Foreclosure settlement could bring welcome relief to Utahns

SALT LAKE CITY — Beleaguered Utah homeowners hit hard by the mortgage foreclosure crisis may finally get some relief. The governor and state attorney general announced Thursday that Utah is joining 48 other states in a $25 billion federal settlement with the nation's five largest mortgage lenders over foreclosure abuses, fraud and unethical mortgage servicing practices.

Under the proposed agreement Utah would receive nearly $23 million in direct payments and $171,115, 273 in total benefits. The total includes $45 million in direct relief to Utah homeowners and $102 million of indirect relief to address future mortgage loan servicing practices.

Qualifying homeowners could receive $2,000 and may also be eligible for one of several loan modifications, refinance or mortgage write down options, including principal reduction, loan extensions or "cash for keys" — offering a cash buyout for heavily indebted clients who relinquish ownership. 

"This agreement provides relief to homeowners and also stops the outrageous conduct that led to the mortgage crisis," Utah Attorney General Mark Shurtleff said.

Homeowners also receive comprehensive new protections from new mortgage loan servicing and foreclosure standards, he said. Additionally, an independent monitor will ensure mortgage servicer compliance.

Utah lawmakers Thursday were already considering how to use the unexpected $23 million upfront cash windfall.

House Speaker Becky Lockhart, R-Provo, said while lawmakers don’t believe the settlement dollars come with strings attached, they do feel an obligation to use at least some of the money to help prevent future foreclosures.

“We are sensitive to that. I think we’ll look very seriously at those kinds of issues,” she said.

But she said there is also the possibility some of the cash could be used to replenish the state’s Rainy Day Fund and other sources tapped in recent years to balance the budget.

Senate President Michael Waddoups, R-Taylorsville, said he's waiting for the money to arrive before making plans to spend it. There have been times when Federal dollars were promised but didn't show up, he said.

Should it arrive before the Legislature adjourns, "I suspect there will some pressures to allocate some this session," Waddoups said.