Office of the Attorney General
General Conway Announces $25 Billion Mortgage Foreclosure Settlement

Press Release Date:  Thursday, February 09, 2012  
Contact Information:  Shelley Catharine Johnson
Deputy Communications Director
502-696-5659 (office)
 


Attorney General Jack Conway today announced that Kentucky will participate in the national foreclosure settlement. The $25 billion settlement with five of the nation's largest banks provides relief to consumers who were foreclosed upon, principal write-downs and refinancing to homeowners who hold mortgages that exceed the current value of their home, and payments to states for ongoing consumer protection programs.

The settlement also preserves the rights of states to pursue criminal and civil actions against the banks. Attorney General Conway was one of the state Attorneys General who refused to sign a settlement unless those provisions were included.

"Our efforts made a difference, and I will use a significant portion of the money that Kentucky receives from the banks to continue going after them on behalf of Kentucky homeowners," General Conway said. "In fact, today I subpoenaed MERS (Mortgage Electronic Registration System Inc.), which I believe may have circumvented Kentucky law by failing to properly record mortgage assignments and pay filing fees with county clerks throughout the Commonwealth."

Of the $25 billion settlement, Kentucky will receive $58.8 million.

  • $12 million available in direct relief to homeowners, which includes loan-term modifications and principal write-downs.
  • $10.8 million in direct payments from the banks to consumers who were foreclosed upon using "robo-signed" documents from January 1, 2008 through December 31, 2011. Each borrower would be eligible for up to a $2,000 direct payment from the banks. The amount of the payment will depend upon how many borrowers participate. "Robo-signing" is a practice where banks did not properly review and prepare foreclosure paperwork and applied automatic or electronic signatures to court documents. Borrowers will not have to release any legal claims they may have in order to participate.
  • $15.9 million in refinancing for borrowers who are current on their mortgage payments, but hold mortgages that exceed the value of their homes.
  • $20 million in a direct payment to the Commonwealth of Kentucky for consumer protection programs.

"This settlement provides real relief for consumers who were foreclosed upon and assistance for borrowers who've met their obligations by staying current on their mortgages," General Conway said. "The national settlement requires Kentucky to file a plan with the federal court to approve and enforce how Kentucky will use this money to benefit consumers and homeowners. I know a portion of these funds will be used to continue our focus on MERS and securitization litigation"

The five banks included in the settlement are: Bank of America, JP Morgan Chase, Wells Fargo, Citi, and Ally/GMAC. In order for consumers to receive direct assistance from this settlement, they must have a mortgage that is or was held by one of these banks.

A website has been established to provide consumers with information about the settlement at www.NationalMortgageSettlement.com . Banks will also be directly contacting consumers who qualify for payments or assistance. If consumers have questions, they may call:

  • Bank of America 1-877-488-7814
  • JP Morgan Chase 1-866-372-6901
  • Wells Fargo 1-800-288-3212
  • Citi 1-866-272-4749
  • Ally/GMAC 1-800-766-4622

The Office of the Attorney General set up a web page with information and answers to frequently asked questions about the settlement www.ag.ky.gov/mortgagesettlement .The fact sheet is also attached to this press release.

"This is a first step in holding banks accountable for the mortgage foreclosure crisis that's affected every community in our country and our Commonwealth," General Conway said. "I am committed to utilizing these resources and continue investigating big banks, their involvement in MERS, and their bundling of mortgage-backed securities that have cost institutional investors billions of dollars."