Arizona officials announced a pair of settlements with large banks over allegations of improper lending and foreclosure practices that will result in more than a billion dollars of aid for struggling homeowners. Arizona’s portion of a nationwide, $26 billion settlement with the country’s five biggest lenders will be $1.6 billion—the third-largest share after hard-hit California and Florida.
Most of the money in that deal, announced Feb. 9 after negotiations by attorneys general across the country, will be paid out by lenders in the form of principal reductions—cutting the amount of money that certain borrowers are responsible for repaying on their home loans. Lenders will also dedicate part of the funds to reducing other borrowers’ interest payments and will issue $2,000 payments to people who lost homes in improperly managed foreclosures.
A second, smaller settlement with Bank of America (BofA) ends a state lawsuit over the bank’s lending practices and will fund consumer protection and future investigation of mortgage lending.
However, the national settlement will not deliver assistance to every struggling homeowner. It applies only to mortgages held by the five large lenders and does not extend to borrowers with loans backed by federal mortgage giants Fannie Mae and Freddie Mac, who make up more than half of all mortgage holders.
Still, federal officials estimate that 60,000 Arizona borrowers could see assistance with their principal or interest rates. The settlement marks the first time lenders have agreed, on any large scale, to forgive money owed by underwater borrowers.
“These settlements will help Arizona homeowners and the state’s economy that is so tied to housing,” Arizona Attorney General Tom Horne said. “I think we are holding banks accountable.”
Only borrowers with loans owned by BofA, Citigroup, the former GMAC (now known as Ally Financial), JPMorgan Chase and Wells Fargo are eligible for aid from the national settlement. The five lenders are responsible for contacting eligible homeowners in the coming month to offer assistance. For additional information, you can head over to azcentral.com.
Considering the amount of work that goes into completing a settlement, it is important to keep these things in mind. Instead of buying a foreclosed South Arizona house for sale, it is wiser to buy a new home in Arizona, especially those built by Dorn Homes, a premier Arizona home builder. Dorn-built custom homes in Arizona are stylish, comfortable, and convenient. Plus, Dorn’s Arizona custom homes are more energy efficient than pre-owned homes, reducing your expenses for utilities. Contact Dorn Homes today!