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.
The landmark agreement was negotiated in conjunction with the U.S. Justice Department, U.S. Housing and Urban Development, and a bipartisan group of state attorneys general with the country's largest mortgage lenders including, Bank of America, Citi, JP Morgan Chase, GMAC and Wells Fargo. The five lenders account for about 60 percent of all mortgages in the nation, Shurtleff said.
A secondary settlement with nine other lenders is expected sometime in the future, he said.
The agreement applies to Utah borrowers who lost their homes to foreclosure from Jan. 1, 2008 through Dec. 31, 2011 and suffered servicing abuse. Approximately 23 percent of Utah mortgages are currently underwater.
Salt Lake City homeowner Odette Dunn said the announcement of the settlement is welcome news for her family, who could benefit if they qualify for relief from their lender under the agreement.
In March 2009, her husband lost his job, putting the family of nine in financially dire straits. She said after months of wrangling, they were eventually able to work out a loan modification with mortgage holder Bank of America and keep her home.
Now, in the wake of the settlement, she wonders if her lender treated her family fairly. She said she is glad the bank's misdeeds were finally revealed and some homeowners will be helped.
"The banks have to be held accountable," Dunn said. "Too many people lost their homes."
- Lost recording of an interview with 1867...
- Boulder slams into Rockville home, killing two
- National Weather Service radar mistakes swans...
- Passerby was mistakenly used as translator in...
- Utah husband wins 'Most Memorable Moment'...
- Charges filed against 'fixer' in ongoing...
- Many Mormon missionaries who return home...
- Young adults are faced with risky decision to...
- Pay increase for Gov. Herbert, other... 67
- Legal analysis supports Utah's law on... 37
- Do Utah high school students need four... 30
- Supervolcano hidden in plain sight in... 19
- Rare snowstorm traps I-15 motorists... 14
- Young adults are faced with risky... 14
- John Swallow lost computer hard drive... 12
- Better than a raise: The smallest thing... 11