Agreement with Banks over Mortgage Servicing Practices Yields $428 Million for Texas

AUSTIN, February 9, 2012 – Texas Attorney General Greg Abbott issued the following statement after today’s $25 billion nationwide agreement to resolve a multi-state investigation into wrongdoing by major mortgage servicers and lenders:

“Today’s sweeping measure halts past misconduct by large mortgage lenders such as ‘robo-signing,’ inadequate documentation and improper record-keeping. Because of the banks’ misconduct, homeowners have faced unnecessary hardship. Today’s agreement imposes a variety of reforms that are intended to benefit homeowners, help the nation move past the housing crisis and provide certainty to aid our long-overdue national economic recovery.”

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Texas was among eight states and four federal agencies that negotiated the landmark settlement with the five largest mortgage servicers over abuses that led to widespread home foreclosures. The agreement streamlines procedures for reviewing loan modification applications and establishes tight restrictions on banks seeking foreclosure during the modification process.

Financial relief for homeowners

• Texas homeowners are scheduled to receive almost $287 million to help restructure existing mortgages and for payments to certain borrowers who lost their homes due to servicing abuses.
• Part of this amount will fund loan refinancing for homeowners who are upside down on their mortgage, meaning they owe more on their mortgage than what the home is worth.
• In addition, Texas will receive $141 million for the banks’ violations of state law. These dollars will be deposited into the treasury for future appropriation by the Texas Legislature.

Participating banks

• Bank of America – (877) 488-7814
• Wells Fargo & Co. – (800) 288-3212
• JPMorgan Chase & Co. – (866) 372-6901
• Citigroup – (866) 272-4749
• Ally Financial Inc. – (800) 7664622

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