Mortgage Settlements to Benefit Homeowners

On Feb. 9, a settlement was made with five major loan services: Bank of America, Wells Fargo, Chase, Citigroup and Ally Financial Inc. (GMAC) that will provide $26 billion in mortgage relief. California secured up to $18 billion for its distressed homeowners as part of this national multistate settlement. More than $12 billion will be used to offer short sales or write-down loans over the next three years for about 250,000 underwater homeowners in California. Relief will go to areas hardest hit by the foreclosure crisis within the first year of the settlement.

The settlement releases the five named lenders from certain federal and state claims pertaining to robo-signing (seizures made without proper paperwork) and other foreclosure misconduct by the lenders. It does not affect any individual's rights to bring legal action against a lender. It also does not apply to the majority of mortgage loans, which are those owned by Fannie Mae or Freddie Mac. The breakdown of how the money will be distributed is as follows:

• $1.5 billion to approximately 750,000 homeowners that have already been foreclosed on where proper documentation and procedures were not followed; those people can receive up to $2,000
• $17 billion to modify loans for people that are in foreclosure of which 60 percent must be used to write down loan amounts on people who owe more than their home is worth; these write downs will average $20,000
• $3 billion for non FNMA, FMAC loans; there will be money set aside to refinance owners current on their mortgage that owe more than the home is worth

Financial benefits specifically for California include:

• $849 million for refinancing 28,000 borrowers who are underwater but current on their payments
• $279 million restitution for 140,000 homeowners who were foreclosed upon between 2008 and 2011
• $1.1 billion for unemployed homeowners, transitional assistance and repairing blight
• $3.5 billion to extinguish unpaid loans that remain after foreclosure for 32,000 homeowners
• $430 million to the State Attorney General's office for costs and fees.

As part of the California guarantee, if the lenders fail to reduce principal balances by a minimum of $12 billion, they will be required to pay fines up to $880 million to the state.

This mortgage settlement does not change any homeowner's existing financial relationship with a settling lender. It does not relieve homeowners from any obligation. It does not require a settling lender to stop any foreclosure.

The settlement sets up a federal monitor to oversee the process and try to prevent roadblocks and red tape that tripped many homeowners seeking help in earlier programs designed to address the housing crisis.

The settlement program states that the people will be notified by their servicers if they qualify to get paid, modified or refinanced. However, I would encourage all readers who feel that they may benefit from this mortgage relief to take proactive steps to gather information and work to seek this relief if possible. I would not wait around waiting to get a surprise notification from your lender.

If you require more information including detailed FAQs, visit the California Attorney General's website, or visit the National Mortgage Settlement website.

Help may be on its way, or is this entire settlement just a political play so lawmakers can claim victory? I want to believe that our government is there to assist the millions of California property owners, so please tell anyone you know who may qualify for these benefits to work hard to garner the benefits of this settlement.

Beverly Taki is a California-licensed real estate broker who has represented clients in Malibu for 22 years. She is a Malibu resident and president/broker of . Taki has earned a certificate in dispute resolution from , specializing in mediation. She can be reached at beverly@beverlytaki.com or 310-456-4843. Her website is beverlytaki.com.