Attorney general says waiting not over for homeowners looking to benefit from foreclosure settlement
MANCHESTER – New Hampshire homeowners hoping to benefit from this winter’s federal foreclosure settlement may have to wait several months to receive assistance, according to Attorney General Michael Delaney.
More than $43 million is set to come to New Hampshire under the record $25 billion settlement announced in February by the U.S. attorney general’s office. But those funds haven’t yet reached the state as the settlement has been caught up in paperwork, Delaney said Monday after a presentation at Saint Anselm College in Manchester.
Federal authorities first announced the settlement Feb. 9 of this year, but it wasn’t formally approved until last month. The five affected banks, Bank of America, Citigroup, GMAC, JP Morgan Chase and Wells Fargo, are beginning to review applications, a process that could take weeks or months, Delaney said.
“By necessity, it will take time for the banks to review these applications,” he said. “Suffice it to say, this is just starting now in earnest.”
Because the money will be distributed directly from the five banks, rather than the state or federal government, it’s impossible to tell how many people will receive money under the settlement. But Delaney said Monday that the number of homeowners calling the attorney general’s office for assistance has tripled since the settlement was announced.
“Outreach continues to be an important part of what we’re doing,” he said. “People are still learning all about this.”
The money, awarded to 49 states across the country, will be available to help homeowners or foreclosure victims in four different ways.
Of the $43.6 million coming to New Hampshire, $9.5 million will go directly to “underwater” homeowners, who owe more than their home is worth, to help restructure their mortgage; and $4.5 million will go to residents who have already lost their homes to foreclosure. Many of these families could receive up to $1,800 each.
“That settlement does represent a substantial, but only a partial remedy for our homeowners,” Delaney said.
About $9.5 million also will go to the state to find mortgage counseling and other assistance programs to directly benefit New Hampshire homeowners.
“That $9.5 million will not go to the lawyers,” Delaney said. “That $9.5 million will go directly to local programs to help homeowners in need.”
Despite the settlement money, foreclosure rates are likely to remain high over the year to come, the attorney general said.
Since 2008, more than 3,000 families have lost their homes to foreclosure each year, according to state figures. Those numbers are more than six times higher than 2005 when 500 homes were lost to foreclosure, Delaney said. And with the housing crisis still in effect, the numbers will likely remain high for another year or two, he said.
But over the long term, the state and the country are set to recover. The federal Dodd-Frank Wall Street Reform bill of 2010 launched the Consumer Financial Protection Bureau, and the foreclosure settlement introduced further reforms to better guard homeowners from fraud and abuses.
“This can make a positive difference in the lives of our citizens,” Delaney said.
Still, with the federal settlement funds in process, New Hampshire lawmakers could do more to protect homeowners, he said.
To close his presentation, Delaney called for legislators to restore the attorney general’s authority to investigate bank fraud and other lending abuses.
In 2002, state lawmakers enacted a provision exempting banks from the state’s consumer protection law. Supporters of the bill intended to better clarify the law, which provides oversight responsibilities to the attorney general’s office, the Banking Department and other state authorities, according to state Rep. John Hunt, R-Rindge, who helped to craft the proposal at the time.
But in the years since, the provision has only tied the hands of the state’s top investigator while the housing crisis grew.
Only the foreclosure settlement freed the attorney general, restoring the state office’s jurisdiction over the five affected banks. But the office still cannot investigate other banks not included in the settlement, Delaney said.
A proposal to reverse the exemption, under consideration at the Statehouse, is likely to be defeated once again, he said.
“At a time when our nation was going through this crisis, our state attorney general is literally handcuffed on the sidelines,” Delaney said. “Why wouldn’t you want our attorney general to have that authority?”