State trails in providing foreclosure restitution to homeowners
BY CARY ASPINWALL World Staff Writer
Saturday, February 23, 2013
3/18/13 at 10:45 AM
Learn more about the settlement: Read the national settlement monitor’s latest report
and view information about relief banks are providing in other states.
While Oklahoma has handed out an average of $11,000 in foreclosure restitution to fewer than 300 people, more than a half-million troubled homeowners in 49 other states received an average of $82,000 in assistance through the National Mortgage Settlement, data show.
A report issued this week on the National Mortgage Settlement shows that the nation's five largest mortgage servicers have extended about $45.83 billion in gross relief to more than 550,000 borrowers, or roughly $82,668 per homeowner. Between March 1 and Dec. 31, 2012, the banks involved cut struggling homeowners' mortgage balances by $19 billion.
Oklahoma was the only state to opt out the National Mortgage Settlement, an agreement that 49 state attorneys general and the federal government negotiated with the country's five largest mortgage servicers: Bank of America, Citimortgage, JP Morgan Chase, Wells Fargo and Ally/GMAC.
In 2012, those banks agreed to provide $25 billion in relief to distressed borrowers and direct payments to states and the federal government to resolve allegations that they had engaged in improper mortgage servicing practices, such as dual-tracking and robo-signing.
Attorney General Scott Pruitt turned down a projected $28 million in other forms of homeowner assistance when he opted Oklahoma out of the national settlement and instead decided to use the state's $18.6 million direct payment to provide what he termed "real and substantial relief" to residents harmed by those mortgage industry practices.
Pruitt has argued that the national settlement strayed too far into becoming housing policy by offering homeowners options such as principal reductions and refinancing assistance.
Instead, Pruitt offered compensation to homeowners who provided documentation that they had been victims of practices such as robo-signing or dual tracking - averaging about $11,000 in direct payments to 271 homeowners in Oklahoma.
The largest of the direct payments was $20,000, the smallest payments were $5,000 - larger than the average direct payments homeowners were offered through the national settlement. So far, Pruitt's program has spent just more than $3 million of the $18.6 million in direct compensation payments to homeowners.
But Oklahoma's program does not include options that other states received: relief through principal reductions, lien modifications, short sales and refinancing assistance. Under the settlement, each state received a direct payment to spend as it chose, in addition to an estimated amount of consumer relief through the banks working directly with homeowners.
Pruitt's office maintains that Oklahoma homeowners are eligible for the same additional types of relief that homeowners in other states are receiving by working directly with the mortgage servicers.
But any consumer relief distributed to Oklahoma's homeowners will not be credited toward the overall obligations the banks have agreed to provide under the terms of the settlement, according to the National Mortgage Settlement monitor, Joseph Smith.
And Smith said he is not monitoring or tracking the banks' progress in Oklahoma, as he is in the other states.
In each of those states, banks must provide detailed reports of all types of relief they have given homeowners, reports which are also tracked by the national settlement monitor. Detailed accountings of the progress in each state can be viewed by clicking on an interactive map at tulsaworld.com/mortgagesettlement Highlighting or clicking on Oklahoma on that map results in a message: "No data available."
The Oklahoma Attorney General's Office has received reports from the banks on total amounts of relief they've provided in Oklahoma, spokeswoman Diane Clay said. Tallies provided to the Tulsa World show 1,251 homeowners have received about $38.5 million in other forms of relief, about $30,000 per homeowner. Those totals do not include figures from Ally/GMAC because the office has not yet received those, Clay said.
Those figures do not include direct payments to Oklahoma homeowners, Clay said, as the figures from the national monitor do not include direct compensation payments to homeowners. The federal payments are not expected to begin until the summer at the earliest, she said.
Because the national averages included housing markets in the northeast, West Coast and northwest that include homes with much higher values than in Oklahoma, "a more accurate comparison" would look at how Oklahoma fared versus neighboring states, she said.
The national settlement monitor's report showed that 935 Arkansas borrowers have received nearly $35,000 in average relief so far, for a total of $32.6 million - nearly $7 million more than the $25.9 million the state was originally estimated to receive in homeowner benefits under the settlement.
In Kansas, about 1,500 borrowers received nearly $53 million in relief, about $36,677 per homeowner, according to the settlement monitor's report.
In Colorado, more than 6,000 homeowners have received an average of $56,000 in various forms of relief under the settlement, for a total of more than $344 million in relief.
Initially, Colorado was expected to receive $152 million in borrower relief, in addition to a $50 million direct payment to be used for supplemental loan-modification programs, affordable housing, counseling, legal services, staffing and a foreclosure hotline.
Oklahoma will use portions of its $18.6 million settlement to fund Resolution Oklahoma, focusing on legal assistance for low-income individuals, seniors, veterans and homeowners in financial distress.
Legal Aid Services of Oklahoma received $1.275 million to provide legal representation to lower income families and seniors who have foreclosure and modification-related legal issues.
Some of the funds have gone to the Oklahoma Bar Association to offer free training sessions to help lawyers prepare to offer foreclosure defense to homeowners. Those who do not qualify for income-based need can apply for a voucher worth up to $5,000 in legal services through the Resolution Oklahoma program.
Legal help for homeowners struggling with foreclosure is available now.
The voucher form for legal assistance is on the Oklahoma attorney general's website tulsaworld.com/attorneygeneral
Homeowners without Internet access can request assistance by calling 405-521-3921.
Low-income homeowners who need assistance can call Legal Aid Services of Oklahoma at 1-888-534-5243.
Original Print Headline: State lags in giving mortgage assistance
Cary Aspinwall 918-581-8477