By Howard Koplowitz
Relief will soon be on the way for Queens homeowners on the brink of foreclosure and to some who have lost their houses after the federal government and five of the country’s largest mortgage providers reached a $25 billion agreement over foreclosure abuses.
U.S. Attorney General Eric Holder, along with 49 state attorneys general, including New York’s Eric Schneiderman, achieved the settlement.
Schneiderman was the last to join the suit and was able to negotiate an additional $136 million, on top of $795 million for the state — the fourth highest amount among the 49 states.
The total settlement is $25 billion and was approved in talks between the federal government and the nation’s five largest mortgage lenders: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. The agreement ended nearly a year of negotiations.
In Queens, the southeast portion of the borough was the hardest hit by foreclosures and subprime mortgages that offered interest rates that ballooned in later years, which made the arrangements unaffordable.
Southeast Queens led the state in the number of foreclosures at the height of the financial crisis and at one time some neighborhoods in the area were among the worst in the country in terms of foreclosed properties.
State Sen. Malcolm Smith (D-St. Albans) applauded the settlement and said he was proposing legislation to increase funds for foreclosure victims.
“Home purchasing is the largest single investment that individuals make in their life time,” Smith said. “Banks committed crimes against homeowners and restitution needs to be fair.
U.S. Rep. Carolyn Maloney (D-Astoria) said the settlement “offers substantial relief to homeowners hurt by unethical mortgage providers.
“New York homeowners will benefit significantly, with a projected $790 million being directed to New York state for victims of wrongful foreclosure and for mortgage modifications.”
But the congresswoman also said the amount of the settlement “is not nearly enough to help all of the homeowners who were negatively impacted during the financial crisis.”
The extra $136 million will be distributed to fund legal aid, homeowner assistance and advocacy organizations to help people facing foreclosure or abuse by their lender.
In addition to that amount, the U.S. Department of Housing and Urban Development estimates $13 million will be paid to New York victims of wrongful foreclosure, $140 million will be earmarked for home owners to refinance their mortgages and $495 million will be used for loan modifications.
The money gained in the settlement is scheduled to be doled out over three years and borrowers will not immediately know if they are eligible for payments, Schneiderman’s office said.
It will take between 30 and 60 days to appoint an administrator for the settlement and banks will be conducting searches to identify eligible borrowers, which Schneiderman said may take “several months.”
Reach reporter Howard Koplowitz by e-mail at hkoplowitz@cnglocal.com or by phone at 718-260-4573.
