The story is here
Ohioans will get share of $25 billion foreclosure
settlement
Fund is enough to give each Ohio homeowner in trouble
only $1,000
The Columbus
Dispatch Friday February 10, 2012 11:08 AM
Tens of thousands of
struggling Ohioans stand to benefit from a landmark settlement reached yesterday
with the nation’s largest lenders.
Ohio’s $335 million share of the $25 billion settlement will be used to help
residents stay in their homes, demolish thousands of blighted properties and
compensate some who lost their homes to foreclosure.
“Although this settlement is of historic proportion, we know it does not
solve the mortgage crisis,” Ohio Attorney General Mike DeWine said. “It is a
start. It is a first step.”
The deal is the biggest settlement involving a single industry since a 1998
multistate tobacco deal.
Under the agreement between 49 state attorneys general and the lenders — Bank
of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — will
modify loans for almost 1 million households. They also will send checks to
about 750,000 Americans who were foreclosed upon. The banks will have three
years to fulfill the terms of the deal.
The five banks service about 55 percent of U.S. home loans. Federal and state
officials are pursuing a similar settlement with nine other lenders, which could
bring the value of the deal to more than $40 billion.
Ohio’s share of the settlement will be divided this way:
• $102 million will come in the form of loan modifications to homeowners who
are delinquent or in the foreclosure process, possibly allowing them to remain
in their homes.
• $90 million will allow homeowners who owe more than their home is worth —
so-called “ underwater” mortgages — to refinance or reduce the loan balance.
• $44 million will compensate former homeowners who were foreclosed upon
between Jan. 1, 2008, and Dec. 31, 2011. The amount of the payment will depend
on the numbers who apply, but it is expected to be between $1,500 and $2,000 per
home. Exactly who will qualify for the money has yet to be determined.
• $97 million will come as a direct payment to the state, $75 million of
which the attorney general’s office will use to demolish abandoned properties
across the state. The money will be distributed in matching grants to
communities, although details on disbursement still are being worked out.
“The time has come to shout, ‘Tear down these houses; tear down these
buildings!’ ” DeWine said.
The settlement is the result of months of negotiations between the states and
the lenders, after several states including Ohio threatened to sue lenders over
shoddy foreclosure paperwork.
President Barack Obama and other politicians praised the settlement as an
important step to fixing the nation’s housing industry, which is in a six-year
slump.
The agreement, said Obama, “will speed relief to the hardest-hit homeowners,
end some of the most-abusive practices of the mortgage industry and begin to
turn the page on an era of recklessness that has left so much damage in its
wake.”
Others were more cautious. They noted that the total value of the agreement
addresses a fraction of housing’s problems and that banks already are modifying
loans.
“I really don’t see this as being that big a deal,” said Richard Green,
director of the University of Southern California’s Lusk Center for Real Estate.
“In reality, the total number of dollars is still small compared to the value of
the mortgages that are underwater. To some extent, the numbers reflect losses
the lenders would have taken anyway.”
About 9 percent of Ohio’s 1.4 million home mortgages are delinquent, and more
than 4 percent are in the foreclosure process, leaving almost 200,000 state
homeowners in trouble. The $192 million reserved for troubled Ohio homeowners in the settlement amounts
to less than $1,000 per homeowner.
“I think this will be beneficial for some, but we don’t see a lot of folks
who are just $1,000 behind,” said Stephen Torsell, executive director of Homes
on the Hill, which assists troubled West Side homeowners.
“Sometimes, that’s a large gap to fill, with a reduction in income or loss of
a job, but any funds will be helpful,” Torsell said.
Just as important, said some, is that the agreement helps clarify mortgage
rules moving forward.
The settlement addresses, for example, one of the biggest complaints from
homeowners during housing’s meltdown: the difficulty in getting clear answers
from the bank.
The deal requires banks to establish a single point of contact between the
bank and homeowner.
The agreement also prohibits lenders from foreclosing on a homeowner who is
being considered for a modification.
Banking representatives praised the settlement as an important step toward
getting housing back on track.
“It’s good that the settlement is finally here, so we can move on,” said Bob
Niemi, executive director of the Ohio Mortgage Bankers Association.
