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  • Staff photo by Bob Hammerstrom

    Dave Carlson, right, came to experience and learn about foreclosure auctions Friday morning, February 10, 2012, as auctioneer James St. Jean waits for any bidders to show up for an occupied home on the auction block in Litchfield.
  • Staff photo by Bob Hammerstrom

    Dave Carlson, right, came to experience and learn about foreclosure auctions Friday, February 10, 2012, as auctioneer James St. Jean waits for any bidders to show up for an occupied home on the auction block in Litchfield.
  • Staff photo by Bob Hammerstrom

    Bidders walk away from a Diamond Drive house as this foreclosure auction in Derry was postponed at the last minute Friday, February 20, 2012.
Saturday, February 11, 2012

Foreclosure settlement just the first step, officials say

EDITOR’S NOTE: This is the first day in a three-day series looking at the state of New Hampshire’s housing market.

The $43 million foreclosure settlement this week won’t right the wrongs of the New Hampshire mortgage crisis.

It won’t correct the struggling housing market, and, with promises of an $1,800 payout, it won’t help foreclosure victims get back in their homes.

“Eighteen-hundred dollars is a slap in the face,” said Gary Vallier, a Milford resident who lost his home to foreclosure last year. “I’m not sure I’ll even accept it.”

New Hampshire’s settlement announced Thursday was part of a national $26 billion settlement in which 49 of the 50 states participated.

In the short term, the agreement will help thousands of struggling homeowners keep up with their mortgage payments, according to the state Attorney General’s office. In the long run, it could help restructure the mortgage industry to prevent similar fraud and abuses in the future.

Under the settlement, the nation’s five biggest mortgage holders – Bank of America, Citigroup, GMAC, JPMorgan Chase and Wells Fargo – acknowledged “robo-signing” thousands of foreclosure documents without reviewing the accuracy of the papers.

The agreement “isn’t perfect. Nothing ever is,” James T. Boffetti, senior assistant attorney general in the Consumer Protection and Antitrust Bureau, said Friday. “But what it is is a way to get significant relief quickly to consumers who need it.

“This is the beginning, not the end of the process.”

Over the next several months, New Hampshire homeowners who hold their mortgages with one of the five banks will be able to look to refinance their mortgages or reduce the principal balance remaining on their homes.

Under the settlement, the banks must provide $19 million to help struggling homeowners reduce the balance remaining on their homes, as well as another $9.5 million for refinancing programs.

“The foreclosure prevention side, to me, that’s impactful. … We’re hoping this will help a lot of people stay in their homes,” said Robert Tourigny, executive director of NeighborWorks Greater Manchester, which provides home buyer education and assistance across southern New Hampshire.

Local foreclosure victims and state officials, however, are more skeptical about the foreclosure provisions of the agreement. The settlement provides about $4.5 million for those who have lost their homes because of “robo-signing” and other improper foreclosure practices, which will translate to payments of about $1,800 each, officials said.

Across the state, more than 11,000 families have lost their homes to foreclosure since 2008, according to the New Hampshire Housing Finance Authority.

“This doesn’t give any relief. It’s a drop in the bucket,” said Executive Councilor David Wheeler, of Milford, who has helped Vallier and other town residents file foreclosure complaints with the state Banking Department.

“If it were the citizens creating this fraud, they wouldn’t be able to be bought off by this settlement,” Wheeler said. “The state should have held out for something more.”

The settlement, to be spread across the 49 participating states (Oklahoma was the holdout), isn’t meant to pay foreclosure victims back in full, Boffetti said.

“If you’ve lost your house, there’s nothing that can really make you whole,” he said.

The agreement could help lead foreclosure victims to better restitution further down the road by qualifying them for a full review with federal consumer protection authorities.

By applying for the settlement money and filing with the federal government, foreclosure victims could make themselves eligible for further complaints or cases against the banks, which could yield additional payouts, Boffetti said.

“Some cases have more merit than others,” he said. “They’ll be judged on a case-by-case basis.”

Good intensions aside, the fate of New Hampshire’s foreclosure cases will depend largely on government oversight of the settlement program, local foreclosure attorneys said this week.

State and federal officials plan to hire accountants and other staff members to oversee the settlements, they said this week.

In addition to the payments and loans, the settlement requires a new set of standards, requiring banks to work with homeowners before pursuing foreclosure, among other provisions that will prevent future foreclosure crises, officials said.

“This stuff changes the whole landscape about how these banks will deal with customers,” Boffetti said.

Without stringent oversight and accountability, these reforms will fail, leaving foreclosure victims and homeowners once again to fend for themselves, said Mary Stewart, a foreclosure and bankruptcy lawyer in Concord.

“The devil is in the details,” said Stewart, who has represented clients in Nashua and around the state.

“It does help the consumer to know what the (settlement) is supposed to be doing, but the key again gets back to how do you enforce it? Only time will tell.”

Even after it was announced, the settlement remains only in its initial stages. Federal administrators will file it formally in federal court later this month, and the loans and payments will become available over the coming weeks.

Federal and state officials are hoping the settlement will be only the first of many.

State attorneys across the country are working on cases involving other national banks, as well as security and investment firms, Boffetti said. Possible suits could be explored against federal housing financing enterprises Fannie Mae and Freddie Mac, he said.

“This is only the first five banks,” he said. “The intention is to go now to the next nine, to seek settlements against others.

“We’re going to hold these people accountable. We’re just getting started.”

Jake Berry can be reached at 594-6402 or