Relief Available for Distressed Homeowners


After years of investigation into abusive mortgage practices of certain lenders by the United States Attorney General and United States Trustee, a settlement agreement was reached which hopes to provide some relief to distressed homeowners. The relief will be available to homeowners who are in bankruptcy, as well as those who have not filed a bankruptcy, but are still struggling with their mortgage payments. There also may be relief available to former homeowners, who lost their houses through foreclosure, if the subject mortgage companies failed to follow the proper procedure. Details of the relief can be found at A summary of the settlement is as follows:

  • The five lenders who were subject to the investigation, and are participating in the settlement, are Bank of America, Chase, Citi, Ally/GMAC and Wells Fargo. Mortgages held by other companies are not subject to the settlement. However, there may be relief for homeowners who have a mortgage with another company, if that mortgage had been held by one of these five during the time period of the alleged misconduct.
  • Assistance for eligible homeowners may include loan modification, with adjustments to the monthly payment, interest rate, and even the balance.
  • There would also be assistance for homeowners who could not afford their home even with a reduction in the principal or monthly payment, such as cooperation in short sale, or waiver of the deficiency balance.

If you are struggling with your mortgage with one of the five lenders subject to the settlement, you may want to consult your lender about potential options. However, refer to our previous blog on the steps to take when trying to modify your loan, to make sure that there is no misunderstanding as to the rights and obligations of both parties under the loan modification. In addition, deal directly with the lender. As we have warned before, you do not need the assistance of a third-party to obtain a loan modification. There are many scams where companies or individuals will advertise special relationships with lenders, and will charge a fee for helping you to obtain a loan modification. Ultimately, they will not accomplish anything, and you will have lost your money. Even worse, you could lose your residence.

See our previous blog on See what our least favorite mortgage company, GMAC, is up to now!
See our previous blog on Steps to take in pursuing a homeowners loan modification.
Deficiencies on first mortgages are rare in Georgia because Georgia law requires that a foreclosure sale be confirmed in order for a lender to pursue a deficiency. Most lenders do not apply for a confirmation in order to expedite the resale of the property. However, a deficiency on a second or third mortgage could be a possibility.