Sunday, 30 December 2012

Homeowners Still Wait to Receive Funds from Foreclosure Settlement

California was one of several states included in a multi-billion-dollar federal foreclosure settlement, to help homeowners struggling with foreclosure.  However, even 2 years after the disbursement of much of the settlement, the program is still struggling to make sure that homeowners receive the funds.
The federal settlement totaled $7.6 billion, and involved 5 of the largest mortgage lenders as part of a settlement through the Hardest Hit program.  The program was one of several that were initiated by the administration to combat the rising tide of foreclosures. 
Out of the $7.6 billion that was committed, about $900 million had been given to homeowners by November, and another $620 million had been committed to the 18 states that were part of the program. A time period of until 2017 was given to spend the money.  Different states received different amounts, and California received one of the largest amounts.  The state received close to $2 billion, and is believed to have distributed more than $200 million.
California was on top of the priority list, because the state had suffered severely with high foreclosure rates and plummeting house prices.  As California foreclosure lawyers saw, the foreclosure crisis in the state was dire, and necessitated expansive measures.  However, the speed of the disbursement of money to homeowners has been slow.  
Several states, including California, are now changing the program to make it quicker and more responsive to homeowners.  Initially, the state required loan servicers to match reductions in principal made by the program, but the idea received very little response from servicers.  Currently, California provides up to $100,000 in reduction of principal for homeowners eligible under the program, with no match from servicers.

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