Homeowners Receive Help

Arkansas To Receive Estimated $39.4 Million

Arkansas Attorney General Dustin Mcdaniel issued a consumer alert on Feb. 8 to remind homeowners of Act 885 passed by the General Assembly last year.

That law requires additional information be provided to homeowners and encourages loss mitigation of loan modification before a foreclosure is initiated, according to Mcdaniel.

In simple terms — any mortgage company or bank must provide a homeowner who is facing foreclosure copies of the note, mortgage and any assignments, as well as the exact physical location of the documents and an accounting of the homeowner’s payment history.

This is a result of large national banks bundling mortgages together and selling them to a larger international bank, investment bank or commercial bank, hedge fund or private equity fund.

Who knew where the initial mortgage papers went when push came to shove and homeowners began to get behind on their payments?

Some banks, like Bank of America, even hired people to forge foreclosure documents, according to several television programs like 60 Minutes on CBS that revealed this unlawful practice.

Arkansas has not been hit as hard with foreclosures as many states in large part because we haven’t suffered during the recession with high unemployment numbers like Nevada, California and Florida.

Too, most housing in this state is not inflated beyond what it should be valued.

However, this state has had its unemployment numbers go up and foreclosures rise in higher numbers than they had before the recession.

Mcdaniel joined 48 other states and the Justice Department last week at a press conference with U.S. Attorney Eric Holder to announce a deal that could provide relief to a million families whose mortgages are considered to be “under water,” which means a homeowners house is no longer worth the amount borrowed on it.

Due to the announcement by Holder of holding banks responsible for their part in the mortgage crisis, banks will have to “clean up their acts” even to providing refinancing for homeowners whose loans are in that underwater category and banks will be forced to reduce principal balances on some loans.

A settlement deal is going to states to help with loan modification relief.

Arkansas will receive an estimated $39.4 million settlement, according to the Arkansas News Bureau.

Of that amount lenders will have to dedicate about $11.8 million to first and second-lien principal reduction and other forms of loan modification relief to homeowners in the state. Another $5.7 million will help with refinancing of loans to underwater borrowers.

Arkansans who lost their homes in foreclosure from Jan. 1, 2008 to Dec. 31, 2011 and suffered servicing abuse from lenders will be entitled to a share of about $8.5 million of the settlement, according to the Arkansas News Bureau.

Another $13.4 million will go to government agencies that offer housing assistance and help to low and middle income citizens.

It’s good to know our Arkansas legislators were ahead of the federal government in giving assurances to its citizens who have been, and still are, facing foreclosures.

Anyone who has been paying attention to local news will know that NW Arkansas has had its share of foreclosures and those foreclosures have in large part been responsible for bringing down home values.

Though it seems the economy is improving, we still have a good way to go before the mortgage crisis is no longer felt.

The good part about this latest help for homeowners is it will be available for some people.

However, the bad news is it will take time for the federal help to come through, and it will only be for people who have loans through large national banks such as ALLY/GMAC, Bank of America, Citi, JP Morgan Chase and Wells Fargo. Fannie Mae and Freddie Mac loans are exempt.

And worst thing about the issue — there are a lot more people needing help than will actually get it.