million in the form of one-time payments to those who have already lost their home to foreclosure.
Forty-nine states and the District of Columbia signed onto the settlement. The lone holdout is Oklahoma, where Republican Attorney General Scott Pruitt felt the terms of the settlement were too hard on the banks.
For more information about the mortgage servicing settlement, go to:
www.NationalMortgageSettlement.com
