The National Mortgage Settlement Agreement

Wed, Mar 14, 2012

General Legal Issues

The National Mortgage Settlement AgreementFlorida will get about 8.4 billion dollars in relief from the new National Mortgage Settlement. (California is the only state that will receive more.) That is great news! However, it will not happen quickly and it will not help every homeowner.


First off, the settlement is restricted to mortgages run by JPMorgan Chase, Bank of America (who will pay the most in the agreement), Citigroup, Wells Fargo, and GMAC (now Ally Financial). It does not help those served by Fannie Mae and Freddie Mac.

Once things get rolling with the settlement, it is expected that affected homeowners will receive information in the mail. But, interested parties can contact their mortgage company or the attorney general for their state for faster information.

Some sources say it could be up to three years before full results are seen from the settlement. The delay comes from lots of paperwork and the choosing of the settlement administrator for the homeowners who were already foreclosed on. Also, right now, there is just a proposed agreement. The details are still being finalized. This makes some even more skeptical of the timeline.

The specific cases the agreement relates to are:

  • Those who had mortgages with the aforementioned lenders.
  • Those foreclosed on between January 2008 and December 2011 who were victims of improper foreclosure. About 170 million dollars would go to these homeowners for the transgressions against them. These homeowners will be working with the settlement administrator.
  • Homeowners who need loan modifications. The agreement would provide over 7 billion dollars of relief; some will be in the form of reduction of the principal amount of loans. It could provide about $20,000 to qualified homeowners.
  • Homeowners who need help with refinancing because they are underwater in their loan. About 300 million dollars would go to help these homeowners.


The National Mortgage Settlement Agreement comes after a lengthy investigation into allegations of improper conduct on the part of the mortgage companies, including the process of robo-signing. Robo-signing was a practice in which certain companies filed mass foreclosures without any verification or further investigation and usually without the use of a notary. The homeowners who were improperly foreclosed on will be working with settlement administrators to settle their cases.

The National Mortgage Settlement Agreement also was created after much outcry from states whose homeowners are deeply underwater in their loan and/or who are facing foreclosure. The hope is that the agreement will remedy some of the past and help those in trouble, while also making it impossible for similar problems to happen in the future.

While some civil liability is reduced because of the agreement, the mortgage companies are not immune from criminal liability, suits from individuals, or civil liability from issues outside of the agreement.


It is important to note that even if the agreement comes through as expected, it will not save every homeowner. Those in the midst of foreclosure or on the brink of it should contact their mortgage broker to see if they could be helped by the agreement or contact an attorney for further advice. SmithLaw strongly urges that you not abandon other means of avoiding foreclosure. And, of course, scams are already popping up in regards to the agreement. So, be very careful if you are contacted by any companies or individuals in reference to the agreement.

There is a website with detailed information about the agreement, Also available for information is the attorney general for the state of Florida, Pam Bondi. Her website is, with specific information about the agreement found here.

Image credit: 401K

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